Cutting back on Christmas

SmartCompany surveyed businesses on whether or not they would be curbing Christmas festivities this year because of the downturn. While it’s OK to cut back, JAMES THOMSON warns that ditching celebrations altogether could cost you more in the long run.

By James Thomson

Xmas party poopers

SmartCompany surveyed businesses on whether or not they would be curbing Christmas festivities this year because of the downturn. While it’s OK to cut back, ditching celebrations altogether could cost you more in the long run.

‘Tis the season to cut costs for Australia’s entrepreneurs – and the Christmas party is the number one target.

A special SmartCompany poll has revealed that 43.5% of companies have cut their budget for the office Christmas party, while 17% have cancelled their staff parties altogether in order to save costs.

But a panel of experts in the areas of human resources, brand management and organisational psychology have warned that cutting back too hard on Yuletide cheer can hurt your company’s brand and damage staff morale.

It’s been a rough year. As sales dry up and cashflow gets tight, companies are searching desperately for spots to slash costs. Entertainment expenses are a quick and easy place to start, and that makes the Christmas party – whether it’s for staff or for your customers – a logical target.

Of the 122 entrepreneurs surveyed, 33% said they were not having a staff Christmas party this year, while the vast majority of respondents (92%) said they would skip the customer Christmas function. While 68% of these said they had not held customer parties in the past, 23.5% said they were dumping the customer party this year to cut costs.

Many of those respondents who have decided to abandon their Christmas party gave the same reason – having a Christmas party in such difficult times sends the wrong message.

There is some merit to this argument. If you are a company that has had to lay off workers or shut business divisions, then a big celebration at the end of the year might not be so well received.

Get the message right

Branding export and SmartCompany blogger Michel Hogan says companies need to consider their brand messages when considering whether or not to kill their Christmas functions, particularly those functions aimed at customers.

“If you’ve had a year where you’ve cut back staff, delayed product launches or made customers start paying for things they used to get for free, then to go ahead and have a big lavish Christmas party might create a backlash,” she says.

“It’s sending mixed messages. You’re saying ‘we’re cutting back, we’re not going well, but we’re still going to have this big party at your expense’. Because customers know that they are the ones that end up paying for those sorts of things.”

On the other hand, if your business had performed relatively well during the year, holding a Christmas party can send customers a positive message. “It just says ‘for us it’s business as usual’,” Hogan says.

If you do decide to dump the customer Christmas party but still want to show your appreciation for their support, Hogan suggests sending them a card or other message of thanks. As an extra sign of gratitude, you could even include a voucher offering 10% off their first purchase in the new year.

“When you think about it, this sort of situation is the perfect opportunity to say something different, and get away from the same old boring Christmas party,” Hogan says.

Don’t cancel the staff Christmas party

But while you might be able to drop the customer Christmas function, abandoning the staff party is a very bad idea.

Blogger Tim Sharp, who works as an executive coach, consultant and founder of the Happiness Institute, warns the money saved by cancelling the staff Christmas party may be outweighed by the damage done to morale and employee engagement.

“For many people it will be quite demoralising, dissatisfying and insulting,” he says. “A lot of people would be pretty peeved.”

That said, Sharp says workers will understand if their employee cuts down on Christmas party costs in difficult times. Moving from the five-star hotel to a company sausage sizzle sounds like a bit of comedown, but Sharp says employees will be OK as long as the boss explains the decision.

“If organisations can communicate that effectively, and the employee can still see that the employer is making an effort, then it will be fine,” he says.

“At the end of the day people want to mingle and have a bit of fun.”

If you absolutely must abandon the staff Christmas party, Hogan suggests giving your staff an extra day off at the start or end of their holidays.

Cutting party costs

Cutbacks rather than cancellation appears to be the tactic taken by most of the survey respondents, with 43.5% of those entrepreneurs holding staff Christmas parties admitting they are cutting costs. Most are cutting between 11% and 30%, and the most common amount spent per head on the staff Christmas function is between $50 and $74.

Despite the economic slowdown, event organisers are gearing up for their busiest time of the year.

Richard Hughes, the managing director of Swish Events, admits the level of inquiry has fallen slightly, but says firms that have already booked the Christmas party (and paid a deposit) are still going through with their events. However, he does point to a few ways that companies are cutting costs.

The lavish theme-style parties of previous year (which often necessitate the hiring of expensive drapes and lighting) are gone, in favour of a more low-key atmosphere.

The great lure of the Christmas party – free drinks – is also being looked at. “Some people are going for the three-hour drinks package instead of the four or five-hour package,” Hughes says.

Other ways to save money include holding the party at your workplace if you’ve got an appropriate space, or opting for a shorter cocktail-style event rather than a sit-down dinner or lunch.

Giving gifts

It appears entrepreneurs are a generous lot, with just over 50% saying they will give gifts to staff. Although 42% of those giving presents to staff admit they will cut back on the level of spending, the most common amount spent will be in the $50 to $74 range, although 22% of gift givers say they will spend over $100.

Whether you give gifts to staff members will depend on your relationship with them, whether you have given gifts in the past and, of course, whether they are likely to get you something.

Gifts to clients are more difficult. Jo Macdermott, director of Next Marketing, says she decides which clients to give gifts to using three criteria; their level of support during 2008, how much she wants to work with them in 2009, and whether or not they will receive gifts from other suppliers.

If you’re trying to keep costs down, Macdermott says it is not a good idea to give a crappy, cheap present like a stress ball or a pen – it does nothing for your brand.

Instead, try to get something a bit personal. Some of her suggestions for inexpensive gifts with a bit of class include:

  1. Some good quality tea or coffee.
  2. For the wine drinker, a pocket book on award winning wines for 2008 – throw in a bottle from the book for extra brownie points.
  3. If your client is heading away on holidays, choose a magazine that is tailored to their interests.
  4. If they are going to be driving over long distances during the break, create a pack of muesli bars and snacks.
  5. Make a donation to charity. Tell the client in your Christmas card and then send out a co-branded email in January from the charity and your company, explaining what the money donated has been used for.

If you decide not to get gifts this Christmas, Macdermott says it is a good idea to buy the best Christmas cards that you can afford and write a personalised message to your selected clients. “Send them in the first week of December so that yours is the first to arrive this silly season,” she says.




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