The Death of Office Perks for the Little Guy

Dec. 18, 2008— -- Even if you managed to survive the latest round of layoffs, your office is probably not too jolly a place to be this holiday season.

The festive spirit that normally closes out the year is a bit less bright this year as many companies scale down or eliminate their annual holiday parties.

Christmas parties are the latest victims of the financial crisis. Several small but morale-building perks for your everyday employee are quickly disappearing as corporate America tries to cope with what is likely to be a prolonged recession.

Forget year-end bonuses. We're talking about the little perks that make the daily grind a little bit easier. Think about those free glazed doughnuts in the morning, or that stockpile of hot chocolate or personal use of the company's spare sports tickets.

Amy, a consultant based in Boston, has noticed these kind of changes recently at her firm.

"Over the past year, we have lost perks like free soda in the fridge, bagels every Friday, occasional Happy Hours on the company and our annual Red Sox and Celtics games," said Amy, who asked that her last name not be used to avoid angering her employer. "It does seem petty to complain about the company getting rid of free soda but little things mean a lot to overworked employees. I'm sure the annual cost of sodas and bagels for the office was minimal compared to a partner's bonus."

Like many other workers, she understands that these cuts are better than layoffs. But, she said, they still hurt.

"Of course, I am grateful to still have a job," she said, "but my daily soda used to help get me through a tough day."

Ilene Gochman, practice director of organization effectiveness at Watson Wyatt, a Chicago-based management consulting firm, said that if companies are downsizing they "don't want the appearance that a job could have been saved if only we didn't have free pizza on Fridays."

The dollars between free pizza and an employee's salary probably don't match up, Gochman said, but it is a matter of appearance.

"I'd rather have a job and no holiday party than a holiday party and no job," said one employee at a New York financial firm who asked not to be named.

Other changes aren't quite as noticeable but make a difference. For instance, Gochman said, some companies are scaling back from two copiers on a floor to just one. It's a small change, but one that makes a big difference if you have to make a lot of copies.

Watson Wyatt surveyed 248 companies and found that 19 percent had canceled or downgraded their parties. An additional 18 percent were weighing their options.

"It makes good sense to scale back the party," Gochman said. "It's not in great taste to be celebratory."

Media and entertainment giant Viacom announced Nov. 3 that it was eliminating its annual holiday party. Instead, each employee got an extra two vacation days to use between Dec. 22 and Jan. 1.

"As the holiday season approaches, we also want to encourage you to spend time with your family and friends, which is even more important in these uncertain times," the company said in a letter to employees.

A Viacom employee who did not want to be identified for fear of retribution said, "With rumors of layoffs floating over our heads, I think it's only right to cancel the megaparty. Screw the party and save a salary or four. Additionally, we're all terrified we're about to lose our jobs. Terrified creatives [employees] plus booze equals a disaster waiting to happen."

No Party but More Time Off

So no music, drinks and food at Viacom but "a little extra time to relax and recharge for the coming year" for company employees.

ABC is among the companies that have eliminated their annual holiday parties.

It's not just corporate America that is cutting back. The chairman of the Joint Chiefs of Staff for the U.S. military canceled the annual Christmas party at his home "due to trying financial times."

"Please disregard your December 7th Holiday Reception invitation. We sincerely regret any inconvenience and greatly appreciate your understanding," said a note canceling the event.

Instead, Adm. Michael Mullen says he will "host a small gathering for wounded service members, their families and the families of the fallen."

Sending the Right Message

Gochman emphasized that there is a big difference between scaling back and canceling a holiday party. There are some benefits to holding the parties, even in tough times.

"They are a way to say thank you and acknowledge that people have worked hard this year," Gochman said. By canceling, "you also inadvertently send a message of more panic than you intend."

Some of the firms moving forward with the parties are changing the way they are held: maybe several department events instead of one companywide party or a luncheon instead of dinner.

If a company cancels its event, Gochman warns that management needs to be really explicit about why it is canceling.

"Are you canceling because you can't afford it or because the company thinks it's in poor taste to be celebratory? People could come to a lot of different conclusions," Gochman said. "When there is no information, employees fill in the gaps and they are often wrong. They often assume the worst."

Rodger Roeser, president of a company that plans many events for his corporate PR clients, said there is plenty of scaling back but not necessarily because of tight budgets.

"What we're seeing this year is: companies coming to us with smaller budgets," said Roeser, president of Eisen Management Group in Cincinnati. "I don't think it's a reality of the organizations really having a smaller budget. I think it's being done on a perception basis. I don't think they want to overtly be going too far over the top knowing that there are a lot of people in a challenging situation."

Gifts Are Gone

Companies used to raffle off items to their top-performing employees. Big-screen TVs or trips to Jamaica or Cancun were given away. Now, Roeser said, he is seeing more creative but cheaper rewards such as an extra day or two off.

Executive search firm Battalia Winston has been doing a Christmas party survey since 1988.

Dale Winston, chief executive of the New York-based firm, said that holiday parties are at an all-time low this year with 81 percent of the companies surveyed holding one.

"I don't think the word this year is celebration," she said.

Some companies wanted to eliminate or scale back parties but already had their contracts in place before the financial crisis escalated.

Winston is also seeing a lot of lunch-hour parties and also the implementation of cash bars. But those cuts are not as much about the economy but to "make people drink responsibly."

Many companies long ago did away with family picnics, leaving the holiday party as the only time for corporate socialization.

"This is the one time to bring all levels of employees together in a social setting," she said. "Therefore, I don't think companies want to do away with that. They just want to reflect the mood of the country. And the mood of the country right now is uncertain."

"The Grinch won't steal Christmas," Winston said. "He'll just make it a little less prosperous."