Nixed holiday party impacts employee morale

It looks like the trend of canceling holiday parties has spread from under the umbrella of Viacom companies and into Main Street businesses.

Following Viacom’s lead, Morgan Stanley, ABC News and American Express are three of the latest major employers to cancel company holiday parties this year.

The current economic downturn has employers cutting back on end of the year costs by trimming expenses and muting, sometimes canceling, year-end parties.

According to a national survey by Challenger, Gray & Christmas Inc.:

• 77% of employers are planning holiday parties this year, down from 90% in 2007.
• 13% of employers are cutting their party budget an average of 53%.
• Only 4.3% are increasing party budgets, and increases average only about 5%.

This depressed holiday season will mark a 20-year low in the number of company-sponsored celebrations held, according to a survey by executive search firm Battalia Winston Amrop of more than 100 American leading businesses.

About 37% of businesses said their event has been canceled or scaled down because of the economy, almost double the 19% of companies affected last year, according to the Battalia survey.

Of those companies celebrating the season with a holiday party, the most popular cost-cutting measures include:

• Not serving alcohol or limiting open bar hours
• Not using a caterer or outside party planning service
• Hiring a DJ instead of a live band
• Holding a party in January when rates are less expensive than December
• Limiting the party to employees only
• Holding the party on a workday or near the end of a workday

Even with a strapped budget this holiday season, studies show that simple employee incentive ideas can be just as effective as throwing a lavish party. Companies can improve employee loyalty and increase productivity with simple communication, including telling employees “thank you,” leaving a lighthearted holiday card on the employees’ desk or taking a deserving employee out to lunch.

“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.”

With a struggling economy and worried employees, now is not the time to forget about employee appreciation. If your company canceled their end of the year party, or are thinking about it, remember to find other creative ways to recognize employees and spread some holiday cheer.

We would like to know - Is your company having a holiday party this year? Do you have any new ideas for cutting holiday party costs?