Budgeting when there aren’t any budgets

Dear Bob …

I just read your KJR column on budgeting (“Playing stupid games to win … or at least to not lose,” Keep the Joint Running, 10/23/2006) and you make some very valid points.  However, none of them will work for me because I don’t have a budget.  My boss, the President and CEO, refuses to allow me to budget for anything.  As a result I spend money as I see fit and never know if I’ve exceeded his expectations until I get called on the carpet about something or other.

However, usually I am called on the carpet about the exact opposite:  Not spending money.  This may sound like an enviable position to be in, but let me tell you it is extremely nerve-wracking; trying to out-guess the user base and my boss.  For example, last week the plant manager at one of our remote manufacturing facilities called and said his PC was dying and when could I get him a new one.  Considering I’d have to order a PC and configure it, I told him two weeks.  He hit the roof and said he needed one right away, so I told him if could get one quicker, then go for it.  He went out and bought a $400 wonder at one of the big box stores and then proceeded to trash me to my boss.  I know this because yesterday my boss came in, while I was out at a doctor’s appointment, and asked my co-worker (the other person in my department) if I really told the plant manager it would take two weeks to get him a new PC.  He also mentioned how much cheaper the plant manager was able to get a PC.

So, aside from the back-stabbing issues here, how can I budget when there are no budgets?

– Before budgeting

Dear Before …

First of all … two weeks? I know this problem up close and personal, having gone through it quite a few years ago. The solution is simple: Keep a few preconfigured, pre-burned-in spares in stock.

Here’s how you budget without budgeting: Schedule monthly meetings with the CEO to review your updated 90-day plan for IT. You might be in a great situation, where you can turn the almost-always-nothing-but-lip-service point of budgeting into reality. Your budget is supposed to be the financial reflection of your plans, not just a stupid negotiating game. Not having to get a budget approved, you can make actual plans, let your CEO know what they are and what they will cost, and have real, productive discussions about what you’re planning to do.

If you aren’t in the habit of formulating a 90-day plan, the first one will take serious time and mental energy to prepare. Once you’ve done so, the time and energy you’ll need to update it once per month isn’t all that bad. And the discussion you’ll have with the CEO based on the plan … here’s what I’d planned to do, here’s what actually happened, here’s what the next three months look like and here’s what it will cost to make this happen … establishes you as the kind of executive who knows how to make things happen in an organized, efficient, quick way.

If your CEO has no interest in having discussions like this, my best advice is to work like this and spend like this anyway, only without the monthly review meetings. If the CEO calls you on the carpet for excessive or insufficient spending, bring your plans with you to account for your actions. It’s an opportunity to apologize for getting it wrong, and to ask for an hour each month to go over your plans so you can prevent a recurrence.

– Bob