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With small businesses wearing tighter belts, it's more important than ever to get the most out of their annual holiday party. Here are four tips to help host a celebration that is frugal, safe and fun.

Form a social committee

Nobody wants to waste money on a party that leaves employees disappointed, or not showing up at all. Maximize your employees' fun factor by enlisting staff members to help out, said Fiorella Callocchia, president of HR Impact in Mississauga, Ont.

"I know so many business owners that are disappointed because they don't feel staff are grateful for what they do, and this is money out of their pocket," said Ms. Callocchia. "Put together a social committee who's going to help you find out what people want -- what time, where to have it, guests or no guests, day or night."

Be creative with the venue

If you're looking to lower costs, don't be afraid to do something other than the once-traditional formal dinner out, said Christian Codrington, senior manager of operations for the British Columbia Human Resources Management Association.

"For smaller and medium-sized businesses, I've seen a party in the office, lunch in the day or perhaps an evening event at someone's house, where the CEO or one of the directors host a catered event or a short cocktail evening," he said.

Nix the open bar

Not only can flowing booze be expensive, but an open bar encourages overconsumption of alcohol, says Lauren Bernardi, a human resources lawyer and founder of Mississauga-based Bernardi Human Resource Law LLP. And that can lead to trouble.

"People's inhibitions are curtailed," she said.

Ms. Bernardi suggested taking the focus off drinking by hosting a lunchtime festivity, an alcohol-free event, or adding in other activities, like go-carting, live comedy or a cooking lesson to put the focus elsewhere.

"The other thing that is effective is bringing spouses," she said. "It totally changes the tone of the event."

Forewarned is forearmed

If you do decide to include alcohol in your party, make sure employees know it's not an excuse to run wild, Mr. Codrington said.

Send out a memo before the event, reminding employees to be responsible and letting them know parameters, such as whether a taxi chit will be provided, drink allotments, and what time the evening will end. "Raising awareness plus providing support for people to get home are two things organizations can do to help."

Make it a recognition opportunity

Holidays parties are great opportunities to give out fun awards or recognize employees' contributions, at a modest cost.

Mark Graham, president of Toronto promotional design agency Rightsleeve, does that at his company's event every year.

"We call it the 'Sleevies,' an opportunity for me to get up and give a gift and say something about each employee," he said. "I spend no more than five or ten bucks per person. It's me talking about their personalities or contribution, and it's always funny."

Give back to the community

One cost-effective alternative to a holiday party is to take part in a group charitable activity.

"In lieu of a party, you might spend an afternoon at a food bank, paint a community centre or 'adopt a family' [through a charitable organization] something I've seen that is quite popular these day," Mr. Codrington said.

It will cut your costs while providing a worthwhile service to your community and creating a valuable bonding experience for your team.

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