For many, the thundering of heavy hooves can be heard at this time of year, as the budget cycle rounds the corner in to the last stretch (target).
There’s a question left lying in the air after the last clod has fallen to earth and the steam is rising from winners and loser alike. Is budgeting just informed guesswork?
Is it simply a gamble offering numbers to the business? Numbers that stretch out for more than a year on which the business must rely? Surely the budgeting process is more than just a wild punt. Or is it?
The seasoned punter making a betting on a horse with Honest Ern is making sound informed decisions. You know he is. He makes a living from this sort of thing. He has his own checklist:
Previous form √
Results of last 5 races √
Jockey’s track record √
Horse’s success at this distance √
Trainer has experience √
Weather and current outlook √
The same in business. It is standard to look at the ‘form’ of a business unit when forecasting budget. Then everyone assumes the unit can do better than before. This concludes that budgeting is just broad assumptions. You fill in spreadsheets, light some candles and do a ‘lucky dance’. Budget done.
Standard managers use their experience and their checklist just the same as taking a punt. Like problem gamblers, they can be blinded to realities they face, making guesses on what can be achieved.
But wooah there my four-legged friend! There is a subtle difference between punter and budget holder. Great managers can, and do, influence their runners and riders. They motivate the team of people who will be delivering throughout the ‘race’ all the way to the finish line. Poor punter can only shout from the side lines until he is hoarse (a technique of failing managers btw).
The manager’s job only starts with the budget. For sure he assesses the form of the business unit as well as the individuals. Then he sets about investing in the team by giving clear objectives, support, guidance and inspiration. Managers own not only responsibility for budgeting, but also delivery. Punters assess, then guess and do that ‘lucky dance’.
The manager by contrast walks every step of the way and maybe, if their style is strong, the team will go the extra mile. A team that will succeed on behalf of the business because they believe in it. They want to deliver.
So, despite concerns to the contrary, I’d say the budget process is stable. Involved and stimulated teams will remain focused and productive and will say the course. They’ll deliver the numbers. This means that planned results for good managers are not likely to slip – unlike betting.