InformationWeek

September 22, 1997

Secret CIO: The Art Of The Budget

If your responsibilities can't be measured, you're in. But if you have to produce something, you've got problems.

udget time has thrust its ugly head up at us again. Summer has waned, and the numbers are waiting to be crunched. Sitting on the patio, beverage in hand, I contemplate the process that soon will make my life miserable.

Our way of doing budgets is for the heads of staff groups to review their preliminary budgets with their bosses and then take the wisdom they have gained to heart, remove the offending expenditures (rarely do we get the opportunity to add anything), and prepare for the real test, the final review with the Executive Committee.

I have just completed the preliminar y review with Phil Whitestone, our president and CEO, who is my direct boss, and I am not too displeased. I have survived-and only a few of our critical projects have been consigned to the scrap heap of history, offering up their existence to the god of corporate cost-benefit analysis.

Comparing notes with my colleagues, I have found that indeed, my department has fared rather well. I know that envy is one of the seven deadly sins, but it is my downfall, and the only thing that sticks in my somewhat jealous craw is the knowledge that the quality department has suffered no cuts at all.

It bothers me that people who spend their time having meetings with one another and putting out newsletters don't suffer the way we poor peons do. There, I've said it, but I do not stand alone in this attitude. Karen Lovell, our VP of planning, Crawford Huggins, VP of public affairs, and I came to this conclusion at lunch today. But I think I have figured out the reason, my gin and tonic sharpening my thought processes.

The way I see it, senior management does not have a clue as to what we do. This makes sense to me, since I don't have a clue as to what my direct-reports do. I mean, I think I do, but in reality, I doubt that I do. I know their jobs are complex, so if I think I understand them, I probably do not. At least, that has become my logic, sitting here. Anyway, as a result of senior management not having a clue, budgets are made arbitrarily.

If you are lucky enough to be in a group that's responsible for an in-vogue activity in your industry, like quality, you are on the road to smooth budget sailing. If other people are responsible for achieving your goals, you are really in good shape. And if there is no good way to measure what your responsibilities are-having a lot of coordinators and facilitators gives you extra points-then you're really in fat city.

If, however, you work in a department where you actually have to produce something and people can actually measure whether you do, you have problems. In that case, whenever you present your budget, management-because they take their jobs seriously-will cut it. If you do a good job that year in spite of the budget cut, you have just reinforced the management decision that cutting your budget was the right thing to do, and, naturally, your budget is cut even more the following year to reward you in the hope that you will repeat your excellent performance.

This process continues until you are doing a mediocre job. At that point, senior management is faced with deciding whether they are at fault for cutting your budget too much over the years, as you have been whining, or concluding that you simply cannot do the job that is required, and need to be replaced.

I feel a lot better now that I have an idea of how the budget process really works. And to think, it took me all these years to understand it!

Herbert W. Lovelace is CIO at a multibillion-dollar international company. Herb practices his day job under an alias and has changed the names of colle agues to protect the guilty. Send him E-mail at secret@cmp.com . He'll provide real answers-and whimsical comments-to your questions on InformationWeek Online at techweb.cmp.com/iw/current/secret.htm .

Back to Columnists