It’s Budget Season! Let the Waste of Time and Money Begin

“{The corporate budgeting process} sucks the energy, time, fun, and big dreams out of an organization. It hides opportunity and stunts growth. It brings out the most unproductive behaviors in an organization, from sandbagging to settling for mediocrity.”-Jack Welch, as stated in his book Winning

With the publication of OOPS! 13 Management Practices that Waste Time & Money (and what to do instead), I have presented the case for eliminating or revising many organizational processes that are not behaviorally sound and consequently are ineffective, or at least inefficient. High on my list is the budget process. While I have been challenged on more than one of my 13, I have received none from my suggestion that the budget process is a big waste of time and money since almost every supervisor and middle manager agrees. It is a major usurper of management time and a major source of punishment during the building of the budget and throughout the year, as managers are frequently second-guessed, questioned about minor expenditures and held accountable for budget variances over which they have no control. Russ Banham, writing for CFO Magazine, quotes Steve Player, program director at the Beyond Budgeting Round Table, as suggesting that organizations should do away with budgets all together and he has more than a few takers. However, I think the process is more of a problem than the budget itself. For example, what behavior is really being reinforced when managers prepare budgets? Is it “Ask for more than you need, and then make sure you spend it?” Let’s face it, managers learn the budget game quickly or they don’t survive. Ask for more than you need in the hope that you will get just what you need. It is a game that all supervisors and managers play.

What is strange is that everybody knows what is happening but continues to play anyway. Budgets are necessary for nothing more than providing a tracking and goal-setting mechanism. People like to know how they are doing relative to expectations. However, the gamesmanship and misaligned consequences are definitely unproductive. To avoid this all you need to do is pinpoint the behaviors and business results that are valuable to the organization and align them with the proper consequences.

Posted by Aubrey Daniels, Ph.D.

Aubrey is a thought leader and expert on management, leadership, safety and workplace issues. For the past 40 years, he has been dedicated to helping people and organizations apply the laws of human behavior to optimize performance.