While the economy is beginning to show signs of possible recovery, many companies will remain cautious when it comes to spending. Evidence of this continued frugality is seen in a new survey showing that fewer companies are planning 2009 holiday parties and, among those that are, nearly one in three is budgeting less for the event.

In its annual survey on holiday parties, outplacement consultancy Challenger, Gray & Christmas Inc. found that 62 percent of U.S. companies are planning holiday parties in 2009, down from 77 percent in 2008. In 2007, 90 percent of companies surveyed were planning holiday parties. The Challenger holiday party survey was conducted in October 2009 among approximately 100 HR executives in a wide variety of industries nationwide.

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Separately, a survey by consultancy Watson Wyatt found that only 37 percent of large U.S. employers plan to organize a holiday party in 2009, compared with 47 percent that organized one in 2008 and 70 percent in 2007. Two in five (41 percent) that are planning a holiday party have seen their budgets decrease, according to Watson Wyatt, whose survey was conducted in October 2009 and includes responses from 201 large U.S. employers.

“The strength of the recovery, or whether we are even in recovery, is still unclear,” commented John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in a statement. “Companies are postponing major investments, hiring initiatives, and many other expenses, including holiday parties. For companies that have recently announced layoffs or other significant cost-cutting measures, such as wage freezes, it would be difficult to justify, let alone get in the mood for, a holiday party,” he added.

Companies that are planning holiday parties are more likely to make them low profile, low-budget affairs. About 64 percent of companies are spending the same as in 2008 and 28.5 percent are spending less—10 percent to 20 percent less, on average—than they did a year ago, according to the Challenger survey. Among other findings:

• More than half of the employers holding parties are reportedly having it on a workday or near the end of a workday (57 percent).
• Nearly two-thirds are inviting employees only (65 percent).

Despite the focus on cost-containment, 70 percent of companies still plan to hold their functions at an off-site venue and 57 percent are planning to serve alcohol. However, only 36 percent of companies are using a caterer, event planner or other outside service, suggesting that more employers may be organizing smaller, departmental potluck events, in which attendees are asked to bring food and beverages.

Stephen Miller is an online editor/manager for SHRM.

For more information on the best practices for company holiday parties or more economical alternatives to a traditional party contact your Emplicity HR Consultant at 877.HR.MADEZ (476.2339) ext. 6