The budget games

Ever noticed how much budget discussions between corporate and local managers resemble a sports game? Let’s analyze an average budget meeting.

Game kick-off

Local management kicks of the game with a predictable first move: they propose a slightly improved budget compared to the current year forecast. A safe and predictable move, not drawing admiration of the other party or the onlookers, but not putting them at risk of an extreme counter move by top management either.

Now it’s the other party’s turn. No suspense yet, as the move by top management is just as predictable. They lay down their expectation of less cost and more turnover, increasing profit by 5-10%.

The middle part

Now that both teams have had time to warm up and get used to the arena and each other, the real game begins.

Arguments go back and forth, pulling the budget a bit down here, a bit up there. Now and then both parties score a point by having the stronger arguments that seem to convince the other team, at least temporarily. Often the game gets stuck a bit as we enter the phase that both parties aren’t inclined to budge to the other party.

In this phase the onlookers can spice it up for themselves by:

Playing budget bingo

Before the meeting, make a list with phrases such as ‘low-hanging fruit’, ‘efficiency’, ‘built-in fat’, ‘entrepreneurship’, etc. Please add the current buzz words for your organization, and leave room for some interesting new phrases or words to note down during the game. For these, the onlookers afterwards can place bets on which phrases will become new buzz words in the aftermath of the budget meeting. Add columns for how long it took before the phrase was mentioned the first time, and score the number of times it was used.

Closure

After a while one or both parties will start to feel worn out. Now you know the game is coming to an end. The discussion will go back and forth a bit more, but soon parties grudgingly agree on a compromise. Almost always the new budget is the average of what top management set and local management proposed. A result that could have been simply calculated within 15 minutes of the start of the meeting.

Now note the number of people around the table on your budget bingo sheet (13 the last time I did this), estimate their average salary (in my case 150k annually, conservative estimate) and calculate the cost spent on reaching this budget. One day budget discussions easily costs 5k. Not counting the rework finance and the budget holders have to do.

Then sit back and let the irony of talking about low-hanging fruit fully hit you.