Holiday Parties Show No Sign of Decline in Corporate America

. October 14, 2008

By Hanah Cho, The Baltimore Sun

Knight Ridder/Tribune Business News

BALTIMORE, MD, December 7, 2005. Nothing has stopped Bob Leffler from holding his annual holiday shindig during the last two decades: not wars, tough economic times or the Sept. 11, 2001, terrorist attacks.

Besides being a tradition, the festive bash is a time to let loose and celebrate with employees, associates, clients and even competitors, said Leffler, president of Baltimore advertising firm the Leffler Agency Inc. "It's a great gathering, and it's a lot of fun," said Leffler, who's holding the holiday affair at City Lights restaurant in the Inner Harbor for the 22nd year tomorrow night. "It's a lot of camaraderie, and it's very gratifying for me."

Though holiday cash bonuses and gifts are steadily declining in corporate America, company holiday parties remain a staple in the workplace -- large and small. While companies cut back on their party budgets in past years, and some canceled their events in 2001 after the terrorist attacks, corporate holiday celebrations are not going away anytime soon, surveys show.

"It's the last bastion of a social event for companies," said Dale Winston, chief executive officer of Battalia Winston International, an executive search firm. "In the old days, there would be the company picnics, but this is the only annual celebration left where companies can socialize in a group."

Several surveys found that more than three out of four companies on average are planning holiday parties this year -- a figure that has held consistent during the past several years.

A survey of 100 human resources executives shows 80 percent of companies having holiday celebrations, up from 70 percent last year, according to international outplacement company Challenger, Gray & Christmas Inc.

"It's a way of looking back over the year and bringing people together and creating community, which is so important to companies because people are so staggered in so many ways," said John A. Challenger, the firm's chief executive officer.

Another survey, from Battalia Winston International, which has been conducting its holiday outlook for more than 15 years, was more optimistic.

Its survey of 150 businesses nationwide found that 87 percent of companies said they're having holiday parties -- though it is down from 95 percent last year. Historical data from Battalia Winston's survey show that no less than 82 percent of companies said they have had holiday festivities since 1990.

At the National Aquarium in Baltimore -- which hosts numerous corporate events throughout the year -- booking demand in December has stayed around 20 holiday parties during the past several years, said Paula Katz, director of sales and services.

What has changed is the decor and scale of corporate holiday affairs with parties becoming more subdued and less elaborate, Katz said. "They're showing appreciation of their staff without all the luxury and glamour that was in the '90s," she said.

Many companies are shifting from dinner parties to more cost-effective luncheons or cutting back in other ways, such as forgoing filet mignon and lobster for inexpensive food items, said Joshua Joseph, research director with the Bureau of National Affairs in Washington, whose survey also showed a slight increase in holiday festivities.

The median cost of the average companywide party is $5,000 this year, compared with $8,000 last year, according to the BNA survey.

Employees are a "lot more forgiving and less likely to notice the scale back," Joseph said. "People can appreciate 'It's been a tough year or tough whatever.' If I've been used to this party and bringing my wife for the last X number of years, it's something I look forward to."

Steakhouse restaurant Morton's in Baltimore, which serves only dinner throughout the year, opens its doors for lunch in December to meet the demand for daytime holiday affairs, said Judi DiGioia, sales and marketing manager.

Companies can save money while hosting a holiday event outside the office, she said. Others want to stay away from serving drinks, DiGioia said.

"To do so, you could offer a lunch and there's no expectation of serving alcohol at a business function during lunch," she said.

Lunch at Morton's has been the tradition for the administrative staff at S.F.&C. Insurance in Towson for the past four years. This year's celebration is scheduled for Dec. 20.

"The staff really enjoy it," said Robin Rubin, an executive assistant. "We have a great turnout every year. They always ask me as we get closer to the holiday season, 'Are we doing our office lunch again?'"

Not every company is scaling back on its holiday fun.

Global consulting firm Booz Allen Hamilton's central Maryland office is holding its annual affair at the M&T Bank Stadium, a venue large enough to accommodate about 1,000 people expected for the party Saturday.

The semiformal event will include an open bar, dinner and dancing. Door prizes, donated by the firm's senior executives, will greet employees and guests, said Booz Allen's vice president Bill Stewart.

Stewart, who has been with the company for 17 years, doesn't recall a single holiday absent a company party.

"It's really a time for us to say thank you to the staff who have done a tremendous job for us over the year and have had success in the marketplace," he said. "The dividend in terms of morale, productivity and commitment is well worth the cost. You can't measure the return on investment directly but you could see it. It creates a community that bonds together more closely."

Many employers, however, have abandoned other traditions.

In the past five years, companies have been eliminating holiday bonuses and replacing them with performance-based pay to create an environment where a job well done is awarded, said Ken Abosch, compensation business leader at Hewitt Associates, a human resources outsourcing and consulting firm.

Six of 10 companies will not dole out holiday bonuses this year, according to a survey of 151 large businesses. Meanwhile, 78 percent of 1,000 organizations offer merit pay, up from 51 percent in 1991, Abosch said.

"They're looking at all their investments and making sure there is a good return on them," he said. "There's a sentiment that there isn't a good return on holiday bonuses."

Another survey of 184 human resources executives by the Bureau of National Affairs found that 40 percent of employers plan to give out holiday gifts in the form of gift cards, food, cash awards or bonuses, down from 45 percent last year. The survey found that more small businesses were planning to give gifts compared with larger companies.

"A lot of companies don't allow employees to accept gifts," said Winston, of Battalia Winston. "I think with corporate governance, it's not socially acceptable right now."

However, parties seem to be a mainstay that many employers aren't willing to negotiate away.

"We work hard to build a nice business reputation and this is part of it," Leffler said of his advertising agency's party tomorrow night. "It's also a thank you to the reps, who get beat up all the time."

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