This is the dawning of the age of austerity as the Coalition urges us to batten down the hatches, don the sackcloth and ashes, and face the cold reality of cutbacks, cost-cutting and economising. The outlook for this year is tough for many of us, not least for small businesses, students, and anyone dependent on the public sector. Even the TV chefs have caught the mood, doing programmes on how to use up leftovers or feed a family for a fiver. It's the Dunkirk spirit all over again. We will be knitting our own shoes soon.
But at least we can look forward to a royal wedding. The Palace is talking of a national celebration in keeping with the times, not too ostentatious or extravagant, but something to take people's minds off the ever-present deficit for which we must all pay. In these hard times, even William and Kate will have to be circumspect in their spending on their Big Day. But I suppose you can't skimp too much when you have to fill Westminster Abbey with heads of state and world leaders, as well as the rellies and friends.
It's true that a good party can lift the mood, bring people together and be life-enhancing. With the right approach a party can also be good for business. People are more likely to do business with people they like and a party can be a good place to make new contacts and improve existing ones. It is surprising, therefore, how some companies can get it so badly wrong. Over the years I have been to lots of company parties, sometimes out of obligation, sometimes out of curiosity and often because I know it is going to be fun.
Sometimes, however, it can be deadly. Just before Christmas, I went to the fifth birthday celebration of an international company. It was held in a lovely location, no expense had been spared on flowers, music or food and as I walked up the steps I felt the usual hint of excitement about the evening ahead. That was until I walked into a room of 250 men. Grey suits all around. There was, literally, no woman visible who was not carrying a tray of drinks or food. I found my host and pointed this out to him. He had not noticed this glaring fact and we then toured the room looking for some other female guests. We found five in total, clustered together and mostly ignored by the men who were deep in 'mine's bigger than yours' conversations about deals or football. Shortly afterwards, I made my excuses and left. I would be surprised if this company celebrates its 10th birthday unless it wakes up to the fact that the world of business in the 21st century is full of dynamic, interesting women who tend to be better conversationalists and guests than the boorish blokes at this party.
The contrast with the wonderful Thanksgiving lunch, given by former US ambassador to the UK, Phil Lader, on behalf of Morgan Stanley, could not be greater. This is an invitation anyone would be delighted to receive. So popular is this event that he holds three of them. Greeted personally at the door, you are made to feel like a welcomed friend. The food is a delicious selection of American specialities, ranging from black-eyed peas to pumpkin pie, but the best thing about these parties is the blend of people. With skill and charm, Phil Lader mixes academics, bishops, broadcasters and even the occasional supermodel, with business leaders, bankers and politicians. Speeches are few but the conversations sparkle, ranging far and wide over many topics. Everyone leaves feeling good about their hosts, their fellow guests and, above all, about themselves. No doubt Morgan Stanley reaps benefits many times in excess of the cost.
And that is the crunch issue with all corporate entertaining, especially in these belt-tightening times. To put it crudely, is it worth it? Of course people like to be entertained but does an evening at the Chelsea Flower Show, definitely the most-coveted invitation among the corporate wives, bring in a return? Or maybe a box at the races, or a round or two on a classic golf course? One CFO I asked about this had a very hard-nosed attitude. His rule of thumb was an expected £5,000 of business for every £1,000 of expenditure on entertainment. Put in such blunt terms it begins to sound almost corrupt. Certainly the new Bribery Act, which comes into force in April, has had corporate legal departments scrambling to advise their marketing colleagues just how far they can go in entertaining prospective customers. In negotiating this potential minefield, companies will have to think carefully about organising lavish events that could be interpreted as bribes.
As a result, some large businesses have decided to sponsor charitable events as a means of entertaining clients and ticking the corporate social responsibility box at the same time. Among the most extravagant Christmas parties of the recent festive season were those given in the name of charities, with companies taking tables at between £10,000 and £50,000 a time and inviting clients and customers. The main purpose of the evening is charitable fund-raising of course but there is no doubt that a good deal of business is done at the same time.
Austerity measures, the Bribery Act and budgetary restraint notwithstanding, corporate hospitality will continue to be a feature of the business of doing business in 2011. It is likely to be more restrained and discreet and the commercial motive less overt. A party to thank will always be more acceptable than one to ask.
- Baroness Kingsmill CBE has been a non-executive director of various private and public boards. She is a non-executive director of British Airways and Korn/Ferry International.