Budgeting: What's wrong?

What’s wrong with having budgets?

Well, lots of things...

• It takes away a lot of management time
• Expensive: Ford Motor Company spent $1.2 billion annually on its budgeting process




• A survey showed that budgeting consumed between 20-30 % of senior executives' time
• A Stanford professor says that a few companies avail themselves of the data collected during the budgeting process to actually understand their business models and what actually drives success

• May drive unproductive behaviour. How? Evaluation & payouts to senior executives are based on whether the budgets are met/exceeded. Hence, they have every incentive to set targets that they can meet or, even better, exceed, while the boards will try to set ambitious goals... So whats the end result? The process rewards forecasting ability, and also the ability to negotiate with one's bosses
• Zero based budgeting is more of a myth. Everybody focuses on what the company achieved last year...
• Too much focus on the budget target: There is an example of a company not spending money fearing that they will miss the budget target...
• Another problem is that the budgetary targets is that its based on forecasting ability and negotiation. Its possible to hit the targets while losing market share, falling behind technologically, and even going broke

The obvious solution is to use budgets as rough guidelines for planning & forecasting, but to base assessments of executives, depts, and companies on indicators that more fully capture relative performance vis-a-vis external competitors.... is it growing faster, is it gaining or losing market share, is it out-performing its competiton in bringing new products & services to the market? Is it attracting & retaining customers & employees

The absence of rigid budget adherence is not the same as financial anarchy! Instead of spending too much time in meetings where people weigh past performance against budgetary goals, it can be more productive to focus on recent product and customer successes & failures, whats been learnt, & how the company can do things to be more productive/effective in the future...

Adapted from 'What were they thinking? Unconventional wisdom' written by Dr. Jeffrey Pfeffer

What were they thinking? Unconventional wisdom about management

Dr. Pfeffer (he’s the Thomas D. Dee II Professor of Organizational Behaviour at Stanford) has written an interesting book on management wisdom. Its called ‘What were they thinking? Unconventional wisdom about management.

He refers to an experiment he does on a regular basis with his executive students. He will go up to one & say, “Assume that you work in my company & that you are who you are- a competent, experienced, hardworking, intelligent individual, doing your best to do your job as you think you should. Now I come up to you & say, ‘Our organization has fallen on hard times- which, by the way, may be because of strategic mistakes you had no part in making- and in order to restore profitability & financial viability, we need to cut salaries & other employee benefits, by about 25%.’ How would you feel about this, and what are you going to do in response?”



He says ‘I have never once had an executive respond by thanking me for making the tough decision required to keep the organization economically viable. Instead I get one of the two responses. The first, often communicated with a reasonable amount of anger & emotion, is that the person is immediately going to look for another job & leave. The second response, if I add that general conditions of the job marker preclude such a move, is that he is going to with-hold efforts & ideas, cut back on what he does, & maybe find ways of getting back at management by intentionally messing things up.

Note what cutting salaries does beyond the immediate benefits of reducing the wage expense. First, it drives people to leave. And who is likely to be able to find another job? Usually, the best people- those who have the most skills, experience, and the highest levels of performance. As the best people leave, turning the company around becomes more difficult, because turn-arounds require insight & skill, & both are being lost.

Second, cutting salaries creates a desire of the part of those who remain to passively (by slacking) or actively (by sabotaging) harm the company….

Read the book. Its available in our library!

International Women's Day: 08 March

Annually on 8 March, thousands of events are held throughout the world to inspire women and celebrate achievements. A global web of rich and diverse local activity connects women from all around the world ranging from political rallies, business conferences, government activities and networking events through to local women's craft markets, theatric performances, fashion parades and more...

Many global corporations have also started to more actively support IWD by running their own internal events and through supporting external ones. For example, on 8 March search engine and media giant Google some years even changes its logo on its global search pages...

08 March is a Sunday. We thought of celebrating IWD on 7th itself (its a surprise so shush...) along with the exclusive women's event- LPL Throw Ball Championship!!

Wouldn't it be amazing if you personally are present to cheer up the girls? I think that would make their day!!

So what does a mentor do?

The competency assessment for Senior Managers and above has been completed.

The next stage is to create individual plans for them. The superiors have a very significant role to play as a mentor to this set of employees.

So what does a mentor do?

A mentor helps to induct, orientate and develop the teaching and learning skills of the mentee by:

• Attending regular meetings with the mentee
• Being well-prepared for meetings with the mentee
• Helping the mentee to set the agenda for discussions
• Making oneself available on an ad hoc basis to freely provide appropriate support and guidance
• Developing, monitoring and reviewing an Individual Learning Plan with the mentee
• Initiating reflective dialogue with the mentee, particularly about teaching and learning
• Sharing, exploring and reflecting on teaching and learning pedagogies
• Listening, clarifying, reflecting back and discussing
• Acting as a sounding board
• Conducting developmental non-graded observation(s) of the mentee
• Being observed by the mentee
• Facilitating the mentee to observe others
• Providing constructive feedback after observation
• Observing the confidential nature of the relationship and the dialogue arising within it
• Meetings with other mentors
• Attending relevant training to improve one’s own performance and skills
• Sharing information to the mentee about continuing professional development and opportunities
• Having a duty of care towards the mentee and helping them to deal with any emotional responses triggered by the training process

Sounds like a BIG list? Huge responsibility?

Yes, it is...

What New Year Resolution Can REDUCE Your Persuasiveness?

It’s that time of year again—the very beginning of it. In all likelihood, this means that you recently considered a variety of potential New Year’s Resolutions, ranging from getting that promotion to losing weight to spending more time with your family. But there’s one potential resolution that, should you fulfill it, might actually make you less persuasive. What is it?

According to social psychologists Cory Scherer and Brad Sagarin, giving up swearing in the New Year could actually make you less persuasive. The researchers hypothesized that when people pepper their speech with an occasional obscenity, the audience perceives an increase in the speaker’s intensity. Moreover, this boost in the perceived passion and enthusiasm of the speaker ultimately makes the speech more persuasive.

To test this idea, Scherer and Sagarin had participants watch a video of a five-minute long persuasive speech. For half of the participants, the speaker used the relatively tame swear phrase “Damn it!” once during the speech. For the other half of participants, the speech was exactly the same, except the swear phrase was omitted. Once the speech was over, participants were asked about their attitudes toward the topic addressed in the speech. Consistent with predictions, the data revealed not only that the speaker was viewed as more passionate about the topic when profanity was used than when it was not, but also that the former was more persuasive than the latter.

Does this mean that you should call up your clients and start filling your sales pitch with four-letter words? Of course not. First, the swear words used in this research were clearly very timid by modern standards. Second, the research also suggests that profanity is most likely to be effective when the audience is already generally in agreement with you, but you want to push them even more toward your point of view.

Still, these results should give pause to anyone considering completely abolishing profanity from their vocabulary in 2009: If you go through with it and eliminate even the tame swear words, you may find yourself breaking that very resolution—and cursing yourself out—the next time you fail to be persuasive.

Source:
Scherer, C. R., & Sagarin, B. J. (2006). Indecent influence: The positive effects of obscenity on persuasion. Social Influence, 1, 138-146.

How could a tiny seed create a huge tree?

Its common to say that trees come from seeds. But how could a tiny seed create a huge tree? Seeds do not contain the resources needed to grow a tree. These must come from the medium or environment within which the tree grows. But the seed does provide something that is crucial: a place where the whole of the tree starts to form. As resources such as water & nutrients are drawn in, the seed organizes the process that generates growth.


In a sense, the seed is a gateway through which the future possibility of the living tree emerges.

Source: Presence- Human Purpose and the field of the future: Peter Senge & others

Initiative: An important factor for transformational leadership

There was an interesting article in TOI, 04 Jan 2008.
It spoke of this interesting factor called 'initiative'. Its one of the most important factors for a transformational leader. It can result in innovations which can bring about a radical change in whatever we do.

Students design car that runs on water
B’lore Collegians Develop Vehicle With Mileage Of 500 Km A Litre
Bangalore: Imagine a car that vrooms 500 km on a litre of fuel, which has water as an important component. Students of RV College of Engineering here have built a prototype of an energy-efficient, eco-friendly vehicle that can dodge the twin crises of global warming and exhaustion of renewable energy resources. Various corporate giants have expressed interest in the project, with GE stepping in to financially support initial research costs and provide them with light and state-of-the-art polymers for the car’s aerodynamic shell. “Our first prototype released in August last year delivered a mileage of 180 kmpl. The new vehicle is being touted as the most fuel-efficient vehicle in India,’’ said Aashay Sahay, a team member of Project Garuda RVCE Supermileage that has masterminded the project. This car uses the principle of extracting hydrogen and converting it into gaseous form that can be injected into the engine, significantly revving up its fuel efficiency. The entire procedure is performed through a speciallydesigned hydrolyser kit and when perfected, this innovation could be applied to all cars and bikes to nearly double their mileage. Work on this front is guided by Vineet Engineering from Pune. The young team is confident that such a system can later help a vehicle run completely on water.

WATER WHEELS: Bangalore college students with their fuel-efficient car

Another system that has enhanced efficiency is the use of a fuel injector guided by an Electronic Control Unit (ECU). These ensure that the vehicle draws optimum fuel as it is calibrated along various power curves. The project has been nominated for the Rotary Young Achievers Award 2008. “Our dream is to enter it in two international competitions—the SAE Supermileage in Michigan next June and the Shell Eco-Marathon in the United Kingdom next July,’’ said a spokesperson. How water drives this machine Explaining the mechanism that drives the car, a scientist said: “When you hydrolyse water, hydrogen is separated from oxygen. The separated hydrogen is then injected into the engine in gaseous form which will be the fuel to run the vehicle. The use of hydrogen as gas could lead to the possible enhancement of mileage. If hydrogen is extracted from water, it becomes a fuel form.”