The Zero-budget Manager
Zero based budgeting is an approach in which all expenditures must be justified for each new period, whether this is a quarter or a full year. Zero-based budgeting starts from a “zero base” and every function within an organization is carefully analyzed for its actual needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one (because it is built around planned future activities). Managers using zero-based budgeting can consequently often lower costs considerably by avoiding blanket increases or decreases when compared to a prior period’s budget. To implement a zero-based budgeting approach successfully, managers need an analytical approach, set clear goals and targets for the exercise and to challenge all costs by using carefully worded questions of team members about tasks and projects. In addition, a manager should challenge assumptions and be able to rebuild an overall budget for a forthcoming period within a very organized manner.
- Analytical ability
- Clear Measurement/milestones
- Cost consciousness
- Critical thinking ability
- Organization/Planning skills
- Questioning capability
Ingredients should be added, blended well and left to mature over time:
- Analytical ability refers to a manager’s ability to evaluate large or complex situations in a logical and systematic way and to identify the most critical issues and factors that need to be dealt with.
- Clear measurement/milestones is about the extent to which you design and apply appropriate performance measures to your goals and objectives, and identify logical milestones, where necessary.
- Cost consciousness refers to a manager’s capacity to remain constantly aware of the need to ultimately generate more income than expenses in all their efforts.
- Critical thinking ability refers to a manager’s capacity to think rigorously and broadly about issues, challenges or problems and to optimize the route to finding potential solutions that work.
- Organization/Planning skills refers to a manager’s ability to build balanced and comprehensive strategies to achieve goals through careful preparation and organization.
- Questioning capability is about a manger’s ability to ask key or insightful questions about why things are done the way they are and in what way could they be done differently, to be more efficient or effective or generate more profit or margin.
“Readiness Recipes” is a new article series exploring 26 different kinds of managers A-Z and the key ingredients that each needs for success.