The management role of budgeting

“It's clearly a budget. It's got a lot of numbers in it.”- George W. Bush

Although humorous, for most managers, this quote unfortunately has more elements of truth than we would care to acknowledge. When it comes to budgets, most managers are content with a Laissez-faire style of management. Why is there a disconnect in this role of management? Is it that frontline managers feel helpless and prefer to focus on the roles that feel they can control or influence?

Most front line managers often have very little input in the organizations budget process. It is usually passed down to the frontline from upper management. How often are frontline managers asked to submit even a raw calculation anticipated expenses? I would dare say much less often than they are asked to set lofty performance goals for their team.

Budgets need to be created and based in realistic expectations for the organization. It is easy to set lofty goals of performance in planning roles; however, it is much more difficult when you start budgeting staffing, equipment and financial resources. This may say more about our human nature than anything else. I have to admit, I am guilty of planning projects focusing more on the positive benefits and failing to account for the cost. I have found that I often overestimate my abilities and underestimate my resources. Knowing this about myself, reminds me to pay close attention to this weakness.
While budgeting and accounting does not have to be a managers forte, a basic understanding of your organizations budget and healthy respect for the role of budgeting, will help provide solid foundations for other roles of management. Budgeting is not all about finances. Consider all the staffing, equipment, and more importantly, time. All of these factors need to be addressed in the budgeting role.
The best place for the budget to be addressed and discussed is during planning sessions. When an idea or goal presents itself, it should be weighed in context of cost of reaching that goal. Nothing in business is free...even when you think it is. Every achievement comes at a cost to someone or department. This might be either a personal sacrifice of employees or a financial one for the company. Either way, knowing that cost up front will help prepare you during leadership and control roles of management and allow you to mitigate any obstacles to success.

Even if front line managers are not invited to participate in the behind closed door aspects, no manager should take the budgeting process and its impact on your ability to do your job lightly. In order for managers to effectively execute all of the fundamental roles of management, a strong appreciation for the budgeting process will be critical. Regardless of the management style that a manager functions best in, active engagement in the budgeting process will provide a solid foundation.

The management role of planning

Failure to plan on your part does NOT constitute an emergency on my part.
by: Eric Stokley

Someone close to me once said, regarding vacation planning, “if you don’t plan to do something, you will never do it.” I scoffed, in my usual way hoping to defend my beliefs about spontaneity and impulse. I have come to learn that thru effective and early planning, I could find myself enjoying much more in life and at less cost and disruption to those who rely on me. If you plan, and share your plan, then others will plan with you.

If you ask managers which of the four roles are most important, you will be given any possible combination of answers. More often than not, the answer will be driven by the implied power that each role provides a manager and the relationship they have in the organization. A charismatic visionary manager may say leadership is the most important role. The accounting manager may say, budgeting, the compliance manager would say control is the most important role of management. As with most things in life, the most effective managers integrate all of these roles...usually in various degrees depending on the challenges or dynamics of the organization.

Although, I have chosen to address each role in a logical order, it is important to remember that the four fundamental roles of management actually interlock to support the other roles of management. For example, organizational control relies on strong leadership, and leadership comes from effective planning and budgeting. It is this integrated characteristic that ultimately defines an effective manager.

Despite the effectiveness of planning, its’ role is often overlooked. The goal of planning should be one of discovery and mitigation and transcends all other roles. The gathering of information, identifying obstacles and exploring solutions will help you indentify processes affected, staffing and equipment needs that will be addressed in budgeting, and organizational behavioral issues that will need to be addressed by leadership. As you can see, the role of planning should be pivotal in your management process.

Although there are several methods of planning, the method you choose will largely depend on what is being planned. Each method has advantages and disadvantages that need to be considered. Regardless of your preferred method, it is important to remember the key point to planning, discovery and mitigation.

Don't underestimate the impact of your decisions.
What seems like an insignificant splash to you, can become a tsunami after it hits the water. For this reason, during planning sessions, it is vital to consider input from several levels of the organization. This includes superiors and subordinates.

Superiors will provide the implied authority and helping connect your objectives to the overall organizational objectives. Consulting them periodically and keeping them informed will prove invaluable.

Subordinates on the other hand may actually provide you with your most useful information. However, you should prepare yourself ahead of time. They may not be able to communicate effectively what you need to hear. As a manager, you should work to encourage and reward input regardless of the crude nature it sometimes can take. This is why you’re a manager and front-line subordinates learn from and model your example.

Embrace Criticism
Many people find bald, unvarnished truths so disturbing, they prefer to ram their heads in the sand and start dreaming at the first sign of reality. The more criticism mounts up, the harder they'll ignore it. As a manager in the passion of planning, and a quest for success, we often push aside solid criticism until it comes back around and kicks you and your project, in the backside…and usually at a significant cost. Remember, "that which does not kill you, makes you stronger."

Now this does not mean that you should go out and find everyone who might criticize you and include them in your planning sessions. A little criticism is healthy, but to much can paralyze you, and your project. The key here is to include people who not only criticize, but also provide solutions with their criticisms. A criticism without a solution is just a gripe.

Remember that criticism is simply a chance to solve a problem, before it can become problem. Try to keep an open mind and keep everyone focused on the vision and goal. If you are caught up defending your position, then you are not building a team.

The process of planning should be a recurring theme in your management style. Regardless of how effective your planning has been, an effective organization is evolving, growing, and changing. Revisiting the planning role will constantly help you make more informed decisions that revolve around the other fundamental roles of management.

Back to Fundamental Roles of Management

During periods of rapid growth and development it is often easy for management roles to become segmented and managers begin to take on characteristics of specialization. This is a natural tendency for managers as teams began to grow because it is easier to delicate, or to a larger degree, ignore roles they are less comfortable with. It is during this time, that managers should be careful, not to let roles they worked so hard to develop, wither away on the vine. Most often during prosperous times, roles of budgeting and control are set aside and planning and leadership take on larger life as we see opportunities for our visions to be realized.

As we all know, the one constant that we can rely on is that of change. So as the prospect of growth brings resources to you, during periods of contraction, the reverse is also true. To further aggravate the situation, it is human behavior during hard times to start focusing on budgeting and control issues and neglect characteristics of effective planning and the leadership development regardless of how skilled you are in these areas. This can be most readily seen in crisis management. Ironically, this can do more harm than good.

Over the next several post, I would like to discuss each of the four fundamental roles of management separately and then review how and why I feel that managers can improve performance by nurturing all of these roles consistently and how the individual roles actually support one another to form what we have come to recognize as an effective manager.

Join in the conversation and share your own personal challenges or success as you have exercised each of these roles with your team.

Welcome!

“Thinking drives behavior. Behavior drives results. So if you want to change the results – start by changing the thinking of leaders and managers throughout the organization.”

“The H Factor in Management” is designed to address the shifting paradigm of management. Studies have revolved around quantifying the intangible assets and measuring the financial impact of behavior in business. However, there is a strong need for managers to be able to do more than recognition and measurement. Managers should be developing tools and abilities to manage these “human” characteristics and manage them in a way to improve performance, promote a more satisfied workforce and reduce the financial impact of high turnover and the departure of key positions. Simply stated; managers should be able to understand human behavior and learn how to influence human behavior in a positive way.
This discussion is designed to introduce a new concept in management that is based on behavioral analysis on an individual level to identify antecedents and consequences to actions in the workplace. With this analysis managers could influence performance and /or policy changes that would impact the employee’s performance with positive results.
Feel free to join our discussion and share your experiences or challenges.