Companies Reluctant To Throw Holiday Blowouts
89% Of Budgets Stay The Same Or Decline

By James E. Challenger, President
Challenger, Gray & Christmas, Inc.

The economy is growing, a pro-business Administration has retained the White House and hiring finally appears to be on the rebound - all of which should provide companies and their employees good reason to do some extra celebrating this holiday season.

However, a new survey shows that while a majority of employers are planning holiday parties this year, almost one in four are cutting their budgets, some by as much as 20 percent. Only 11 percent are increasing their budgets from last year.

The message from employers is clear: business conditions are tenuous at best and maintaining tight budget controls is critical.

Companies still have the holiday spirit, with 70 percent planning to hold a holiday function, but 67 percent are budgeting the same amount as last year, while another 22 percent plan to lower budgets by an average of 13 percent, according to the survey conducted among 100 human resource executives by global outplacement firm Challenger, Gray & Christmas, Inc."If we ever return to the type of lavish holiday parties associated with the dot.com era, it will not be this year. Soft confidence among business executives and general uncertainty about this economy will undoubtedly keep festivities in check," observed John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Some companies have abandoned the traditional holiday party formula entirely, choosing to hold low-key, more economical functions on company premises.

Lisa Siroky, vice president of human resources for Plano Molding Company, Plano, Illinois, said that maintaining a 24/7 manufacturing facility and a growing number of employees working flexible schedules were no longer conducive for the buffet dinner parties the company formerly held at an off-site venue. Even a set luncheon would require a halt to manufacturing operations.

Instead, the company now holds an "all day graze," which allows employees to come at anytime throughout the workday and during the evening and overnight shifts to partake of food and non-alcoholic beverages.

According to Siroky, the company has received positive feedback from all employees. "All employees can enjoy the meal, not just the ones who paid for babysitters, dressed up and came out for the formal dinners." Interviews with several catering companies and party venues echoed survey findings.

David Boris, owner of Hel's Kitchen Catering, Chicago, indicated that spending is about the same as last year. Budgets are still significantly lower than four years ago.

"A lot of people want to pin this on September 11, but I think it has a lot more to do with the dot.com bubble burst. Companies are just being more conscious about the spending," Boris told Challenger researchers. He said steak and shrimp have been replaced by less expensive alternatives. Overall, he estimates that companies are spending 25 percent less than they did before the recession.

On a positive note, he said companies begin calling earlier every year. By mid-October, companies are starting to lock up the Thursdays, Fridays, and Saturdays leading up to Christmas and New Year's.

A La Carte Catering in Phoenix started "getting bombarded" with requests around Halloween. In fact, executive head chef Paul Offelle noted that things are definitely improving in the Phoenix area. He estimated that his customers are spending 25 percent more than a year ago, but keeping the focus on elegance versus extravagance.

In Ohio, one venue indicated that companies appear to be saving money by eliminating the open bar, opting instead for a cash bar.

"The cash bar option is not only a way to cut costs, but making employees pay their own way can help lower the rate of over indulgence and reduce a company's liability," Challenger suggested.

Luncheons are also an increasingly popular option for companies interested in reducing alcohol intake and the party budget. According to the Challenger survey, one in four companies plans to hold a daytime lunch for its employees. The remaining respondents were evenly split among formal dinners, casual dinners, cocktail parties and other holiday-related events, which for one employer consisted of cookies in the conference room.

Most companies (63 percent) restrict their holiday parties to employees only, while 37 percent allow workers to bring a guest, such as a spouse or significant other.

Like Plano Molding, which found that employees preferred an alternative to the formal dinner, Challenger said many companies might discover that their employees would prefer something other than the traditional holiday party.

"Employers may want to consider asking their workers how they would like to celebrate the holidays. Companies may be surprised to learn that some employees would rather have a low-key family function. Others might vote that money budgeted for a party go to charity dedicated to providing food and other aid for the jobless.

"Companies that think they are boosting morale by holding an extravagant holiday party could actually end up damaging it. Taking the pulse of workers would help prevent this fate and could significantly reduce the amount of money allocated for holiday events," Challenger concluded.