Workplace: What Should The Budget Do?

I interviewed Roland Begg for more than ten years ago. An interviewer's question was to ask the "zero benchmark budget" what happened.

Although I had already obtained a Ph.D. degree, I had not learned this theory.

I can't answer it, I can only guess its meaning.

Fortunately, my later supervisor felt that it was more important to understand China than to understand the new theory of budgeting, otherwise I would have no connection with Roland Begg and management consulting.

If so, my later career may be totally different now.

Life is really full of chance.

By the end of the year, it was time to make the budget.

The headache for bosses and employees is: what should be the target next year? How much is the right growth? How can we make the budget reasonable?

Some enterprises make budgets from the bottom up, and the boss makes the managers and staff of each department decide their own plans for next year.

The idea is that if the employees figure out the tasks of the next year, this goal should be achieved.

The boss doesn't have to pat his head on his own.

Some enterprises make budgets from the top to the bottom. According to their understanding of the market and customers, the boss puts forward high goals according to his own wishes. What employees want to do is not to discuss whether this goal can be achieved, but how to achieve this goal.

Usually employees do not approve of the goals set by the boss, but because of their awe of the boss, they even passively accept this goal even if they can not do it.

The common result of these two approaches is to let enterprises lose their growth opportunities.

The first problem is obvious.

Employees and departmental managers usually think of the future from the past, without considering that the future should be essentially different from the past.

Their logic is usually: I have 100 customers this year, 20 more customers next year, minus 10 customers to lose next year, and my 10% growth is fixed.

They seldom consider more but more fundamental variables and conditions, for example, what will happen when new products come out? How about 30% increase in manpower? What will happen if we change the sales mode? What will happen to the product price increase? What will happen if we increase sales channels? What will happen if we increase our office?

What about reclassification? Growth in other ways is not always their case.

Inside.

But according to past practice, calculating the future must be a conservative and erroneous goal.

The real future lies in changing past practices.

The question of "zero baseline budget" to be answered in my interview is to solve this problem.

Zero benchmarks mean that when budgeting is not simply mapping the past figures to the future, instead of pushing the past down, asking ourselves from scratch, if there are such or such conditions (products, manpower, patterns, etc.), what goals can we achieve?

The second approach is not obvious.

The logic of many bosses is: I know that it is unrealistic to ask for 100% growth, but if I ask for 100%, I will achieve 50% at last, which is much better than the 20% proposed by employees.

But the fact is that the boss can not only get 50% of the growth he wants, but even 20% of what he could have achieved.

I have found this fact for many years in many clients.

The boss has ignored this.

The most important link is to let everyone in the budget trust the budget and understand the logic behind the budget.

The budget that the boss pats his head does not recognize, and no one will seriously carry it out.

The goal is not a goal, but a joke.

Usually even the boss does not believe in such a goal. He will not configure the corresponding resources according to this goal, such as increasing manpower or other inputs.

Without input, the budget goal is simply impossible to achieve.

A good budget requires enterprises to complete several cycles from top to bottom and from bottom to top.

Behind the cycle is a serious discussion of the company's future.

Not only is the boss's opinion important, but employees' views are equally important.

In the process of discussing and even arguing, the boss's subjective idea is corrected, and the employee's limitation is also broken by the boss's advanced thinking. The final result is a feasible budget, and it is also a budget which is accepted to the maximum extent by all people.

It is feasible and acceptable to achieve such goals.