The Crunch That Stole Christmas

AS the annual crop of desktop evergreens and water cooler wreaths attest, Christmas permeates every branch of the workaday world. In this holiday season, however, office parties, business gifts, Christmas cards to customers and year end bonuses to employees are not as pervasive as in previous years. Caution about the economy, confusion over Phase 11, and a generally rising level of employee sophistication have combined to produce a crunch that is taking away those Christmas extras.

The policy on bonuses has not been fully defined by the Pay Board in Washington. In general, companies can grant the same size bonuses as in previous years. If a firm paid little or no bonus last year because business was bad, but had a record in prior years of giving a bonus, this year's payout would probably be permitted. Companies that seek to raise their bonuses are expected to adhere to the board's 5.5% limit on overall pay increases. Thus, whatever a company adds to its bonuses, it will have to subtract from its increases in wages and benefits in order to stay within the 5.5% limit.

In many firms, holiday bonuses are shrinking or disappearing altogether. Wall Street's brokerages, for example, are not all the generous year end Santas they were during the peaks of the mid 1960s. At the New York Stock Exchange itself, the 1969 bonus of nearly 10% of salary for almost all the exchange's 3,000 employees is down to 71% for the second year in a row.

Some companies that still make holiday payouts, like Los Angeles' Security Pacific National Bank, are turning to employee profit-sharing plans as a more rational way to spread good fortune around. But 1971 was not a particularly cheery profit year, and workers whose bonuses are tied to corporate earnings may find it a cruel Yule instead. At General Motors the bonus schedule has been redrawn to exclude employees earning less than $24,000, instead of $15,000 as in 1969. Last year, no bonuses were paid because of the lengthy United Auto Workers strike. One survey of 524 New York City area firms showed that not quite 37% will grant holiday payments this year v. more than 39% last year.

Taking Turkey. Companies are also de-escalating the scale of their Christmas parties. A Chicago brokerage house spent $40,000 last year on a sit-down dinner for all staff members and their wives at the plush Hotel Ambassador East. This year the firm is settling for a buffet in a Loop restaurant, omitting wives and limiting the total outlay to $1,000. At Swank, Inc., a Massachusetts jewelry manufacturer, the 3,200 employees voted to skip their usual Christmas party and floor show and to accept 3,200 turkeys instead. The chiefs of John Hancock Mutual Life Insurance Co. are encouraging their various departments to have Christmas parties for the residents of hospitals, orphanages and homes for the aged rather than for themselves. Pacific Southwest Airlines is giving a party for 1,500 persons in one of its San Diego hangars, but is asking that each guest bring a gift to be distributed in veterans' hospitals. Explains Lloyd Leipzig at United Artists Corp. in Los Angeles: "If you announced a big Christmas party, ennui would set in." Says Robert E. Sibson, president of Sibson & Co. Inc., a Princeton, N.J., management consulting firm: "Employees would rather have the company spend money on something else, like putting it in their salaries."

Companies are not only spending less on their employees, but are extending the same parsimony to customers and suppliers. One division of a Chicago cosmetics manufacturing firm used to give $40 and $50 pillows covered with the skins of tigers, zebras and foxes; this year it has switched to $15 lambskin rugs and chopped its gift list in half. A number of firms have decided that it is just as bad to receive as to give. Massachusetts based King's Department Stores has mailed letters to 7,000 suppliers asking that no gifts be offered to King employees. Macy's made a similar plea in an advertisement last month in Women's Wear Daily. Corporate gift giving nationwide is expected to decline about 2% from last year's $295 million, the first year to year decline in a decade.

Liquor is still the king of business gifts, but dozen bottle cases have been replaced by gift packaged single bottles. The same moderation seems to be spreading to the old habit of sending Christmas cards to customers and coworkers. Not surprisingly, Lockheed Aircraft Corp. will send no cards this year. Ogilvy & Mather, the advertising agency, is not distributing employee address lists within the company. Chairman Jock Elliott figures that if everyone in the agency's 755 employee Manhattan office sent every co-worker a 250 Christmas card (plus 80 postage), "we would spend $187,859.10 saying 'Season's Greetings' to each other."

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