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Economy unleashes Grinch on traditional company holiday parties

HR group recommends finding ways to create team environment despite tough times

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About 21,000 children will get an unexpected holiday gift this year thanks to KPMG LLP, a worldwide public accounting and consulting firm with an office in Des Moines. And they can thank the economy.

Although the economy might be this holiday season’s biggest Scrooge, it has forced companies who are tight on cash and conscious about both their employees’ and the public’s perceptions to think outside the box about celebrating the holidays.

For KPMG, that meant it would become one of a growing number of companies that wouldn’t sponsor a holiday party. But instead of dropping the holiday spirit altogether, company executives decided to hold a community service holiday event in which employees from around the country stuffed teddy bears, which will be paired with a book in packages for underprivileged children.

“I just think that spending money on a Christmas party was the wrong message to send to employees,” said Kevin Beagley of KPMG’s external communications department. “In a time when we are asking everyone to do more with less, it just didn’t seem right to be spending money on a big party. And this gave us a way to get everyone together in the spirit of the holidays.”

Many companies – 23 percent according to an annual survey conducted by Challenger, Gray & Christmas Inc. – have canceled their parties altogether. The survey, which polled about 100 human resources executives nationwide, found that 62 percent of companies were planning holiday festivities this year. That percentage was down from the 77 percent that had a company party last year and from the 90 percent that had one in 2007.

“The strength of the recovery, or whether we are even in recovery, is still unclear,” said John Challenger, CEO of Challenger, Gray & Christmas, a Chicago-based global outplacement consultancy, in a release. “Companies are postponing major investments, hiring initiatives and many other expenses, including holiday parties. For companies that have recently announced layoffs or other significant cost-cutting measures, such as wage freezes, it would be difficult to justify, let alone get in the mood for, a holiday party.”

In an effort to battle a potential public relations nightmare, many financial institutions that took bailout money as part of the Troubled Asset Relief Program (TARP), such as Bank of America Corp., Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc., have decided to forgo holiday parties, according to a CNNMoney.com report. U.S. Bank in Des Moines President Mike Helak said the company won’t have a party and instead choose to increase donations to local charities. Wells Fargo & Co. said it doesn’t host a corporate-sponsored party for its Des Moines office, but is urging managers to consider the current economic environment when planning small informal celebrations.

West Des Moines-based West Bancorporation Inc., which also took bailout money, said it is having an informal holiday party this year but that it is scaling back by eliminating the larger formal party it typically had at some point after its small holiday gathering. The company said it is trying to tighten its belt and wasn’t worried about the public relations side as much as it was about doing something nice for its employees.

Good decision, said Ted Williams, owner of Des Moines-based human resources consultant company The Williams Group. Williams said canceling a holiday party could be a morale breaker, perceived as thoughtless and insensitive.

“In this time right now, the one thing you want more than anything in the world is to let your work force know you are a team, because the uncertainty, as you might guess, is palpable,” he said. “Here we are having a Christmas party, and then I’m going to get a pink slip Jan. 2.”

To help build a team environment even in tough times, Williams said he always asks senior managers to ask the work force what they think before making a decision like this. Often, he said, supervisors make assumptions about what is best for the rank-and-file workers that just aren’t true.

“Why not poll the employees?” Williams said. “Maybe canceling the party is the appropriate thing to do – let’s not spend money unnecessarily and let’s focus on keeping jobs – but then again (managers) might be surprised to find out that the work force says, ‘You know what? We’ve been looking forward to this; we need this.'”

The trend this year is for companies to plan low-profile and low-budget parties. The Challenger survey found that one-third of the companies that are planning parties intend to spend 10 to 20 percent less than they did last year. Only 36 percent of companies plan on using a caterer, which the survey suggests could indicate that employers are organizing smaller, departmental potluck events.

Many companies in the survey said the main reason they were cutting their party was for financial considerations. Williams said if a company doesn’t have the money, it should go ahead and tell the employees that it doesn’t have the funding but ask the employees to come up with some low-cost alternatives that still allow for team building.

“I’m a Vietnam veteran, and I can tell you something. One of the best parties I had was on a Christmas Eve in the Mekong Delta, in a war zone with my buddies,” Williams said. “I guarantee we didn’t have a Christmas tree and we didn’t pass gifts, but what we did have was friendship.”

Doing some good in place of its holiday party helped bring the staff together at KPMG, said Tom Garton, managing partner of the Des Moines office. His office combined to make 72 of the bear/book packages as part of the national effort. The packages will be donated to Toys for Tots and the Ronald McDonald House.

“A lot of people are hurting, the recession, people that have lost jobs,” Garton said. “We thought it seemed a bit out of character for us to do something fun for ourselves when we could be doing something good for others.”