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Office holiday parties getting tamer, cheaper

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For some workers, the office holiday party is a scaled-back affair.

The company holiday party is slowly returning, but its new incarnation reflects the lingering effects of the recession on corporate America: This year's parties will be smaller, more casual and less boozy.

"There used to be a lot more lavish alcohol displays — things like martini luges where you would pour alcohol into the top of an elaborate ice carving and it would land in your glass," said Todd Fiscus, owner of Todd Events, which has produced events for clients ranging from Gatorade to Jay-Z. In a sign of the times, he says, companies today are more likely to host a Western-themed "hoedown" instead of a black-tie blowout. 

According to outplacement consultancy Challenger, Gray & Christmas, 68 percent of companies will hold a holiday party this year, roughly flat with last year and up six percentage points from 2009, when the economy and holiday party bookings were at a trough.

As 2011 winds down, companies have more reason to celebrate: Most have come through the worst of the economic downturn and are setting their sights on 2012. They're shifting their focus from survival to motivating and retaining their remaining employees. 

"Companies in the recession were fighting for survival, and they cut back on a lot of things," said Challenger CEO John Challenger. "That loosened the ties that people have to the company. Now they're in the process of carefully trying to win back some of that loyalty or at least commitment they lost when times were tough."

The financial crisis that began in September 2008 brought many companies' holiday party plans to a screeching halt. Many canceled because they couldn't afford a bash or because layoffs and other austerity measures made the prospect of a party look unseemly or irresponsible.

"It's really hard to justify a holiday event in the aftermath of layoffs," said Richard Coughlan, associate professor of management at the University of Richmond. "The remaining employees will think, 'What are the priorities of the firm?'"

Even companies where lavish events were the norm bowed to the pressure. Investment bank Goldman Sachs, which canceled its holiday party in 2008, upped the ante in 2009 with an edict that employees were not allowed to gather in groups of a dozen or more for dinner on the company dime.

Coughlan said cost is still the main consideration that dictates the where, when and whether-or-not of a corporate holiday party. "We're seeing a lot more companies deciding to hold the parties not at some ritzy venue, but many of them are doing them at their headquarters," which can save a lot of money, he said.

Some businesses are switching from nighttime to daytime events and forgoing a band or DJ in favor of a school band or choir performing Christmas carols. Fiscus said some companies are bringing back the holiday party — but only for top executives.  

Alcohol is another area targeted by still-frugal managers. According to a survey conducted by outplacement consulting firm Amrop Battalia Winston, nearly a quarter of all holiday parties this year won't include anything stronger than soft drinks. That's down three percentage points from last year and is a far cry from 2000, when 90 percent of holiday parties featured booze. At parties where employees can still get their drink on, they may have to choose from only beer and wine or a limited selection of cocktails rather than a full bar. 

Some companies are spending as much as they were before the recession, but these expenditures are camouflaged. Conspicuous consumption is still out of favor, which means jettisoning the champagne bar and crystal-studded decor, Fiscus said. The menu might be enchiladas and chicken-fried steak instead of filet mignon and shrimp, but the company might make up for that by booking a terrific band.

"Instead of making it a winter fantasy party … they might make it a party where everybody could wear jeans," he said. "It's not that they necessarily spent less, but the party feels different." 

"There's no flowing champagne and caviar," said Dale Winston, Amrop's chairwoman and CEO. "Even the companies that are doing well are sensitive to the period of austerity that's going on in the country. It's a sign of the times."