Rallying TO the Flag   

How can one be a strong leader during the annual planning and budgeting process and create a culture of continuous improvement?

Chris L. Kenny: It is beneficial to “push down” the budget formation and decision-making process to the lowest level possible to understand the unique needs of the various divisions of the organization and inspire their meaningful participation in the process and loyalty to the vision of the organization. A leader must effectively coordinate all levels within the company structure during the budget planning, recognize their interdependence and communicate between and among the participants a common vision. When the process is uniformly percolated up from the lowest levels of the organization along a common communicated vision there are less intentional gaps in information and oversight of key emerging issues. We utilize this submitted information and check it through various internal and external data points like employee and customer surveys and broader comparative market information that help us better understand our trends and what is needed for strategic direction the following year.

How does a leader not micromanage the planning process and empower the budget creation without dictating the result? 

Chris: Always utilize specific data reference points that show why a particular investment of time, treasure, or talent needs to be made or conversely reduced or eliminated. You need to be versed in correlating facts and data to inspire compliance on the vision, a leader will never get the required organizational buy-in to accomplish a unified mission if you provide no reference points for your guidance.

Ex. If you are trying to reduce an expense because the vision is you can be more productive in that particular unit, then you need to be able to point out specific examples in similarly situated situations where it has been achieved repeatedly and motivate them to want to replicate. Never write the budget item and say it’s done elsewhere; figure it out and get it done. That never works and actually demotivates and cripples the entire initiative.

Ben Simons: By fostering teamwork, many great ideas and strategies come from observations outside of one’s direct responsibility. Lose the "stay out of my sandbox" mentality. Disagreements are not a bad thing. That's where positive change comes from. Someone doesn't have to be a subject matter expert when taking on a new area of responsibility.

 

                        ALIGNING THE BANNERS    

How do leaders set guardrails while encouraging risk taking and enable decisions within the constraints of the economic realities?

Chris: Communicate all financial realities internally and externally facing the business decisions; do not hold back hidden info or agendas. Determine and enforce consistent minimum standards, guidelines and expectations well in advance across all units. Don’t have selective enforcement or double standards—be fair. Reward risk taking and do not punish mistakes. When people know the rules of the game and they agree they are fair and on a level playing field, they will perform far better.

Ben: Sometimes risk taking involves giving opportunities to people who are eager to learn which I believe are often better than handing an area or project to someone who has knowledge but will then walk through the motions as opposed to being innovative. Someone who doesn't necessarily have knowledge in an area will strive to learn and excel to prove that they have ability to learn and grow. Don't be afraid to look outside your direct team/organization for information and direction. You don't always have to recreate the wheel. Someone else has probably already experienced a hurdle you have faced and found solutions to cross it.

Chris: To reward risk and not punish mistakes, encourage top performers to go outside the confines of the budget, but require communication to all in advance, require a written plan and strategy, and tell them to make a decision. If it fails, you don’t do it again, but you make the decision and do it. Nothing ventured, nothing gained.

 

                        Unit order of Battle    

How does a leader progressively address poor performing units without demotivating?

Chris: I use peer pressure. If you have everyone present their operating objectives and financial budget in front of the group then everyone will see who isn’t pulling their weight. Do not sugarcoat lack of performance. Address the issue, ask the group for feedback, and engage in a vigorous discussion of why. Tear down the ego barriers and build back clear agreement on the new operating direction.

Ben: Understanding that employee morale is almost always based off of the management/employee relationship and not just financial incentive is important. If you build that relationship with the employee, they will work harder and be more loyal than just handing them another dollar. The dollar may make them happier short term, but if they still dislike the engagement and relationship between manager and employee, then they will still be dissatisfied and less eager to promote positivity and work efficiently.

Conversely, how do you reward/incentivize good performing units without demotivating?

Chris: First, give them credit privately and amongst their peers. Then increase the scope of responsibility, promote position, add more business units to their domain. People will be forced to grow and challenge themselves to continually perform at the higher standard in the new or expanded area. You build trust that you are relying on them more and more to execute the vision.

Ben: The success of a leader should be based off of the success of those they manage. Empower and engage your team to be involved in all processes. This makes them feel as though their voice is heard and they don't feel blind-sided from a decision or directive.

Any final words?

Ben: Budget and annual planning takes time. Be realistic in the process. If multiple revisions aren't occurring then there are probably missed opportunities. Don't put a number down just to put something on paper. Justify your calculations but be prepared to adjust fire when variables occur which almost always happen whether it’s as large as a pandemic or a competitive variable that suddenly occurred. Transparency is important. Your team may not like a decision, but if they feel they have had an opportunity to address thoughts into what goes into making a decision, they will often understand the reasoning and get behind it.

Chris: Create a culture of continuous improvement by having a regular transparent budgeting and planning creation and review process that is well documented who has to do what and by when and to what standard. Stick to that process every year and tweak it but don’t make exceptions like we don’t have time or this is a difficult time, etc. Do not do this in a hurry or in a vacuum with only a few people. That’s a disaster waiting to happen.