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The big chill for holiday parties?

In the tech industry, holiday parties aren't getting canceled left and right in the face of cost-cutting, but things are certainly being done differently this year.

For a company that's cutting costs these days, the annual holiday party is an easy target. But there have been fewer cancellations in the tech industry than one might think.

True, eliminating an evening of eggnog and sugar cookies won't help an ailing balance sheet that much; in the current financial downturn, it has a lot to do with appearances, too. "It's the economy, definitely, but it's also a lot of public perception," said Celia Chen, a New York-based event planner who runs the blog Notes on a Party.

"People don't want to seem like they're being gratuitous or over-the-top when their colleagues have lost their jobs. It's more of a responsible way to run your company," she said.

On the other hand, there's a delicate balance between appearing prudent in the face of hard times, and keeping employee morale afloat. Many tech companies are in trouble, but for the most part they are not in meltdown mode like financial services companies or in a continued downward spiral like print media companies. Perhaps because of this, event planners say they haven't seen the same cancel-everything attitude when it comes to tech companies that they've seen in other industries.

"In the financial industry, their budgets are significantly lower than last year. In the tech world it really depends on the company," said Nate Valentine, a partner in the San Francisco events firm Vintage415. "You're seeing companies that are new, emerging companies that are doing events that haven't done events in the past, because they have the budget (now)."

Things are very different in traditional media companies, many of which have acquired tech start-ups and recently expanded their digital divisions--they're hurting, badly. Hearst Publications, which shuttered three magazines, canceled its party. So did Viacom, which is rumored to have layoffs coming before the end of the year. But many smaller media companies and tech start-ups have never had a large-scale holiday party, and probably aren't hiring high-end caterers or renting out big nightclubs for open bars.

The appearances factor comes into play here, too: employees of some smaller companies say they haven't even heard yet about whether the holiday party is on the books or not, indicating that a few executives are still vacillating on how appropriate it would be to throw a company party amid layoffs. "I haven't actually heard either way yet (about a cancellation)," said a representative from one San Francisco-based start-up that recently cut several dozen employees.

"I can't see us not having (a party)," said an employee of one New York-based blog company that also went through a fresh round of layoffs. "It'll suck, but we'll have it, I'm sure."

For larger companies, scaling back a holiday party can be particularly appearances-driven because there's a good chance they've already paid for much of it. "If you're a really big company, you're putting a deposit down on a Christmas party probably in September, if not August, because you have to accommodate a large group and it's been allocated in the budget for the year," Chen said.

There are signs of cost-consciousness everywhere: Valentine said that recently a group of several dozen Google employees in the Bay Area had arranged for an open bar at one of Vintage415's venues without actually booking the club. In New York, news outlet The Daily Beast reported that Google was renting less glitzy venues for its Gotham holiday parties. (Representatives from Google were not immediately available to confirm the report.)

"They'll still find a way to celebrate," Valentine commented. "It's just a different way to celebrate."

"It's very difficult to celebrate with your senior executives when you have to look your staff in the face and say, 'We just had to let half of you go.'"
--Celia Chen, event planner, Notes on a Party

Viacom, for example, canceled its companywide party as well as parties for big divisions like MTV Networks and Paramount. "All employees across the country are getting two extra vacation days in exchange," company spokesman Jeremy Zweig told CNET News.

One member of Viacom's MTV Networks said that he speculates individual divisions of companies may come up with their own smaller celebration plans. "I'm sure we'll have drinks somewhere, at some point," said the Viacom employee, "even if it's just my team."

But a bigger complication arises when it comes to companies that have traditionally invited clients, media, or analysts to holiday parties. Canceling a party to which non-employees, particularly non-employees with an indirect stake in the company, are invited, could skew perceptions about that company's health. Both Google and Facebook, for example, have already sent out the invitations to their holiday media parties, fairly low-key affairs at company headquarters where handfuls of bloggers and journalists show up to schmooze with executives.

That said, the image issues work in the other direction, too. Chen said that a new-media company might want to think twice before throwing a big holiday party where one of the goals is to get loyal advertisers nice and tipsy. "Advertisers, I think they want to know that the companies they're advertising in are fiscally responsible," she speculated. "I think advertising is taking a hit in its own light, so I think the general feeling is that we have to be respectful of what's happening with so many people being laid off. And people really admire companies that are trying to do the right thing."

In the end, it's a tough executive decision. Unlike, say, the financial services industry, there really is no clear-cut answer in the tech sector to the question of whether a holiday party should stay on, scale back, or get the ax altogether. But event planners agree: it's never a good idea to throw a party just to act like things are all right.

"It's very difficult to celebrate with your senior executives when you have to look your staff in the face and say, 'We just had to let half of you go,'" Chen said.