The correlation between company performance and the extravagance of Christmas celebrations is no secret. In 2008 we saw great market uncertainty and with that a huge reduction in expense budgets and ultimately reward come the festive season. A SmartCompany survey published in late 2008 suggested that more than 33% of organisations abandoned plans for a staff Christmas party last year, whilst those proceeding reduced costs by up to 50%. Clients generally got the rougher end of the stick with more than 90% of respondents not holding a client function last year.

As 2009 continues to unfold, we are gradually seeing confidence return to markets, but what does that mean for the Christmas function? Where do you draw the ethical line in the sand given the likelihood that staff cuts and aggressive cost cutting have been prominent during 2009?

So what's the big deal? It's just another work function. Or is it? Let's consider the hidden cost associated with a cancelled Christmas party. Firstly, for many people the Christmas function represents a reward, it's a time of the year when an organisation and its leaders say thank you for the hard work you have put in. Not offering this reward has the potential to impact on staff morale. And why wouldn't staff feel slightly cheated? In many cases the tougher market conditions have meant bunkering down and getting the job done, often with less resources and more budgetary restraints. Secondly, what message does it send to the industry when you cancel staff and client Christmas celebrations? Does this damage your branding?

So before you cancel your corporate function, carefully consider your options, discuss any potential impact on your workforce, and consider any branding implications and your client's perceptions. Be creative and realistic in your planning and communicate with your workforce. Ryan Gately Director Karen Gately suggests that communication is the key to employee engagement. If staff are made aware of the business priorities then the absence of the five star extravaganzas may become less of an issue. Karen suggests that employee reward can take many forms, ‘I have worked with clients to implement reward initiatives ranging from simple thank-you programs, right through to Employee and Team of the year awards. In the current environment a heartfelt thank you from the CEO or relevant Directors at a company picnic, river cruise or BBQ and games day can be just as effective.'

So remember big or small, Christmas is the time for giving. And as with all effective leadership, honest and timely communication may just help you along the way.