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This year more companies are celebrating the holidays with office parties and festive outings, but few are spending as much as in years past. Has the down economy of the last few years forever changed the landscape for corporate celebration?

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Since last year, the number of companies planning holiday parties is up by 6%, according to a survey by Challenger, Gray & Christmas. This year, 68% of companies are planning holiday parties, up from 62% in 2009. However, 53% of companies planning a holiday soiree are saving money by holding the event on-premises, up from 29% in 2009.

The decision on whether to host or scale-back a holiday party is a particularly challenging one for companies right now, according to Richard Coughlan, the senior associate dean at the University of Richmond’s Robins School of Business.

“For any employer  where uncertainty is high for 2011, it’s going to be a struggle to determine what kind of signal they need to send,” Coughlan said.

A holiday party (or the lack thereof) sends a signal to employees about a company’s values, Coughlan said.

“If a company that has previously held holiday parties decides not to, they are signaling that  what’s important to them has changed.  They are saying, ‘We are a different kind of company.’”

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However, at some firms the holiday party has become such a legacy there is no way they are going to omit or reduce it, and there is an understanding in the firm that the party is nonnegotiable, Coughlan said.

Yet while many companies may have cancelled their parties in recent years and may still be trying to save money with a scaled-back celebration, it’s not a  permanent change, Coughlan said. Even if certain executives at an organization don’t like having parties during a downturn, leadership eventually changes, as do economic times.

“Most companies understand it’s worth it to spend a few dollars appreciating their employees,” said Coughlan.  “Some of them even feel like making a big deal out of a holiday event that will launch them into a successful 2011.”

But it seems most companies will be rewarding staff members only — according to the survey, 54% of company parties will not include spouses, family and friends. However, some executives feel this “employees only” policy is best for group bonding.

Evan Weisel, Principal at Welz & Weisel Communications, in Washington, D.C., took his 15-employee team to a local hockey game this year to celebrate the holidays. Spouses and friends were intentionally not included, based more on a desire for “group bonding” than for saving money, Weisel said.

“I think people who own companies, if they’ve had a good year, they want to reward their employees,” Weisel said. “This is best done at an event outside the office where people can get to know one another.”

Although Weisel said in years past his team had enjoyed dinners out as a means of celebrating the season, an event like a sporting event (though more expensive) is typically better for strengthening employee relationships than a meal. This year, the cost for the suite at the hockey game and the food and drink purchased during the event was around $3,500, more than the estimated $2,000 that would have been spent on dinner alone.

“For something that’s a little unique like this, it’s not bad at all,” Weisel said. “We’ve been pinching pennies, and we deserved it.”

At, an online deals and coupon website, HR party organizer Sallie Morgensen said that spouses, friends and family were encouraged to attend this year’s holiday party, but the company actually saved $3,000 over last year by opting for more casual fare and choosing a less expensive venue.

“I think once a year people need to celebrate and have something paid for by the company,” said Morgensen. “It’s really about the getting together with people. Even though the food was less fancy this year, people didn’t feel like they had to get all dressed up, and it was actually more fun being casual.”

Another company that’s opted to go a more casual route is Raleigh, North Carolina-based software and operating system company Red Hat (RHT). For the last three years, instead of having a lavish holiday party, the 650-employee company has turned its “ugly first floor break room,” into a party room, and donated to charity what would have been spent on its end-of-year gala.

“When we thought about party planning in 2008, the bottom had dropped out of the market, and everyone had been touched in some way,” said DeLisa Alexander, senior vice president, People + Brand at Red Hat. “It seemed everyone had either a friend or family member who had lost their job, and we knew we couldn’t have an extravagant party when so many people in our community didn’t even have work.”

Each year, Red Hat employees vote on which charity will receive the annual holiday party donation, and this year the recipient was the Alzheimer’s Association. At the company’s small office gathering, a representative from the charity attends to speak about how the donation will be used.

“It turns out to be such a proud moment for those of us going to the party,” said Alexander. “I just can’t see us moving back to a big costly thing; the response from our associates is overwhelming, and it’s become a part of our culture.”

According to Barry Krull, Corporate & Professional Services Practice Leader for ICG Commerce, company culture has a lot to do with whether or not companies host holiday parties.

“What we’re seeing is that celebrations vary widely within our customer base. Some of our clients, like those in the manufacturing industry, will do something as low-key as a potluck holiday lunch, while others in the pharmaceutical or software industries still hold a formal dinner,” Krull said. “It all comes back to the industry and the perception of the way things should be.”

However, there are some absolutes, Krull said. If a company has had to reduce its headcount within the last year, there is likely not to be a party in any industry. While it’s important to reward employees for a job well done even when things are tough, no one will feel good about celebrating when their friends aren’t there.

Of course, companies that do make the decision to forego holiday festivities completely should take heart in knowing that at least some of their employees will be delighted, Coughlan said.

“For some people it’s a dreadful time. There are always going to be some employees who are relieved they don’t have to attend the holiday party and stand around making conversation all night with people they never really liked during the day,” said Coughlan.

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