A Human Approach – Modern Leadership in a Changing World – Part 1
Making Sense of the Numbers – Balancing Budgets in Business
Long-term readers of this blog will be aware that I feel strongly about the importance of leadership in business and the fundamental difference between leading and managing. Inspired by this, I have decided to try something a little different.
Over the coming days, I will post five new blogs discussing different components of leadership in the corporate world. First, I would like to place the management of business budgets under the microscope, and offer a reminder that every financial decision a company makes could impact an employee.
Before we go any further, I should hold my hands up at this stage. My experience in the corporate world is not exclusively financial, and I have never worked as a CFO. I have, however, managed multiple projects that were assigned seven-figure budgets. I always sought to abide by one golden rule throughout this time; do not overspend, obliterating these budgets ahead of time.
This is potentially problematic, as life in the 21st Century is increasingly expensive. Balancing the books is a challenge that any business leader faces, and blowing through a pre-assigned budget ahead of time is a surefire way to fail. As much as any business needs to speculate to accumulate, striking that balance is at the heart of successful trading. Restraint is key, as is a sound financial strategy.
So, how can businesses work to ensure they do not blow through a budget and leave themselves at risk? If there is one thing the last few years have taught us, it’s that even the best laid plans to manage expenditure can fall under pressure due to unexpected events. To this end, it’s vital to maintain a contingency plan, always ensuring that your company and team do not pay the price for external issues.
The larger question remains: how is this possible in a world where external expenses keep rising? Any business needs to consider a frugal approach to protect themselves and their assigned budget, achieving more by spending less. Here’s the important part, though, and a theme I will return to throughout these blogs. This approach to cutting costs must be humanised, keeping the needs of employees and colleagues at the forefront of thinking.
Reducing unnecessary international travel expenses is an obvious solution, especially now that videoconferencing is so commonplace. Is a flight really necessary, when the same outcome can be reached with greater speed and cost effectiveness from the office or home? If you do need to travel and see people in person, is business class strictly necessary – especially if that decision is based purely on rank and status? Expressing concern about budgets while also needlessly spending on luxury sends a very questionable – and frequently demotivational – message to less senior team members, oftentimes women.
Outsourcing new responsibilities rather than taking on additional hires when you are worried about paying your existing team is another potential idea unless you can find efficient and effective ways to manage internally, as is reducing or spreading utility and technology spending. If your hardware is due for an upgrade, could it be cheaper to hire the latest and greatest IT rather than purchasing outright, especially when technology moves so fast? All of these alternatives could and should all be considered before cutting employees. Any COO needs to remember that employees are not simply another line on an outgoing expense spreadsheet, but human beings that deserve to be treated as such.
If one advantage can be gained from the pandemic and corresponding changes in the way we work, it’s the opportunity for flexibility. By operating a hybrid working policy, or even encouraging full-time home working, expenses and overheads may be reduced. As a cost of living crisis grips the globe, many employees may welcome the opportunity to save on commuting costs and balance their own personal budgets. A company’s team members feel valued and understood, while financial precautions are also being taken – it’s an ideal compromise for all parties.
The quest to run a successful business while remaining on the right side of budgeting does not always run smoothly. Hard decisions must be made at some stage, alongside potential investigations on how expenditure can be cut. Spending can be slashed in a variety of ways. The challenge for any COO is to ensure financial targets are met and potential overspending is identified before the issue becomes irreversible.
That concludes this investigation into the financial responsibility that goes hand-in-glove with effective, resourceful, and inspirational leadership. My next blog will discuss introducing new processes and systems to the workplace, without making employees feel expendable in the face of advancing technology.
Key Takeaways –
- The most essential element of managing workplace finances is not blowing through a budget.
- Financial considerations are vital, but leaders must never forget the humanity behind the numbers.
- The world is an expensive place. The cost of living crisis should be factored into workplace decisions.
About LEAD Network Europe
The LEAD Network Europe is a non-profit and volunteer-led organisation whose mission is to attract, retain, and advance women in the consumer products and retail sector in Europe through education, leadership, and business development. The LEAD Network is run by and for its members, women and men, and we value every individual for their unique perspective. With a primary focus on promoting gender equality the organisation strives for the advancement of women of every race, ethnicity, gender identity or expression, sexual orientation, age, educational background, national origin, religion, physical ability and lifestyle. Its vision is of a fair, diverse and vibrant industry where everyone can thrive. A diverse workforce where both men and women are enabled to contribute their full potential and lead their organisations to the next level of value creation. LEAD Network accounts for 15,000+ members – both women and men – from 81 countries.
For more information, please visit www.lead-eu.net