We like to believe that as the year winds down leaders work together to prudently manage what's left of their current budgets according to carefully considered strategic business needs viewing each dollar as a precious investment in the success of the firm. We would expect that unspent funds in one area would be preserved as profits or shifted to where they can make the business more profitable.
It's a nice concept, but the reality is year-end spending sprees are the norm. Every manager knows the game. "If you don't use it, you lose it." You have to fight for every inch and never relinquish any ground. Managers know that current policies and practices punish those who don't take care of themselves and reward those who do. As much as they hate it, it's the world they live in.
Ditto with budgeting for the upcoming year. Even though the budgeting process is discussed as if it's developed in the spirit of unity and collaboration, many see it as a contentious piñata party with everyone fighting over the treasure grabbing all they can for themselves. Unity and collaboration seem to get lost in the brawl over resources. The program dictates that the more resources you can muster, the more you can make yourself shine in the coming year. Try to play fair in the interest of the greater good and you get squashed.
If this feels anything like our experience with budgets, chances are the same kinds of problems are also popping up in other places. When people focus on the needs of their own departments without regard for the rest of the organization, their work-world experience is driven by competition rather than collaboration, and their allegiance turns to the success of themselves or their groups rather than the business. It shows up when one department refuses to release an employee who is transferring to a new department, managers fight over who gets priority use of a piece of equipment, and staff claim department ownership of company resources like copy machines and office space. Suddenly phrases like "our copier," "our machine," and "our conference room" become the vernacular as if the department owns the resources.
In a year with double digit unemployment due to widespread business retrenchment tactics, you would think leaders would be jumping all over this as an opportunity to squeeze out some strategic advantage. Yet, how many leaders do we see tackling this doozy of a problem?
The year-end spending and budgeting fiasco doesn't have to be a foregone conclusion, however. If leaders want to shift the mindset from the company as a league of competing teams to a single entity with a common purpose, they can start by ripping out the barriers to information about budgets and spending and help everyone understand how and why resources are generally allocated the way they are. Department managers and staff should be directed to play teacher and start educating each other on how their activities and use of resources support overarching goals.
But here's the tough part. In order to get people working together collaboratively, top level leaders will need to learn how to create forums where budgets and spending decisions can be deliberated among broader groups in a context of strategic needs. Leaders will also need to convincingly and publicly support collaborative and selfless decision making among themselves and between managers if they want to break tradition. Managers and staff have to know the top dog is pulling all stops to get everyone on the same page and that self-serving behaviors aren't part of the program.
Making these changes won't necessarily mean you'll soon be breaking out the song sheets for "United We Stand." But executives who step up to the challenge to obliterate the use it or lose it policy and get resources fully allocated for business needs will create more than a little harmony in the ranks. They'll create one of the few organizations with a budgeting and spending process that funds bottom line success.
Trying it on for fit:
Make a list of steps in your budgeting process including those at the department level. Whether you're an executive or manager, at each step of the process make a notation on how you might reduce barriers to information about the larger unit and other departments or work groups and make that step more inclusive. Identify how you might help managers or supervisors, and departments or work groups, work together in budgeting, allocating resources, and in other ways throughout the year to improve business performance, and facilitate them doing so. Consider preparing your managers, supervisors, and staff with knowledge and tools to be able to contribute in a more participative budgeting process next year. Challenge yourself and others to consistently answer these questions, "Would I spend or budget for this item/activity if I were a leader in another department (consider all departments) and know what we both know? Why or why not?"
Send an email and let me know what you learn from your experiences. I would love to hear from you!