Budgets: One Quarter Down – Three To Go

Now that we’ve gone past March 31st, which is the end of the first quarter for most organizations, it’s a good time to sit back, take a breath, and think about how the year-to-date tracking is reflecting on your strategy execution success.


First quarter is over. Photo: Darren Bond

Sure, it’s still early, springtime, and quite possibly it may take more than a calendar year to measure success for some particular strategy. However, it’s very easy to simply keep all-hands-on-deck, heads-down, and forge forward without regard to whether any course correction is required. Or at least checking to see if anything is sending warning signals.

Put your money where your mouth is

Back to budgets: assuming they’re a way to allow you to put your money where your mouth is – turning your strategic objectives into day-to-day action, if you will – then it’s time to look at the results thus far and reflect on what they mean.

And, by budgets, the same principle applies to the whole balanced scorecard. Besides, most scorecards include some kind of operating expense metric in the financial perspective. Which makes sense.

So, do you have the mindset – philosophy – that for some metrics, the lower the “actual” result year-to-date the better, while for others the more/higher the better? For example, is underrunning your budget always a good thing? And if a little below target is good, then a lot below is better?

For other metrics, say, customer growth, is more always better? Can you really handle the unexpected/unplanned volume of business or are you setting up a scenario of customer dissatisfaction with service quality and responsiveness?


I’m a believer in “honesty in budgetting.” That is, when you’re setting up your scorecard and your budget, set a target for what you actually “need” or “want” or “aspire to” based on your strategic objectives. Then, as the year unfolds, track the results and see how close to bulls-eye they are. Less is not better; more is not better. Bulls-eye is better.

But, if you’re not seeing bulls-eye results, don’t freak. Take the time as a team to reflect on each one. Perhaps your initial hypotheses and estimates were off. That’s okay. You reserve the right to be wrong. But you don’t reserve the right to play games. Organizational performance is at risk.

Perhaps your original hypotheses are still sound but the execution has been lacking. Why is that? What can be done about it while the year is still fairly young? (This should be on your agenda.)

Course correction?

Perhaps the elephant in the room is that the strategy itself is off the mark. Better to talk it through as soon as possible and make changes before more good money is thrown after bad. As the saying goes: fail faster, succeed sooner.

You can’t do this if you don’t take a pulse check at least every quarter.

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