Managerial thoughts

Nowadays, managers justify redundancies for budgetary constraints and performance reasons. They strongly believe that laying off employees allow the company to reposition itself for growth.

There is no doubt in my mind that the optimization of cost, quality and timelines is still and remains the winning solution for the development of any business. However laying off employees is not always a solution to make a company, an efficient company. The managers should look for the most appropriate way to rather make the employees of the company much more efficient.

In the managerial equation, I built an equation focused on the needs of the three major players within a company.

The role of the managers is to find the solution that meets the needs of these key players while maximizing the profits of their company. That solution could prevent redundancies and indirectly resolve the problematic of the cost, quality and deadlines. In the following, we will see how we can achieve it.

We saw in the 1980s interesting debate between managers about the usefulness of a budget within a company. Some consider that a budget is the most important aspect in the management of any business. It must be respected and no action should be undertaken outside of it. Others believe that the budget and the way followed to manage it, is an obstacle for the development of the company. They suggest focusing more on the performance management rather than the budgetary management. In 2013, this debate is still relevant within companies and even in some management schools.

Budgetary Management Vs. Performance Management

Isolating the budget from the performance of a company or vice versa is, in my opinion a wrong debate. I personally think that the managers should rather focus on the processes to be developed and to be implemented for setting up objectives and monitoring their achievement. 

Indeed, the traditional process for setting up and controlling budget as applied by many companies might be an obstacle for the development of the company. It is heavy, expensive and requires an extremely important human endeavor, often with results below expectations.

The companies currently operate in a very dynamic market where the needs daily change. The current market requires resources and a new style of management that the traditional management based only on budget model cannot face. In the traditional budgetary management, the major concern of the managers of the company is to respect the budget. It discourages initiatives and is an obstacle to business development in medium and long terms.

How many times we heard accounting managers saying to the operational managers looking for the performance improvement of their departments. No! You cannot do this, it is not budgeted. I am quite sure that some of the managers, who are reading this, do not know the objectives of their company or even their own objectives in their company. They just follow what their supervisors are asking them to do and their supervisors are doing what their managers are asking them to do.  In many companies, only the top management knows how and where the company is going. Instead to share the vision of their company and inculcate to their employees, they impose it. This is a short-term vision, because, it does not take the advantage of the intelligence of their employees when initiating the budgetary and performance management processes.

Unlike the traditional process, the budget as reference is an important element in the performance management. The managers should redefine the planning process for issuing budget and managing the performances.

The models currently offered by consultants in management and implemented, have not succeeded or have gotten very mixed successes, because those models still remain in my opinion, the preserve of the accounting managers and leave a little bit or no room at all for the non-financial or the non-accounting managers.

Operational managers should be active stakeholders

in the process for the management of the budget

and the performance of their company

Most of the CEOs empower the accounting managers to set up budgets and to manage the performance of their companies with an insignificant involvement of the operational managers who are the real work forces on which the success of the company lies. They often leave these processes solely in the hands of the accounting managers.

The success of a company relies not only on the effort that the accounting and financial managers make, but especially on the effort that all its workers make. Every manager within the company has to be an active player in the process for setting up the budget and managing the performance. The non-financial managers should know how to value their action programs and how to measure the performance of the services they manage. They should also know how to negotiate objectives inside of the company and decide accordingly about the actions to be implemented for improvement.

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