Page 151 - Budgeting for Managers

Budgetary Shenanigans
A long time ago, before I was a manager, I worked in the
computer department of a public university.The position of
director was not filled and several managers were working together to
134 Budgeting for Managers
run the department.The prior director left before the budget was
approved and it took several months to get a budget for the year.
During those months, we had to request each expenditure as an allo-
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cation of emergency funding.
Then, one day in September, the school administration approved the
departmental budget.The next day, they announced that the school
had run out of money for the year and there was a spending blackout
for all departments for the year.The computer department got hit the
worst because, without a director, it had no political clout.
The goal of all of this was to save money. However, it ended up
costing more money than it saved.The university did not approve
renewal of the maintenance contract on the minicomputer that ran
the entire school.When it crashed, it cost more to fix it just once
than the entire maintenance contract would have cost.
when money is available, to reduce interest charges for credit or
loans. These types of decisions are aimed at managing work in
order to spend money in a wise way. But a decision to trim next
year’s budget because this year’s budget was not fully spent
falls into the error of thinking that last year’s numbers are what
next year’s numbers should be.
Manager’s Checklist for Chapter 8

❏ Is your department’s budget preapproved? Or do you have
to negotiate for the funds?
❏ Can you learn more about how negotiations work at your
company? Is there anywhere else you could go to improve
your negotiation skills?
❏ Write a plan to negotiate for your budget. Can you make a
straightforward request? Do you need to pad the budget?
❏ Are you familiar with the accounting procedures you need
to follow to set up a budget? To help close an accounting

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