The task of cutting the annual budget of the office supplies company would require the executive team to reach a consensus on the strategies to employ. Looking into the situation of the company in terms of the budget expenditure, it spends a significant amount of money on salaries and bonuses. With the company having 33,000 employees, it means that massive funds would be channeled to the HR processes of maintaining the staff and the executive team on payroll. At the same time, the company’s policy of paying the each of the six executives and the CEO over $ 300,000 per years and paying over half of their annual salaries in bonuses means that it spends a huge chunk of funds into paying salaries, bonuses and maintaining the staff. Addressing the budgetary concerns in the company to realize the objective of cutting down the budget by 20% would require the executive team to reach a consensus on various items that have budgetary implications. In other words, the process would require the executive to reach to a consensus on steps that would work in ensuring that the budget is cut down by at least 20% as desired.
Allowing the executive team to gain consensus on specific steps to cut the annual $3 billion budget by 20% is a huge task, but one that is doable. To begin the process of working towards a consensus on the cuts of the budget, I would engage in developing five critical assessment questions that the executive team would have to discuss through as they contemplate to support the need to reduce annual budget. The first question would be, “Why consider a budget cut for the company’s annual budget? The focus of asking this question would to be engaging the executive team to think through the reasons why the budget cut is important. This question is important considering the fact that string support towards the budget cut begins with an understanding of why the decision is important to the company (Lambert, 2016). When executives would understand why the need to support the budget cut and the benefits it would have on the company in the end, they would get to support the idea. So, this question would evoke the executive to reflect through the need and focus of executing the move.
Delegate your assignment to our experts and they will do the rest.
The second question that I would submit to the executives is: are the critical users of the budget empowered with budget-based financial tools to be successful in cutting the budget cost down? The focus of this question is to allow the executives to think through the existing financial system and the opportunity for critical budget users to participate in cutting down the cost. Critical budget users include non-financial managers, project managers, department heads, and senior management staff who make tactical decisions on the ground that have budgetary implications (Kaarbøeb, 2013). This question would help executives to think through how these users could be provided with tools that would affect how they user company’s resources leading to budget cuts. The third question that I would pose to the executive team is “Are you always striving to better the “ownership” factor? This question is directed at the executives to help them see if they ‘’own’’ their budgets and are committed to the course of cutting it down. The question is to challenge the executives to understand that effectiveness in cutting down the budget begins with the leadership (Lindsay, 2010). This question is to help the executives to think of ways to move from just taking the responsibility into that of owning up the goal of cutting the budget for the good of the organization.
The fourth question would be, is the current budget awareness driving planning and enhancing results?’’ The focus of this question is to allow the executive team to think through the current budget planning process as currently instituted if it would aid cutting down the budget. The last assessment question that I would pose to the executive team reads, ‘’Are our budget-based reports telling the “Good Story?” This question is aimed at invoking the executives to see the need to take action steps towards budget cut (Tjosvoldc, 2001). The question is to make the executive team to see the need to take practical action steps that would allow the company to cut costs and improve on its sustainability. This would also bring consensus on the need for budget cut by allowing executives to see the steps that would change the financial narrative of the company.
I would take on a number of steps to gain buy-in for change first from executives and, later, from lower-level employees. The first step would be to have a review meeting with the executives on the gains achieved in the last financial year. This would be to help the executives see the financial state of the company. On the lower-level employees, I would task the line managers to have a meeting with each of the teams to communicate the gains that would come from the project. This would allow the lower level employees to see the benefits that would come from the change in budget-cut. The second step that I would take is to challenge the executives on the need for ownership over responsibility on the issues of working on the budget. The focus of this second step would be to challenge the executives on the need to own the vision of the company to cut costs and boost the revenues. On the lower level employees, I would task their line managers to help them see how the budget cut would lead to job security. The line manager will communicate to lower level employees that the budget cut would lead to their job security and therefore good for their gains.
The third step that I would take is to challenge the executives to take a leadership role in handling the issue of budget cut. I would challenge the executive team to think through their role as leaders where they need to lead from the front by taking example. For instance, they may need to consider cutting down their bonuses and pass it down to other managers and staff (Lidia, 2014). On the part of the lower level employees, I would task the line managers to engage in employees in ways where reasonable cuts in some bonuses would be instituted. However, the cuts to be made will be implemented progressively so that it may not affect the employees who had already other financial commitments. The fourth step I would take is to encourage the executives to work closely with the critical users of the budget in the process of facilitating the change that is needed. On the lower level employees, who are also critical users of the budget, I would engage them to see the need to support the necessary cuts. The last step I would take is to ask the executives to act and talk less. This step would communicating the changes and taking steps to achieve the changes. Same case would apply to the lower level employees who would have to be executors of the cuts through project execution.
A number of SMART and soft evaluative measurements I (and the CEO) may be used to decide if my work with the executives is successful. The first measurement would be to check if my work is professional, (ii) if it leads to sustainability of the business, (iii) if it has the people/teams in mind, (iv) if it has the interests of the business as a priority, and (v) ultimately leads to the desired goal of cutting down the budget by 20%. Each of these five measurement items are critical in evaluating my work (Bremser, et al., 2003). There is need for my work to reflect professionalism considering the scope of the decision in influencing the growth of the company that serves over 33,000 staff. There is also need for my work to capture the interests of the workers who are critical to the company’s business. The success of my work could also be checked through assessing if my work has put organizational objectives at the frontline, and lastly, if the goal of cutting the budget by 20% would be achieved. In exercising my work with executives, I may encounter decision dilemmas such as resistance by executives on cutting their bonus pay alongside that of workers. There may also be resistance on timelines to execute the changes.
However, I look forward to experiencing success in the process through taking on the five steps of facilitation, as outlined in Chapter 4 of Bens (Bens, 2005). The listen Bens’ (2005) Five Steps of Facilitation include (i) assessment, (ii) design, (iii) contracting, (iv) implementation and (v) follow-up. In assessment, I will use interviews to understand the background of the company. In design, I will develop a summary report to support the need for budget cut. In contracting, I will negotiate my role in the proposed agenda of cutting down the budget. In implementation, I would facilitate a meeting with all executives to set the goals of budget cut and explain the role of executives on the project. Lastly, follow-up would involve communicating outcomes between me as the facilitator, and the Client (the company).
References
Bens, I. (2005). Advanced facilitation strategies: Tools & techniques to master difficult situations. San Francisco: John Wiley & Sons.
Bremser, k., et al. (2003) "Corporate budget planning, control and performance,” Managerial Auditing Journal , Vol. 18 Issue: 9, pp.737-750.
Kaarbøeb, K. (2013). From comfort to stretch zones: A field study of two multinational companies applying “beyond budgeting” ideas, Management Accounting Research , 24 (3), 196-211.
Lambert, C. (2016). Exploring differences in budget characteristics, roles and satisfaction, Management Accounting Research, 30 (1), 47-61.
Lindsay, M. (2010). Beyond budgeting or budgeting reconsidered? Management Accounting Research, 21 (1), 56-75.
Lidia, G. (2014). Difficulties of the Budgeting Process and Factors Leading to the Decision to Implement this Management Tool, Procedia Economics and Finance , 15 (1), 466-473.
Tjosvoldc, D. (2001). Budget participation, goal interdependence and controversy: a study of a Chinese public utility, Management Accounting Research , 12 (1), 101-118.
