Tag Archive for: business financial management

The primary organizational responsibility of every executive and manager is the diligent management of resources. This oversight is clearly expressed through the effective management of an executive or manager’s assigned budget. In many cases, this budget includes revenue generation as well as expenditures. Other organizations are simply cost centers and the budget is a reflection of expenditures only. Regardless of the circumstance, all managers must actively oversee their budgets in order to remain fiscally responsible to the organization and its shareholders.

Effective budget management begins with an awareness of actuals versus plan. While the degree of budget detail varies between organization levels, executives and managers should maintain an awareness of the actuals versus plan as well as past and future trends to the level of detail their budget line items represent. Such an awareness provides leaders the opportunity to probe further as needed and to make decisions regarding activities effecting their budget early enough that their overall commitments are more likely to be met. Lack of awareness implies a laze fare approach to budget management and positions the executive or manager for budget surprises, be they overages or underperformance.

Considerations for Maintaining Budget Line Item Awareness

The following principles are suggested for maintaining routine, ongoing budget awareness:

• Maintain budget awareness at the line item level at which the budget was approved
• Know the actuals versus plan and the reason for any variance
• Assess budget performance and projections to gain an understanding of past line item trends and future projections
• Be able to clearly state any actions to close noteworthy gaps and/or turnaround/exploit trends
• Be aware of past activities taken to close gaps and/or turnaround/exploit trends

Final Thought…

Budget management is a primary responsibility of every executive and manager. As such, it is important for seniors to routinely assess their subordinates’ for effective budget management. By extension, it is equally important for subordinates to not only manage their budget out of responsibility to the organization and shareholders but also out of responsibility to one’s successful performance.