My Fundamental Budgeting and Personnel Assumptions


The following are certain key fundamental assumptions regarding how the budget should be prepared and the organizations expectations regarding the performance of the key Executives.

  1. Zero Based Budgeting (adopted by APS as the basis for budgeting) – each function must substantiate the reasons why it should be funded and then show substantial justification for the funding requested. The substantiation must be in terms of the benefit to the organization and its customers and must be fully supported by key metrics that justify the funding request.
  2. New Function or Initiative – any new function or initiative must have clear and measureable objectives and outcomes and a timeline for achieving them. Additionally, the function or initiative should generally be “self-funding” – either through generating incremental revenue or reducing cost in other areas of the organization. Any new function or initiative that cannot meet this test should not be undertaken.
  3. Executive Management– the key leaders in an organization must have the following talents:
    1. They are experts in their specific areas of responsibility and bring extensive knowledge and experience to the positions they hold in the organization.
    2. They are excellent administrators and are highly capable of personally organizing, managing and executing the mandates for their respective divisions.
    3. They propose, implement and administer policies and procedures that improve organizational effectiveness.
    4. They know their customers and strive to meet and exceed the expectations of their customers – whether internal or external.
    5. They are outward and forward looking and are constantly assessing how to improve the products and services created for their customers.
    6. They are continuously searching for ways to improve the cost efficiency of their divisions.
    7. They understand the requirements of their divisional functions and select highly capable middle management personnel that can execute on the policies, procedures and output demanded by their customers.
    8. They demand and expect excellence from their own divisions and excellence from the other divisions with whom they interact and rely on.
    9. They are the “change agents” of the organization – when organizational changes have to occur, the executive team provides the leadership to make the changes happen throughout the organization.
    10. They understand that they are key members of a team and they are tasked to accomplish the mission of the organization – no single division is more important than the others as each division must rely and use the products and services provided by the other divisions – there are no “prima donnas”.
  4. Middle Management – this key group of individuals are assigned to complete the specific functions required so that the division meets its mandates from the rest of the organization. This group of managers also represents the sole and exclusive “staff” needed by the Executive to meet the Divisional mandate.
  5. Extensive Use of Consultants– extensive use of Consultants indicates that the Executive team is failing on the following points from above.
    1. They are experts in their specific areas of responsibility and bring extensive knowledge and experience to the positions they hold in the organization.
    2. They propose, implement and administer policies and procedures that improve organizational effectiveness.
    3. They are outward and forward looking and are constantly assessing how to improve the products and services created for their customers.
    4. They are continuously searching for ways to improve the cost efficiency of their divisions.
    5. They are the “change agents” of the organization – when organizational changes have to occur, the executive team provides the leadership to make the changes happen throughout the organization.
  6.  Outsourcing Functions or Activities – when there is an ability to purchase services that can accomplish what is required with the same or improved output and more cost efficiently, then the organization should do so. However, when the organization chooses to outsource a function or activity, the organization must remove all internal costs or much of the cost efficiencies of outsourcing are lost.

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