Budget Question

Most companies are well into budget planning for 2010, using what's known as "incremental" budgeting. I prefer "zero based" budgeting, a process I shared with students at Mount Royal University earlier this week.

Essentially, zero based budgeting is the opposite of incremental (aka “use it or lose it”) budgeting. With incremental budgeting, if your department had a $50,000 budget in 2009, they will automatically get a $50,000 budget in 2010 with a small percentage increase based on negotiations with management.

With zero based budgeting, you negotiate for your entire budget each year based on your strategic plans for the upcoming year. Under current economic conditions, incremental budgets are being maintained (after cutting earlier in this year) or being reduced for 2010.

By taking a “zero based” approach to your projects, you should go into a presentation with management with all relevant quotes and estimates from your suppliers in hand so when management says, “so as part of our awareness campaign you want to do a direct mail campaign to every household in Okotoks, how much will that be,” you can confidently respond, “we received 3 quotes and the best value is $0.50 per house or $3,125” (Okotoks caps their population at 25,000, assuming 4 individuals per house, there are 6,250 houses in Okotoks). That response, as opposed to “I don’t know” or “Um, we’ll get back to you on that” increases your chances of getting close to the budget you asked for.

So which do you prefer, incremental or zero based budgeting? How are you doing more with less going into 2010?

Special thanks to Amy, who inspired this post.

Communicating versus micro-managing

Had an interesting conversation with a friend recently about managing a team of direct reports, specifically as it related to inter-team dynamics and informal leadership.

My position was that inter-team issues would arise from a lack of communication around where each team member fit within the team. I felt that it is the responsibility of the team's manager to establish role clarity and inter-team communication norms.

My friend's position was that my position sounded too much like micro-managing, which got me thinking. Where does the line exist between effective communication and micro-managing?

To me, the line exists in follow up communications.

If, after expecations are communicated clearly to a team, observation of the team and individual communication between manager and team members doesn't uncover any confusion with expectations, no follow up is necessary. Reiteration of expecations at this point crosses the line into micro-managing either at a group or individual level.

If the team's manager identifies a disconnect with expectations by one member of their team, follow up communications should occur solely with that individual.

Where is your line for effective communications versus micro-managing?

"Peope" aren't buying

"People" is a mostly useless throw away word, like "they." 

We're not selling to homogeneous "people," we're selling to distinct "individuals" who each have different reasons for buying your ideas.

You will enjoy greater success in getting your ideas accepted (aka "closing a sale") if you speak to each individual's reasons for buying instead of blundering through a canned presentation.

A great example of speaking to an individual's reasons for buying is the "devil's advocate." You have worked with this individual in the past, the one who seeks to poke a hole in every idea no matter how solid the idea may be.

A friend told me recently about how he dealt with a devil's advocate on a team he led; he let the devil's advocate play their role. Every time his team came up with an idea, he asked the devil's advocate to poke a hole in it. Eventually, the devil's advocate couldn't poke any more holes in their team's idea so they bought in. 

Next time you're pitching, make it your goal to understand why each person would buy your idea, you'll be surprised at your success in getting your ideas accepted.