Our Budget Process Sucks Less Than Your Budget Process
By Jim Tighe on Thursday, September 8th, 2011
I’ve been at EWI for 4 full budgeting cycles (plus one partial) and each year we as a company have become better at the process. It’s inclusive, we have horse trading, we get buy-in at multiple levels, we utilize historical trends, external market data… (given another five minutes I could come up with a few more). Even our Board states emphatically (in the minutes to boot) that they really appreciate what a strong budgeting process we have implemented.
And with all that, it’s still a horribly painful and inefficient process.
To be fair, that is essentially to the word how I introduce it to our lucky group of managers and budget owners each year… “we have a really good process… and its very painful”.
I actually find myself laughing (or at least smirking) with the countless spam emails I get on how to make your budget process painless. If its actually a budget process, it can’t be painless. In my mind its parallel to the ab weight loss belt. Sure it only takes 10 minutes a day and (I would imagine) there is little pain involved, but I’m guessing you feel like an idiot wearing one and probably should have just invested the 20 extra minutes doing sit ups.
But I digress (sort of)… To be clear, you (or I) can definitely put together a perfectly good budget locked in an office for 2 hours. And arguably, it could very well be THE budget that a team would come up with over the course of six weeks. But that would not accomplish the three main goals of a budgeting process.
- First, information sharing and trade-off’s…
- Second, buy-in and alignment…
- Third, and maybe most important, the collaborative pain and suffering that helps build team cohesiveness.
In full disclosure, I just made up these 3 goals, but they are essentially all one in the same. As a Company, the budget team (and in turn the Associates) all understand what needs to be accomplished to fund the budget, the cost trade-off’s that were made (i.e. what’s going to get done this year and what is postponed), how much we’re spending in different areas, where the risks are, where we can make up ground, what capital we need, versus what capital we want…
These are all real decisions that were made by groups of people who understand our business and what our members expect from us… And they’re all painful decisions. But the fact that the stakeholders in the Company are making them makes us more accountable to each other, to our members, and to the success of EWI.
Next time I’ll give you a brief overview of the actual budget process we go through… or discuss my last teeth cleaning after claiming that “um… yeah… I floss a couple times a week.”