It’s that time of the year known in finance circles as budgeting season. Unfortunately, for many finance teams still using spreadsheets, it can be a time of dread, stress and frayed nerves. Dwight D. Eisenhower famously said “Plans are nothing: planning is everything”. That is certainly the case with spreadsheet-based planning as, according to research on the subject, 60% of budgets are already obsolete by the time they are completed. We can chalk that up to the ever-changing nature of business and the rigid nature of spreadsheets. But what if plans were actually meaningful? What if the planning process was an opportunity to get everyone to sing from the same sheet of music and get aligned with company strategy? Rather than singing the budgeting blues, finance teams can hum happily through the planning season. That is certainly the reality for many companies who use Cloud-based corporate performance management solutions. The issues of spreadsheets are already well documented and in fact there is even an organization dedicated to spreadsheet risk called the European Spreadsheet Risks Interest Group. You may wish to read about some of the spreadsheet horror stories they have collected over the years.
Carlson Management Consulting is proud to be a sponsor of the NACUBO 2014 Planning and Budgeting Forum in Denver, Colorado on September 22-23, 2014. This NACUBO forum is the “not to miss” event for business officers with planning and budgeting responsibilities. Concurrent sessions address the latest techniques in higher education resource management. Presenters include experienced business officers and higher education strategists. This year’s topics address financial reserves, integrated benchmarking, performance metrics, capital planning, maximizing resources for student success, data driven decisions, effective communication, and more.
Attendees will learn the following:
- Innovative planning and budgeting methods being practiced at colleges and universities
- Strategies to address higher education resource management
- Approaches for using planning and budgeting as an agent for institutional change
Carlson Management Consulting is the premier Adaptive Insights partner for Higher Education. Our growing list of customers include Bentley University, Vassar College, Pratt Institute, Merrimack College, Massachusetts General Hospital Institute of Health Professionals, and Babson College. Contact us today to request a demo and learn how we can help you improve budgeting, forecasting, and planning at your institution.
As famously proclaimed by former General Electric CEO Jack Welch, “the budgeting process at most companies has to be the most ineffective practice in management.”
Most organizations’ budgeting process is not truly aligned with its strategy and key participants are unable to clearly articulate the connections.
One of the key reasons for ineffective budgeting is the disconnect between the budget and the company’s broader strategy. While it seems like an issue of common sense, most organizations’ budgeting process is not truly aligned with its strategy and key participants are unable to clearly articulate the connections. Aside from the mechanics and technology involved in budgeting, there is a human factor behind this problem – mainly, most companies do not have a culture of inclusion. Strategy is often a discussion that takes place at the executive level but unfortunately the resulting insights and decisions made are not permeated through the rest of the organization. Without knowledge of company strategy, the stakeholders who create and manage budgets do not know how they can impact it and where to most effectively allocate their spending and investments.
In order to better align budgets with strategy, here are some steps that CMC recommends:
1. Start every budget cycle with executive-level participation and insight into company strategy. Make sure it is clear how your strategy translates to business tactics and how every employee’s action and role has a direct impact on the success of this strategy. While almost every company has executive offsite sessions and develops or modifies a strategic plan, often the strategic objectives are never translated into the tactics of the business, the annual budget or financial forecast. The problem is that the individuals responsible for strategy and vision are not always the same people involved in creating the budget. Even when they are, the exercises are often not connected. Every member of the company needs to know how their role and actions help the company achieve its goals. The discussion of budgeting should be viewed as the mechanism to allocate resources to achieve strategic results. The budget is the conclusion of the strategy process. It is validation that the tactics will drive success and should not be perceived merely as a compulsory exercise. Executive management needs to drive this connection from the top.