Top 5 Benefits of Multi-participant Budgeting

Group projects. A uniquely painful experiment that many of us try to avoid at all cost…

  • Two-way communication between team members is often a challenge.
  • Someone (or several “someones”) are perpetually behind and need to be coaxed along.
  • There’s always formatting variations in the final document (no matter how clearly you established guidelines up front).
  • And perhaps worst of all – usually half of all group members have an entirely different interpretation of the assignment’s original objectives or goals.

Admittedly, we’re being a bit obvious in the metaphor. But for many finance teams involved in a multi-participant budgeting process – it can feel like a highly dreaded and never-ending group project.   The good news is there are ways to avoid (most of) the pains of multi-participant budgeting

And even better, there are fantastic benefits – both qualitative and quantitative – for organizations that engage their staff in the budgeting process. Here are just 5 of the top benefits for your bottom line:

  1. Cost Containment: As the executor of the budget, the manager is likely better able to control the costs than anyone else in the company. 1
  2. Accurate Forecasting: Managers who are doing a job on a day-to-day basis have a better idea of what is achievable and what is prone to happen. 1
  3. Proactive Oversight: Managers are ideal candidates for continually monitoring progress against the budget and identifying necessary mid-course corrections. 2
  4. Increased Ownership: Bringing employees into the process and giving them accountability leads to greater ownership and engagement. 3
  5. Alignment with Strategic Objectives: Multi-participant budgeting fosters proactive communication and an improved understanding among staff of the organization’s strategic plan and their role in achieving that plan. 2

For more on the research behind these benefits, download the eBook: “When Budgeting is a Team Sport”

For more on avoiding the pains of multi-participant budgeting, check out the article in the AFP Magazine.

 

References:
1  http://managerial-accounting.blogspot.com/2012/11/participative-budgeting-and-its.html
2  http://www.principlesofaccounting.com/chapter21/chapter21.html
3 http://www.inc.com/resoources/leadership/articles/20070801/musselwhite.html

 

Read More