A cheap and cheerful Christmas may be the best many employers can afford to offer their staff this year, says Sarah Coles
Christmas is traditionally a time for overindulging on food and letting out the waistband. Un- fortunately, this year there will be an unseasonable amount of belt-tightening as the economic slowdown bites, and employers that have traditionally displayed their generosity during the yuletide season are faced with the difficult decision of whether to foot a bill they can ill-afford or cancel Christmas. But there is a third option – a cheap and cheerful festive season.
Employers that reward staff with seasonal gifts will be pleased to know there are plenty of affordable options. The tradition of giving employees a turkey or bottle of wine at Christmas has evolved so that organisations can now offer their staff the opportunity to choose from a range of gifts which can be selected to fit a specific price point and then be featured in employer-branded catalogues.
Gemma Barlow, corporate marketing executive at provider Cottrills, explains: “We can put together 20 or 30 gifts and brand a catalogue up for an organisation, allowing choice and for employees to feel their employer has gone to some lengths for them. Catalogues include old favourites such as wines and spirits but also electrical goods and gadgets. This doesn’t have to be expensive, as gifts start at £25.”
With corporate social responsibility increasing in importance for organisations, charity gifts are becoming more popular and again can be a cut-price option. Staff may be given a voucher or lump sum to spend through a charity gift website or catalogue. Present Aid from Christian Aid offers a variety of gifts for less than £20 including school shoes and a disaster kit.
Alternatively, employers could consider offering their staff experiences. These can range from spa treats provided in the office for as little as £10 to action-packed days out such as group ice-skating or skiing trips. At the cheap and cheerful end of the spectrum, employers can simply offer a glass of bubbly or a mince pie to staff at the end of the Christmas run-up.
The value of these gestures is less important than the fact the employer is taking the time to thank staff for their work during the year.
In fact, employers can provide some tokens of appreciation at virtually no cost. For example, they could offer a half-day off for Christmas shopping or New Year recovery. Of course, this will have implications for the business but it may suit the organisation if time off is scheduled for quiet periods. Alternatively, employers could increase staff discounts on their own products for a limited period, so helping employees to pay for presents or food for the party season.
However, when it comes to showing appreciation for employees’ hard work at the end of the year, vouchers are always an attractive option. Voucher companies offer branded festive vouchers for anything from the super- market shop to travel, gifts, cinema trips and experience days. Providers say these allow employees to tailor what they receive to match their needs. They also point out that vouchers are flexible enough to appeal to employees who don’t celebrate Christmas.
Tax issues David Fleming, corporate account manager at Kingfisher Gift Vouchers, says the logistics of offering vouchers is easy. “And they are a cheaper option than giving out products you have to worry about storing, dis- tributing and insuring,” he adds.
Employers can use their negotiating power to extract discounts where they are buying vouchers in bulk.
“In this market, the client holds a lot of power so they may be able to negotiate a big discount on vouchers, especially if they are buying in large numbers. That way, they cut the cost without reducing value to the end user. Alternatively, we could take care of the administration of the scheme and send out vouchers free of charge,” says Fleming.
Kuljit Kaur, head of business development at P&MM, says discounts are increasingly common. “Different parts of an organisation may previously have bought vouchers for different purposes but if they pool their efforts they can get better discounts. Employees still get a perceived value of, say, £10 but employers pay just £9 or £8. This development has been led by procurement departments – we are seeing more involvement from them.”
The possibility of negotiating a discount is helping to ensure that vouchers remain an attractive option for employers in these difficult times. Andy Philpott, marketing director of Capital Incentives and Motivation, points out: “Organisations make a commercial decision on what they can afford but we haven’t seen any fall in demand due to the economic downturn. Employers can offer vouchers instead of cash – after all, you can’t get a discount on cash.”
Whatever token of reward employers choose to offer their staff, they should bear in mind that technically even cheap gifts and vouchers are subject to tax as a benefit in kind, although HM Revenue & Customs has been known to waive this for small gifts.
Some organisations have letters from their local tax offices granting exclusions but this is at the discretion of each office. So unless organisations take advice, their staff could be faced with unexpected tax bills.
However, there is an official tax exemption in the case of an annual party for all employees provided the cost of the event does not exceed £150 per head.
The cost of Christmas parties are already coming under scrutiny from some employers, says Kaur.
“Some organisations are going ahead with parties, but are asking people to buy tickets, thereby footing at least some of the bill. Others are introducing tickets for partners while some will use tricks to keep numbers down such as holding parties in inaccessible places. Or they may officially cut numbers, saying they are just having a party for senior people or high performers. Alternatively, they could offer something fundamentally cheaper such as a buffet, or lunch event,” says P&MM’s Kaur. Employers may also opt for a shared party with other businesses whereby the venue and entertainment may be spectacular, but the cost is split.
Another common solution is to move the party date. “This year will see a huge decline in Christmas parties. Many parties are being deferred until March or April when companies can roll them into annual company meetings. It’s cheaper then, and people also think if they can make it through December things will be better. We have lots of bookings for next year,” says Kaur.
Cutting costs, whether in relation to parties or presents, is never going to be popular with employees. David Conroy, head of reward at Mercer, says employers should think twice about whether the cost saving is worth the disruption. “If it is a small amount, a company may just keep paying because the disincentive is not worth the saving.”
Conroy says that if organisations decide to go ahead with any cost-saving measures communication is key. “Some employers may encourage staff to take a wider view. If they are really up against it, they could be honest and say ‘redundancy is our last resort so we are looking at other areas to cut costs such as the Christmas bonus or party’. This is positive because for some firms, redundancy is the first resort.”
But some companies may seek to exploit the economic situation.
“Some organisations will take advantage of the credit crunch to stop paying for a Christmas reward or bonus. If they have been looking to cut it for a while, this could be their excuse,” adds Conroy.
Once employers decide to go through the pain of cutting a perk, it is important for them to ensure that the replacement is sustainable. “If you cut back without consideration and don’t communicate why you’re doing it, you could be spending money for a negative effect. Some 15 years ago [at a former employer] I remember getting a Fortnum & Mason wicker hamper, the next year it was a wooden hamper and the next a cardboard one until it became a couple of bottles of wine, at which point they obviously thought ‘let’s forget it’,” says Conroy.
Case Study: NHS trust says it with vouchers
When the Liverpool Women’s NHS Financial Trust achieved a high performance rating for its services in a report published last year by the Healthcare Commission, the trust’s board of directors decided to show staff their appreciation by providing them with a Christmas gift.
The board recognised that the trust’s outstanding performance was largely the result of employees going the extra mile for patients.
Kim Doherty, director of human resources, says: “We wanted to ensure that staff received something tangible rather than a cash award for their efforts. In the past, we have found that when we hand out cash awards they are absorbed into household budgets and are not remembered.” So the trust decided to give every employee a £50 Love2shop voucher, at a total cost of £85,000.
Doherty says the £50 voucher was selected because the variety of shops that would accept it meant staff could “buy gifts for themselves or use the reward to buy Christmas presents for others”.
Top 10 employee reward choices
1 Sony portable navigation device
2 Nikon digital camera (bottom of the range)
3 Philips jug kettle
4 Bosch universal accessory set (drill bits)
5 Bosch pressure washer
6 Royal Scot wine glasses
7 Nikon digital camera (mid-range)
8 Bosch cordless hammer drill
9 Philips sandwich toaster
10 Bosch trimmer (garden)