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Sep 16 2020

 

A NEW APPROACH TO BUDGET SEASON

We don’t need to suffer yet another loss.

UNDER A NORMAL YEAR, the fall budget season is never pleasant.  Each department-head has to justify their expenses or be told how much to cut.  This year, most companies saw their 2020 budget blown apart by having to shut down some or all of their operations in response to COVID-19.  Many of us are coming back from a shortened vacation, having just figured out how to get their kids back into some sort of school to be met with 2021 budget-planning.  Oh, joy!

I feel for the CFO’s, controllers, and finance directors who will be the grim reapers to operations managers and vice presidents.

If we approach the 2021 budgeting the same way we did in past years we will have missed out on an important opportunity that is vital no matter what the condition of our financial health:  Discussions about finance should be about mission and sensitivity to emotions. 

Here are some suggestions:

  • Center budget discussions around the mission. How can we best accomplish our mission given our resources? What are the priorities?
  • Empathize with people who will lose a pet project or have to lay off employees,
  • For the finance person, ask the manager to develop their ultimate wish-list-budget. Then, ask them to break down this list into three sections: High, medium, and low priority. Propose their wish list budget becomes a three-year endeavor.

Budgeting often involves cutting. And when we cut, we lose something we value.  Be empathetic, keep the conversation focused on the mission. Be one part finance manager and one part therapist.

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If you cannot control your emotions you cannot control your money.”

 – Warren Buffet

 

 

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