Go to Admin » Appearance » Widgets » and move Gabfire Widget: Social into that MastheadOverlay zone
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Christine Springer
December 4, 2015
State and local governments face a number of challenges including fluctuations in tax revenues, demands for increased investment into infrastructure, schools and social programs, uncertainty over federal funding and increased pressure to improve transparency and comply with the 2010 Government Performance and Results Modernization Act. Many states are improving the quality of their reports and making them available electronically, but many smaller jurisdictions are ill equipped to meet today’s challenges.
As an example, Gartner estimates that 80 percent of budget officers, especially in smaller government jurisdictions, still rely primarily on spreadsheets and homegrown systems to support analysis, forecasts and budget preparation. These factors illustrate the need to practice financial performance management and adaptive management processing so the budget no longer determines how the performance of units and people will be evaluated and rewarded but instead how managers can focus on value creation.
State and local governments, nonprofits and private-sector organizations use the adaptive process. To do so requires that the annual budgeting process be replaced with two performance management cycles: one taking a strategic view, continually looking two to five years ahead, and the other taking an operational view, looking five to eight quarters ahead, with a quarterly review so administrators focus on medium-term strategy rather than short-term targets.
The contrast between the old and new way of budgeting involves changes to the way leaders think and things are done. It looks like this:
The delegation of decision-making and spending authority has and will continue to be one of the key functions of budgeting but the adaptive process transfers power from the center to operating managers and their teams, using six common and shared principles:
1. Build a governance framework based on clear principles and boundaries.
2. Create a high-performance climate based on the visibility of relative success at every level.
3. Provide front-line teams with the freedom to make decisions that are consistent with governance principles and strategic goals.
4. Place the responsibility for value-creating decisions on teams.
5. Focus teams on customer/citizen outcomes.
6. Support open and ethical information systems.
The adaptive process opportunity model of budgeting focuses on local, rather than central, control. By giving capable and committed administrators the authority to make fast decisions in their local setting, they act responsibly, respond appropriately to threats and opportunities confronting them and deliver consistent results with an eye on competitive performance. The local team engages in planning and execution. They are the ones in touch with customer and citizen needs and the ones who have the freedom and capability to act. Central administrators also benefit. They have more time to challenge and support front-line people and reinforce principles and boundaries. Fast, transparent information ensures there are many checks and balances that provide strong controls. Lower cost is also a result of the process.
By removing the cost of the budgeting process and eliminating the entitlement mentality that traditional budgets create, front-line managers can spend less when they need less while feeling safe in the knowledge that they will be provided greater resources should they need them. The adaptive process budgeting model releases the enterprise, energy and capabilities of people supported by the process, appropriate tools and clear leadership principles. There is no place for fixed performance contracts and remote-control management. By doing so, administrators place more faith, responsibility and trust in their operating people in order to provide the organization with a unique source of competitive advantage and budget stability.
Author: Christine Gibbs Springer is the director of the executive masters degree in emergency and crisis management at the University of Nevada – Las Vegas. She is founder and CEO of a strategic management and communications firm, Red Tape Limited. Email Springer at [email protected]