Platt Perspective on Business and Technology

From peer to supervisor – Part 4: budget constraints

Posted in HR and personnel, job search and career development by Timothy Platt on October 7, 2010

There are some crucial types of detail that I always set out to learn and as quickly as possible when I start a new job or consulting assignment. One of them is who I would be reporting to, and a second is what I am to work on and with what priorities. I have already discussed these and several related issues in earlier postings and in a variety of contexts. There are at least two more potential third rail issues that you have to understand from your own supervisor’s and your employer business’ perspective, and as quickly as possible – and if you trip over them from failing to do so you risk getting yourself electrocuted. One of them is in knowing and understanding the budget you will have available for you as a new manager and supervisor, and the restrictions that may be set on that for how you can expend these funds. I will discuss that in this posting. The other is in understanding the way that the table of organization works at your new level in it, as far as silo walls and other access issues are concerned. That is largely a matter of office politics, though it can and usually does involve a variety of other issues as well. I will discuss that in my next posting in this series. But the easiest way to get electrocuted as a new manager is to make a significant mistake with your budget, and as a new manager this may very well be the first time that you are responsible for a business budget of any sort, and certainly where that means expenses covering the activities and functionalities of several or even many other people as well as yourself.

I find myself thinking back to my own experience as I write this, and to the first time that I was responsible for upgrading a phone system for a business. And this wasn’t even my first time managing with a budget. I cite that here as a case in point though as it is one where my budget turned out to be a mine field of potential problems that I had to work my way through to complete my assigned tasks and meet my priorities goals. The first time you face this type of responsibility you do not have personal experience to turn to, at least from a business context. Though you do probably have home budget experience and that may very well include negotiating and coming to a common understanding and agreement with your spouse as to spending limits and priorities and in discussing needs and priorities from a fiscal perspective. If nothing else, turn to that experience for reference here.

Functionally I divide the topic of business budgets into three basic areas and I will discuss them here following that organizational model:

• How much money you have at your disposal for meeting your assigned tasks and priorities (e.g. your team’s tasks and priorities that you and the people who report to you are to complete).
• What you would have to do to accomplish this, with a breakdown as to what everything on your list would cost, ordered by priority from highest to lowest. Here, I have to add that many if not most of the items on your list will develop as for cost as price ranges, and a big part of managing a budget is in deciding what features are necessary, and which would simply be nice to have but that do not reach a level of importance to be cost-effective here and now given your overall budget constraints. Finding those price points across your list is an iterative back and forth process where you cut back in one place to increase available funds for meeting needs in another.
• What your supervisor, and even what their supervisor assumes to be reasonable and acceptable for this, and both for overall budget and for what you should be spending it on. This is probably going to be based on their experience history as to what they have expended on what. And if you find that one of the key resource areas you are responsible for is in desperate need of upgrade and to new technologies – not just newer versions of the same in use, there may be real discrepancies between what you see as minimally necessary and what the people you report to expect and prefer as to cost for that. That is where my phone system mine field came from.

In an ideal world you would approach your working budget as a supervisor and manager exactly as you would salary and compensation negotiations when searching for a job and not discuss anything like firm numbers until you are in a position to discuss what those numbers would be for. Your supervisor, like a hiring manager would have a range at their disposal that they could offer but the number selected within that range would be left open until you had opportunity to develop a context for this discussion. In the real world, you may very well be told your overall budget before you can do any necessary research to even know if your tasks and priorities are realistic given your budget constraints.

• This means you are going to have to be prepared to look throughout your budget for places where you can cut costs and still meet your functionality and other requirements for meeting your assigned goals, in order to have the funds you need to meet your most important goals and priorities.
• This means you have to plan your budget as a coherent whole, and you have to present your case accordingly, if that big ticket, high priority expenditure looks like it will break the expected budget for it when considered alone.

Enlist the help of your supervisor and of other stakeholders who would influence how they evaluate your budget and how you would expend it. Discuss costs, and what would be obtainable at given price points, and what is needed here and now for these expenditures to actually meet current business needs. Yes, talk about scalability and ability for these systems to grow and in a cost-effective manner but at the very least start with current needs and work out from there. And strive to bring your key stakeholders into a position where they will support your budget proposal as being fiscally prudent and in support of their goals and priorities and the business as a whole.

What happens if your best case minimal expenditure budget would still break the budget and no matter how carefully and frugally you set it up and balance expenses to meet at least minimal functional requirements in what you buy? What do you do if your boss does not want to spend more than $50,000 and preferably no more than $40,000 on that new phone system but your research shows that it would be impossible to get a system that would meet their needs for less than $100,000 and that would break your overall budget completely? Always prepare for a Plan B, and in this case that means carefully preparing to present on what could be acquired for that $50,000 and what would not be possible for that. Here, your boss gets to make the call on your goals and priorities and on the capabilities that the business as a whole will settle on as necessary for now – and what may need to be scheduled for on a longer time line or simply set aside.

This, I add is where discussion of in-house versus outsourcing comes in and for a wide range of resources and capabilities. Is this task or project you are budgeting directly connected into and supportive of the business’ core capabilities and something that really has to be maintained in-house or is it a more supportive and ancillary service or capability that may be important to the business but that could be effectively outsourced?

• Be willing and able to argue the numbers, and that means both knowing them yourself and being able to communicate goals and costs.
• Know the context for all of this and look for Plan B alternatives that may include finding alternatives to your initial goals and even outsourced ones if that would make sense.
• And as a final bullet pointed consideration here look for synergies where for example you could simultaneously resolve one or more other issues on your task and priorities list as in effect free additions if you select certain specific solutions to one of the higher priority items on your list. Then it is not $X for A on the list but $X for A and you also get B and C covered, eliminating their costs as separate items. Are B and C of sufficient importance here and now to consider that in evaluating that $X price point?

The next posting in this series will look into more fully and effectively understanding the table of organization, and I add here the corporate culture and how to more successfully navigate these constraints. This is my fourth posting in this series on transitioning into management and on getting off to a strong start as a first time supervisor. You can find the first three installments to this in my Guide to Effective Job Search and Career Development (see postings 105, 108 and 110.)

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