The battle over the budget – a counter-proposal

“It’s that time of the year again” – Hatice is shocked to realise how much of the current financial year’s budget is still open. As head of human resources, she had actually resolved to pay special attention to this this year! And then the Covid crisis again demanded much more attention than expected… “So, what now? Letting it lapse is not an option, and then we’ll get less of the cake next year!”

The reality in many companies today often looks exactly like this: the education budget lapses, while urgently needed expenses pile up elsewhere because the artificially set limit has already been reached and exhausted.

Common sense would at least allow for reallocation, since everything actually comes from the same source – but even that is often prevented by regulations, statutes and trench warfare. They prefer to look at the data of the last few years, formulate forecasts, guess at trends… and then generously demand 10 per cent more for the annual planning than they probably need – it’s better to go into the negotiations with overdrive, you never know!

And yes, for many who have been at home in the agile world for a long time, from Gerhard Wohland to beyondbudgeting, what comes next is just tired repetition – and yet we still encounter it far too often not to put our finger in the wound once again.

Budget planning, the sacred cow

Budget planning. One of the last sacred cows of the many “surviving control processes” according to Wohland and yet one of the most beloved, hottest power instruments in the company. Budget rounds are excellently suited for the perfect staging of hierarchies: how high up do the big sums go? Who has how much to say, who can sell themselves well, who has the best connections, who gets the biggest piece of the pie?

And in the end, for the person who ultimately gets to decide, it’s just a consistent extension of the hierarchical pecking order: if you place particular value on your employees competing with each other and separating themselves from each other, then the budget allocation for different areas, teams, purposes and departments is of course a very welcome instrument for this… oh, you don’t want that at all? Then let’s take another detailed look at what is actually happening here in classic organisations.

Instead of really taking over leadership, in these cases it is administered, i.e. managed. With the help of the distribution of a certain amount of money to different heads and responsibilities, the respective performance of the individual actors is compared, weighed, directed and re-evaluated – often in connection with measurable goals.

By distributing the available resources in this way, the position of power shows that it is still in control – and thus has the planning authority over the concrete goals and projects of the coming year.

Alone: In a dynamic environment, you cannot know at the beginning of the year what money is needed for what, which investment will make sense later, and what will still be on it.

So “Stop!” has to be said now at the latest: “Actually, we don’t want to work like this any more either.”

It is time to admit that budget allocation in many organisations bravely serves only to be able to hold on to this illusion at all: that it is possible to control and plan classically.

Today we know:

Budgeting as an attempt at planning nips agility in the bud and causes immediate stumbling in highly dynamic situations.

Approaches to agile collaboration

So what to do instead?

• Explore and make real decisions together instead of bluntly distributing budgets with a watering can.
• Decentralisation instead of cascading through rigid hierarchies.
• Strategy instead of plan.

What does that mean?

Being honest with each other, justifying why, for example, this marketing expenditure is necessary and appropriate in one’s own eyes, discussing, defending ideas, facing constructive criticism and questions, perhaps even entering into conflict in the best sense of the word.

What is needed for this?

• Knowledge.
• Responsibility.
• Cooperation.

Knowledge of what the overall situation of the company is. A clear framework of the current figures, work processes, order situation, liabilities, outlook for the coming months. If you keep your knowledge to yourself and withhold it, you will run into the wall all too quickly.

Real responsibility, made possible through consistent, equal self-organisation in a decentralised, learning structure and a common strategy.

A profound, new experience of what it means to work something out together – to be effective, to solve a problem for a customer, to make your own product or service even more attractive.

With full hands

But instead, many budget managers will probably feel the same way as Hatice – when it suddenly becomes clear how much money from the beginning of the year can still be spent with full hands, precisely because thriftiness tends to be condemned as inactivity – and now the wild planning has to start quickly.

This is one of the reasons why we too often still hold overpriced Christmas cards or promotional gifts in our hands, throw festive dinners or quickly buy various coaching sessions for particularly deserving executives.

Instead of acting FOR the company in the best sense of the word and taking responsibility for strategic decisions, we simply squander what is still there in order to paradoxically position ourselves for future distribution battles.

But also, and this reveals a deep insight into the prevailing corporate culture, not to give anything to “them”. This usually means either the colleagues or the management department.

But what do you do if the money has to go now?

(Please read the following sentence in the voice of Hella von Sinnen from 1989:)

“Tinaaaa, what do we still have left for the budget?”

Sensitisation instead of Christmas cards

Feeling a little caught out by the derivations and want to do things differently next year? Excellent.

And yet you still have a little something left to spend?

Well then, here is my revolutionary suggestion: at least do something worthwhile with it.

Set the right course, dare to tackle the sacred cows, untie strategic knots!

How about raising awareness instead of Christmas cards, for example? Bring in a diversity expert to take a closer look at your own procedures and application processes and to shed light on how more diversity and participation can be ensured, especially structurally and thus sustainably.

Instead of chocolate eggs for everyone – let me advise you on how to work in a CO2-balancing or even climate-positive way in the future, i.e. to consume less than the industry standard in aspects such as the products, materials, transport, hosting or energy used and, in parallel, to support reforestation, for example.

Or join me in strategy days, remotely or at your organisation: to process the last few months and then look forward to the next stages with a sharpened, fresh perspective.

Either way – don’t go into the next year with the same mistake. Now is the time to make a change.

Notes:

If you would like to get in touch with Lena Stiewe, it is worth taking a look at her very attractive website: https://www.mitdenkerei-stiewe.de/

Lena Stiewe has published another article in the t2informatik Blog:

t2informatik develops and modernises software as a service provider. Click here to learn more.