Companies Say 'Bah, Humbug!' To Holiday Parties Scores of U.S. businesses plan to forgo their annual bash as a response to the slumping economy. One business consultant says the decline in parties doesn't bode well for the futures of the companies cutting back.

Companies Say 'Bah, Humbug!' To Holiday Parties

Companies Say 'Bah, Humbug!' To Holiday Parties

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Many companies are scaling back their traditional holiday parties — or canceling them altogether. Matt Cardy/Getty Images hide caption

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Matt Cardy/Getty Images

Many companies are scaling back their traditional holiday parties — or canceling them altogether.

Matt Cardy/Getty Images

You may not have to worry about the awkward encounter with your boss at the office holiday bash this year. Scores of U.S. businesses plan to forgo their annual holiday party as a response to the slumping economy. That means no top-shelf scotch, no co-workers getting down on the dance floor, no heaping platters of hors d'oeuvres.

Companies canceling include television networks ABC and CBS, fashion designer Marc Jacobs, Walgreens, Morgan Stanley and Citigroup. Even the government is cutting back. The chairman of the Joint Chiefs of Staff retracted the invitations he had already sent for his annual Pentagon party, citing "trying financial times."

Swiss financial firm UBS has held its party at the Natural History Museum in New York for the past two years, with approximately 1,300 guests attending. Spokeswoman Karina Byrne says that this year, UBS decided a party wouldn't be sensitive to the 5,500 employees the company plans to lay off by mid-2009.

"Obviously, there is some mild disappointment … but given the way the year has gone and given what's going on in the economy and given some uncertainty about how the economy is going to go in 2009, I think that our employees are more concerned about some larger issues than the cancellation of a holiday party," Byrne says. She adds that the company felt a lavish party would not send a positive message to struggling clients and wary shareholders.

Not everyone is canceling, though. Many companies are scaling back instead, including National Public Radio. Yahoo is going ahead with its traditional holiday party, despite announcing a plan to cut 10 percent of its workforce in December. Yahoo spokeswoman Kim Rubey says the company paid for the party months ago, so it would not make financial sense to cancel. Rubey also says Yahoo wants to show employees that they are appreciated, even in these trying times.

Business consultant John Challenger, CEO of Challenger, Gray and Christmas, says Yahoo has the right idea. Employees might pooh-pooh the holiday party, but it's still important, he says.

"Canceling parties altogether is a very tough statement about where the company's at. It can only be damaging to morale. It makes people even more insecure about their job," he says.

Challenger was disappointed to see that only 77 percent of companies are planning parties this year, down from 90 percent last year, according to the Challenger, Gray and Christmas annual survey of company holiday parties. An additional 13 percent of companies say they'll be downsizing.

Challenger says he thinks the decline does not bode well for the futures of those companies. "Parties are the canary in the coal mine. They are symbols of where the companies stand, how they see their future, how they think about workplace culture," he says.

Florists, restaurants and event spaces across the country are also noticing the downturn in the corporate holiday season.

Christina Hoag started Matters of Taste catering in Alexandria, Va., more than 20 years ago. One of her corporate clients canceled this year, and many of her longtime customers never called.

Hoag found new clients by marketing more aggressively, but the budgets for many of the parties she has booked have been smaller. She has seen more cocktail parties and luncheons, but fewer sit-down dinners. Some companies have even asked employees to bring their own desserts, potluck style, she says.

To accommodate her clients' new budgets, Hoag says she has become more creative with her catering. For example, she has changed the way she serves shrimp. Shrimp are popular, but they can also be expensive. If she puts them out on display, people tend to eat seven or eight. If she passes them as an hors d'oeuvres instead, people tend to eat only one or two. The client still has a shrimp appetizer, she says, but food cost is lower for a limited budget.

Hoag says there are some things she won't scrimp on, including presentation.

"We try not to change things we've been doing, because our clients expect it. We're not going to change things if want to keep that client," she says.

She will make other subtle changes, however, like serving on smaller plates so partygoers take less food each time they visit the buffet.

Despite the cutbacks, Hoag is optimistic about her party-catering business. If the economy improves by next holiday season, she might even be able to put a few more shrimp back on the plates.