Why Budgeting is Essential to deServing Leadership
As we prepare for 2020 and beyond, I have been thinking about some of the questions that have a general underlying theme: as deServing leaders, our primary focus should be on building our culture and supporting our employees, and that should supersede any financial or budgetary aspirations of the firm. So the question is — how can you align budgets and business goals with deServing leadership principles and use them to enable a servant leadership culture. For me, the emotional budget of any deServing leader is directly dependent on the financial performance of the organization. If the organization is financially sound, it enables leaders to focus their energy to engage the emotions of those around them positively.
In simple terms, a budget is an estimation of the revenue and expenses over a specified period. To serve your organization, deServing leaders need to plan on having enough resources to implement their vision, focus on continuous improvement, and provide long term security to our employees. It is impossible to do without a budget! As Yogi Berra famously said, “If you don’t know where you are going, you’ll end up someplace else.”
In my opinion, there is perhaps nothing more relevant to implementing the deServing leadership concept, and accomplishing your mission and vision, than having transparent, concise, and predictable budgets.
Here are a few key reasons:
Reinforcing the winning mindset: I have written in previous blogs about the importance of making teams feel like they are winning. To know if we are winning, we must have clear, measurable goals. Budgets help to define what winning is, perhaps in the most objective way possible.
Decentralization: At its core, deServing leadership is about empowering others to grow and become leaders themselves. Having transparent budgets decentralizes obligations without losing business control.
Monitoring: As I have mentioned in a previous blog — “what gets measured gets done.” There are things we do very well at EVENTEQ, and there are undoubtedly areas of improvement. Proper budgeting and continuous monitoring against it enables timely disclosure of deviations from targets so corrective measures can be taken and keep your teams on a winning path.
Clarity: Budgets provide clarity on the resources required to implement the vision of the organization. In recent internal discussions about potential new hires for next year, we have had many conversations about what each department thinks they need. But putting it all together in an overall budget helps provides clarity and prioritize what is most crucial to the organization. It helps us protect what matters the most.
Continuous Improvement: We strive to continuously provide opportunities for everyone to grow and enhance their knowledge. Whether its time and effort from the leadership teams or done using external resources, they involve real costs that can be budgeted to ensure continuous improvement remains a top priority.
Alignment: Budgeting allows for the entire team to align themselves around the priorities of the business. It helps with defining precise responsibilities and distribution and provides the foundation for accountability — a key deServing Leadership foundation.
Security: In my previous career, I have been part of organizations that have had to do layoffs as a direct result of not having a clear, measurable budget against which we could continually measure ourselves. There is nothing more contradictory to deServing leadership than having to look an employee in the eye to let them go due to lack of clarity or financial oversight.
Contingency Planning: In the face of current economic uncertainty, every organization must plan for contingencies to ensure that we can react quickly to any unforeseen challenges. Having a clear understanding of your organization’s financial standing helps you do so in the most efficient manner.
The primary benefit of budgeting is to bring planning and discipline at the forefront — a known characteristic of almost every successful organization. DeServing leaders owe it to themselves, their organizations, and their teams to provide clarity of mission, vision, and predictability. Budgets are a sure way of doing so.