In the following I would like to present the different aspects of the questions around the planning processes in a company, starting with the budget: The budget itself is important. Budgeting as a process is almost more important. Because, ideally, this creates a social process that runs rhythmically. This means regular and recurring appointments and meetings as well as the three processes described below. It's also helpful to work only with whole numbers, not percentages or calculated figures:
How far into anorganization do budgets apply? Far enough to allow individuals or groups to work directly in their day-to-day business, e.g., in the case of expenses, they can control them themselves and thus contribute to the planning process in advance. In the target / actual comparison, the effects of the action are immediately recognizable.
The planning process is divided into three processes:
- Top-down: Here, for example, the "guard rails" or framework conditions in which the Bottom-Up process defined, are set by the management. This can, e.g., be percentage wage increases or increases in sales.
- Bottom-Up: The planning process goes so far down the organization (e.g., areas or departments) as individuals or teams can influence their own numbers through active entrepreneurial action. The numbers planned there are passed "up".
- These two processes meet in the middle. Here, there is a horizontal dialogue, an intensive work and coordination process. Do the processed numbers fit into the frameworks or “guard rails”? Can all wishes be realized on the expenditure side? Where does one have to save? Where are higher yields necessary? Where else higher expenses?
It is highly recommended to create a schedule with specific dates / milestones for the budget process. These include budget discussions, voting talks, decision-making appointments, etc. The process should be a "living one": designed so that the whole thing can be seen time and again from the detail, and vice versa. If, in the following year, the actual figures are compared with the budget figures from the previous year on a monthly basis, there can sometimes be significant deviations. Nevertheless, there will be no budget adjustment in the current year. There may be one or two forecasts that reflect current developments. In addition to the comparison of planned numbers with the actual monthly figures, the comparison with the actual number from the same period of the previous year can also be helpful in detecting developments.
In addition to the three processes mentioned above, the following qualities are found in the planning process on three levels:
- Definition of the framework, description of the planning process by management.
- What contribution can I / the team make to the overall process of the planning process? This is about the quality of the middle, the mutual tracing of what is possible and necessary in for the whole.
- Merging the various planning processes with the goal of achieving the best possible result for the company, employees, customers and society. Integrating activity to achieve the best possible result for the whole.
PS: From now on (March 2018) also our colleague Timothy Apps will be contributing to this course.