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Holiday Parties Muted, or Canceled, in 2008
 

By Kathy Gurchiek  11/6/2008

Morgan Stanley is one of the latest major employers to cancel its holiday party. And on Oct. 28, 2008, ABC News informed its staff in an e-mail that it was not throwing any holiday parties in 2008—one of several steps it’s taking to reduce administrative costs—according to an article in The New York Observer.

In the face of a troubled economy, some employers are cutting out or cutting back their 2008 end-of-year celebration.

A few employers (13 percent) are cutting their party budget an average of 53 percent, according to global outplacement consultancy Challenger, Gray & Christmas Inc. Only 4.3 percent are increasing the party budget, and those increases average about 5 percent, it found in a national survey conducted in October.

The number of employers planning parties is down from 90 percent in 2007 to 77 percent in 2008, according to Challenger’s survey of 100 HR executives.

The Society for Human Resource Management, most of whose members represent small- to mid-size employers, found a steady, slight decrease in the percentage of employers offering holiday parties in the last two years.

In 2006, 87 percent offered such parties, vs. 85 percent in 2007 and 83 percent in 2008, according to SHRM’s 2008 Employee Benefits Survey Report. That’s still slightly up, though, from 81 percent in 2004 and 2005.

The New York Times reported Oct. 31, 2008, that “caterers and party planners said they were seeing cancellations—and, even more, the entertaining equivalent of a buzz cut, with simpler menus, fewer guests, shorter hours and less glamorous glassware.”

An eye to the budget is part of the reason, but something else is going on.

Dale Winston, CEO of U.S. executive search firm Battalia Winston Amrop, attributes this to a “somber” holiday mood.

“Over the past 20 years, the number of holiday parties has always mirrored the health of the economy,” he said in a press release. “This year we see how hard companies have been hit, especially in the financial and manufacturing industries where many companies have had to cancel parties altogether.”

Those two sectors will either host more modest parties or cancel them, vs. 85 percent of health care/pharmaceutical industries that say the economy will have no impact on their holiday party plans.

This year will hit a 20-year low in the number of corporate holiday parties held, Battalia Winston found in its survey of 108 of America’s leading businesses. Eighty-one percent of companies will conduct some type of holiday celebration in 2008, vs. 83 percent in 2001 and 82 percent during the 1991 recession.

Among those who will host a celebration, cost-cutting measures include not serving alcohol (71 percent vs. a high of 90 percent in 2000).

Challenger’s survey found that among cutbacks organizations are implementing, fewer are using a caterer or outside service—56 percent in 2008 vs. 69 percent in 2007.

“The comparative data from this year to the last is very telling,” Challenger CEO John A. Challenger said in a press release.

“The effects of the housing slump that began around August 2007 had not been fully realized when companies were planning year-end parties. With the impact of the housing collapse rippling through many sectors of the economy, we are seeing the toll on holiday parties.”

Of those organizations planning a party, Challenger’s survey also found:

    • 65 percent are limiting the party to employees.

    • 57 percent are having their party on a workday or near the end of a work day.

    • 48 percent plan to serve alcohol.

    • 65 percent plan to hold their functions at an off-site venue.

“With a few notable exceptions, many companies had already abandoned the extravagant parties that were common during the dot.com boom of the late 1990s,” Challenger said.

Although 83 percent are spending the same amount on their parties in 2008, he noted that “even companies spending the same as last year will have to settle for less extravagant parties, thanks to higher costs for food, alcohol and venues.”

Hosting a more low-key or low-budget celebration is better than canceling the party entirely, says Challenger, who advises employers that “these year-end celebrations are an effective way of boosting employee morale, especially in tough economic times.”

Such events also offer rare opportunities to socialize with senior executives, he added.

“It is important to keep these events going, especially if they are part of your culture,” writes a SHRM member in an Oct. 15, 2008, online bulletin board posting. “However, you want to scale down to below the level of ‘they-could-have-canceled-the-party-and-not-laid-off Joe.’ ”

“We’ve scaled back from a full dinner for employees and [significant others] with entertainment to an in-house catered deli luncheon held in the plant for employees only,” wrote another SHRM member in an Oct. 15 posting.

One wrote of scaling back for 2008, with employees suggesting a covered-dish event and the company providing the meat. The meal was followed by a gift card raffle.

“We did this last year and it was awesome,” the member said in the posting.

Among party cost-cutting ideas HR professionals shared on a September 2008 bulletin board:

    • Holding a gourmet coffee and tea bar with an assortment of fruits and desserts served late in the day after lunch. Permit employees to leave work a little early after the party.

    • Serving an in-house breakfast or brunch instead of dinner at a restaurant.

    • Holding the party at the clubhouse of a development where an employee lives instead of at a costlier venue.

    • Senior leadership cooking and serving breakfast or lunch. Management prepares the food and serves employees.

    • Holding an employer-sponsored volunteer event in lieu of a party.

    • Making a charitable donation from the employer in lieu of a Secret Santa.

    • Pulling names for a wrapped toy that “matches” the employee whose name was pulled—such as a basketball for the athlete, a game of Monopoly for the person in finance. After items are revealed at the party, they are donated to Toys for Tots.

One interesting approach comes from an HR professional whose organization schedules the first three hours of the workday for its celebration.

The first hour is “official goof-off time” when employees may exchange gifts, visit friends in other departments, read a book or otherwise relax, the member said in a posting.

Breakfast is served the second hour as a few employees provide background music—

rock guitar, violin duets of holiday music, vocals—while colleagues eat and mingle.

Company presentations—seniority awards, perfect attendance recognition, year-end review—take place the third hour. Everyone then goes home.

“This way the company sets the partying time and keeps it manageable and we still get to do our awards and recognition presentations,” the poster writes, adding “another bonus is that there are no ‘should we or shouldn’t we’ debates about serving alcohol.”

Kathy Gurchiek is associate editor for HR News. She can be reached at kathy.gurchiek@shrm.org.

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