Alison
By Allison Linn Senior writer
msnbc.com
updated 11/17/2009 7:32:34 AM ET 2009-11-17T12:32:34

Caviar and cocktails are out, while casseroles and cookie trays are in as many employers scale back holiday party plans this year in recognition of an economy still struggling through a deep downturn.

And it's not just the sky-high unemployment rate keeping a lid on holiday cheer. For people who work at companies that benefited from taxpayer-funded bailouts over the past year the holiday season may be marked with little more than a good cheer e-mail.

For many employers, the move to rein in holiday office parties reflects an effort to cut costs. But executives at bailed-out firms clearly are sensitive to criticism from taxpayers, shareholders, government officials and even employees themselves, many of whom have endured another painful year of budget cuts and mass layoffs.

“It’s all about the optics now,” said Marcia G. Rhodes, spokeswoman for WorldatWork, a membership organization for human resources directors.

More than half the companies surveyed by the executive search firm Battalia Winston Amrop said the recession has prompted them to either scale back or cancel their holiday party this year.

In all, 81 percent plan to host holiday celebrations of some sort, the survey found. That’s the same as last year, but that already was the lowest percentage since the company began doing the survey 21 years ago.

Taxpayer scrutiny
The issue is especially sensitive for companies that have received government bailout packages over the past year. Many of the banks, automakers and other companies that have benefited from taxpayer largesse have discovered that Americans are intensely interested in whether their money may be going toward junkets, jets or multimillion-dollar executive salaries.

The hundreds of banks and other companies that fall into this category are required to develop and post policies regarding expenses for holiday parties and similar events.

Most of the policies don’t expressly prohibit such functions, but they do require that costs be contained and that major expenses be approved by high-level executives. That in itself could be enough to rein in many holiday party plans.

Under the guidelines posted by insurance giant AIG, for example, holiday parties or events must be approved by the chief executive of the business unit involved.

AIG which owes more than $83 billion in bailout funds, according to the company, more than any other firm, has frequently found itself in the spotlight for its spending on corporate events and outsized salaries and bonuses in the wake of the financial crisis.

Company spokesman Mark Herr said no decisions had been made yet about whether holiday parties would be held this year.

“We have more important (things) to be concerned about. We’ve got to repay the taxpayers,” he said. “Holiday parties, I think, are fairly low on the things that are tops on our priorities.”

Executives at Wells Fargo, another bailed-out financial company that has come under fire for lavish spending at company events, is encouraging its business units to consider more frugal celebrations such as potlucks or luncheons, spokeswoman Melissa K. Murray said in an e-mail.

Other companies are taking a more extreme stance.

“There are no holiday parties,” said Kelly Sapp, a spokeswoman for Bank of America, the nation's largest bank by deposits, which has received some $45 billion in government aid.

Sapp said some employees might organize events like charity benefit drives on their own, but the company won’t host or fund any corporate-wide holiday celebrations.

Gia Moron, a spokeswoman for Goldman Sachs, which received and has repaid $10 billion in government aid, also said it would not have holiday parties this year.

Even if you’ve got it, don’t flaunt it
Experts say even companies that didn’t receive government funds are likely to tone down their holiday party plans this year, in part because they don’t want to seem to flaunt success in tough economic times.

Even though the economy is growing again and many analysts believe the recession is over, unemployment is still rising and remains at a 26-year high of more than 10 percent.

Richard Hoyt, a caterer in New York City, said many people are hesitant to book an event or have decided to go with a less lavish celebration such as a cocktail party instead of a full dinner.

“A lot of people are doing things last minute and also on a tighter budget,” he said.

Keeping costs down is paramount. At a recent benefit Hoyt catered there was a discussion about whether guests really needed a fork and knife for the salad course or could make do with just a fork.

Hoyt, who’s been in business since 1991, said the tone is similar to what he has seen in past recessions.

“Nobody wants to appear ostentatious,” he said. “Everybody wants to feel as though they’re being frugal.”

Some companies are wary of even saying whether they are having a holiday party.

Citigroup, which has received $25 billion in government aid, declined comment. JPMorgan Chase, which repaid $25 billion in government funds, also declined to comment.

A spokesman for Northern Trust did not return several calls. The bank, which has repaid $1.6 billion in government funds, drew the ire of lawmakers this year after hosting lavish employee events connected to its sponsorship of a golf tournament.

A spokeswoman for automaker Chrysler Group LLC said in an e-mail that the company “will continue to adhere to the conditions of its loan from the U.S. Treasury.” The company’s posted policy requires that expenses for things like holiday parties be reasonable and pre-approved by high-level executives.

Chrysler has received some $12 billion in government backing, some of which was wiped out as the company was forced into bankruptcy, emerging with Italian carmaker Fiat in control of its business.

Tom Wilkinson, a spokesman for General Motors, which also has received billions of dollars in  government aid, said it’s been years since the company held any kind of lavish holiday party. He said most departments will celebrate with low-key events like a potluck lunch in the conference room.

Wilkinson said GM is considering hosting a holiday reception for journalists, to give them a sneak peek at what’s ahead for the coming Detroit auto show.

Not just recessionary
The shift toward toned-down holiday celebrations is not only the result of the deep economic downturn and scrutiny over bailout funds, said Rhodes of WorldatWork.

Many companies have started to question whether a holiday party is the best way to boost employee morale, or whether such events could be uncomfortable for single people, remote workers or those who feel such celebrations conflict with their religious beliefs.

She said some employees might prefer to do a volunteer event or just get an afternoon off.

“Employers are moving away from one-size-fits-all type of recognition,” she said. “They don’t want to assume that everyone in the work force values a holiday party.”

Rhodes herself remembers that she once worked for a company that regularly hosted a lavish holiday party requiring employees to rent tuxes or buy gowns. Preparing to attend an event like that could be costly and inconvenient, although at the time it did make her proud to be part of the company, she said.

But times have changed.

“Now,” she said, “I would be embarrassed by that.”

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