Small businesses calling off Christmas

By Deborah L. Cohen

CHICAGO | Wed Nov 24, 2010 2:29pm EST

(Reuters) - Jim DiMezza is no Scrooge, but this year he decided to forego the annual Christmas party at his engineering and construction business.

"It had a negative effect," said DiMezza, owner of Philadelphia-based company Indoor Quality Solutions Engineering, referring to last year's festivities that came on the heels of layoffs that have reduced his staff to 14, from a peak of 90 in 2008. "It wasn't like it was before."

He was put off by workers' response at last year's modest restaurant gathering, which was downsized due to the recession from prior hotel galas that included fancy menus, clients and suppliers - even a hired comedian one year. So despite modest improvement in the economy, he decided not to risk a repeat.

DiMezza is representative of a growing number of businesses choosing not to celebrate the holidays this year, according to a survey by Battalia Winston Amrop, a headhunting firm that annually polls a cross-section of companies about their plans.

BLUE CHRISTMAS

"The country is not in a partying mood," said Dale Winston, Battalia's CEO. "It's not necessarily because of budgets, but because of the message it sends."

The 2010 holiday season represents the worst slump since the firm began polling 22 years ago, she said. Of 103 leading businesses queried, those holding a celebration of any kind fell to 79 percent, down from 81 percent both last year and the year before, during the height of the economic recession.

Over one-fourth of companies hosting parties said their events this year will be more modest; that comes on the heels of nearly half that cut budgets in 2009. The majority will keep spending the same as last year.

"The only reason that not as many downsized their parties this year was if they downsized more, they wouldn't be having anything," said Winston, noting a shift away from events intended to woo clients toward simpler, employee-only gatherings. "You can't downsize any further."

Those companies that do deck their halls this year are doing so moderately, weighing the signals their events send about business priorities as much as impact on the bottom line, according to providers contracted to put events together.

"With many businesses asking employees to make sacrifices, forego raises and bonuses, even the appearance of a lavish affair projects the wrong message," said Greg Jenkins, owner of Long Beach, California-based Bravo Partner Productions, which has coordinated holiday parties and other events for companies large and small for 25 years.

"A lot of it has to do with perception," said Jenkins, noting that some companies are making a conscious effort to tie their parties to some form of charitable giving. "The last thing you want to do is spend money on caviar and champagne."

Jenkins, himself a small businessman with just five full-time employees, keeps his own year-end celebrations low key with a simple lunch out at a restaurant or a small gathering at his home with light appetizers.