Employers Cut Back on Christmas Rewards

November 28 2006 - Preliminary findings from the Chartered Institute of Personnel and Development's (CIPD) annual Reward Management survey suggest that manufacturing firms are half as likely to provide a Christmas gift in 2006 and the number throwing a Christmas party has dropped from 71 per cent in 2005 to 60 per cent this year. However, public sector and voluntary sector organizations remain those least likely to provide a gift or throw a party at Christmas.

Charles Cotton, CIPD reward and employment conditions adviser, said:

"A combination of intense competitive pressure and higher non wage labour costs has squeezed profit margins, over the last year. This will have resulted in greater efforts to control costs causing modest increase in pay cuts and job losses. So less festive generosity this Christmas is likely to be symptomatic of such pressures, rather than indicating a more Scrooge like attitude just for the sake of it.

"Making cut backs might be necessary but if these are not communicated effectively to staff they could cause lack of motivation and poor performance, costing businesses more in the long-term."

The survey suggests that 64 per cent of employers meet most of the cost of a Christmas party. However, only 9 per cent now provide a Christmas gift such as a hamper or vouchers.

The survey highlights differences between various sectors. Christmas parties are likely to be provided by 83 per cent of private sector employers, 60 per cent of manufacturing and production firms, and 59 per cent of voluntary sector organizations. Only 23 per cent of public sector employers provide a party or lunch. Manufacturing and production companies are most likely to provide a gift (12 per cent) compared to only 10 per cent in the private sector, 7 per cent in the voluntary sector and none in the public sector.

Small private sector organizations remain more likely to mark Christmas, with four-fifths (82 per cent) of firms employing up to 49 staff paying for a party and 8 per cent providing a gift. The rates steadily decrease as the size of the organization increases. Only two-fifths (44 per cent) of firms employing over 5000 staff provide for a party and just 3 per cent give a gift.

Charles Cotton added:

"Research indicates that employees are attracted, retained and motivated by a whole variety of rewards and there is not one solution that will meet everyone's needs. In today's tight labour market it is becoming more and more important for organizations to be flexible in their approach to reward if they are to compete in the war for talent. Employers need to work with employees to find out what they want and then develop rewards that meet both the needs of the business and the workforce."

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