In most organisations, budgeting is an annual process.

During this period business units take time to plan out the purchases for the next year. They look at projects that align with the strategic direction of the business and decide which will have the most impact. Reasonable estimates for time and cost is chosen. The process is relatively simple and often leads to a successful year ahead.

AH HA HA HA HA HA HA HA HA HA!

Budget time has consistently been a hectic, rudderless boat, with people often unsure what they are going to do next. And estimates are often based on SWAG – Scientific Wild Ass Guesses.

Now, most budget items have the best intentions, but depending on how your organisation uses the budget, it just becomes a burden. This could happen for a few reasons:

• most organisations will not make a purchase unless it was budgeted for, so essential purchases may have to be deferred until the next year.
• this leads business leaders to overload the budget with things they “may” do the following year, but not quite sure.
• because the budget is so overloaded, finance departments have to go through and cut many budgets, because there is no cohesiveness in budgets as they are done separately across units. This leads to critical items getting cut sometimes, simply because they were large budgets.
• because many of the items made it to the final budget may not have been truly important, they often get deferred.
• these deferred projects lead the finance people to say that you never really needed that money and cuts the budget further the next year.

In the worst cases, because business units do not want to lose the money, they just spend it on something. Then that something is either wasted or implemented so poorly that you may be better off having not purchased it, to begin with.

This whole thing happens because of Year-on-Year accounting mainly.

Budgeting itself as a practice is not a bad idea. I work with a budget for my personal and home life and know the benefit of doing so. The difference is that I don’t lose my budget if I didn’t spend money over the past year, and the amount of money I earn the next year is unaffected by how much I did spend. Further, I don’t have to deal with shareholders.

Organisations can choose to be a little or pragmatic about this whole process but want to be pedantic instead.

Today a coworker and I were lamenting about how many people try not to tell the truth about how things like projects or other operational items are going. They’ll all try to put a positive spin to make it sound that all well when in reality it’s all shot to shit.

This happens a lot during audits, where people try as best a possible to hide any skeletons that may exist. The most activity to occur in term of ensuring that almost every control is checked is just before the audit is carded to start.

Now maybe that’s the expectation: that the audit is not meant to catch us not doing the right things, but determine that we know what the right things are. But probably not.

I believe we should try to be as truthful and as transparent as we could be for everyone to see. It will hold us accountable, and as a plus, if anyone sees us struggling, they can provide support before it becomes a problem.

But this is hard for people. No one likes to be the bearer of bad news. So they keep the bad news as quietly as could be until it can be resolved quietly, or can no longer be kept quiet.

But these secrets come at a price. Because we don’t fess up and try to make amends, we never really learn. As a result:

• They often don’t help us improve or get better next time. They only help us get better at keeping things quiet.
• We often try not to make the same mistake, not by doing the tasks better, but by avoiding it altogether.
• If by chance the truth comes out, people will have a hard time trusting you next time around.

So do yourself a favour and tell the truth. If you need help giving bad news, this is a helpful article.