Trey Richardson, Managing Partner
Summer is upon us. Association and corporate leadership are launching annual planning and budgeting processes. This cycle usually lasts through much of the fall, culminating in the next fiscal year’s budget for the organization and, importantly, government relations.
We are all aware the past few years have been rocky, and this election year may once again rock Washington and our nation. The new constant in politics is change — and change dramatically affects government relations operations.
Not only does change create uncertainty among members, employees, and consumers, who strive for stability and security, but unpredictable change shakes the core of our executives, leadership, and business processes. Even when we start six months early with promises of transformation, that quickly gives way to templates, redundant forecasts, debates over goals, and clashing with our colleagues for resources. But there is opportunity.
If the last few years have proven anything, it is that being agile is paramount to success. To accomplish your goals, I suggest a few keys to effective budgeting in the current environment.
Revise the purpose of planning.
Most planning and budgeting are designed to help us predict, command, and control. Predict precisely what the organization must do to deliver smooth, stable trends. Command each group to execute plans that will add up to the desired outcome. Then control activities within groups to ensure people perform. The rub is that in a world of unpredictable change, long-term forecasts are increasingly unreliable, and commanding people to stick to flawed plans is dangerous.
Effective planning and budgeting define success as opportunities for improvement and growth, not hitting your numbers. It focuses on learning and adapting, not on trying to predict the unpredictable. It tells the truth about forecasts, making it admirable to expose honest uncertainties and potential pain points, not pretend they are unthinkable.
Focus on strategic success.
As the planning and budgeting season kicks off, leadership assigns targets. Then, when all the budget submissions are combined, it’s common for the total to be too big. At that point, leaders prioritize spending and make cuts — often to your government relations program. On paper, it adds up. In reality, it seldom turns out that way. A better approach is to turn the targeted outcomes into strategic guidelines that move the budgeting process along.
By properly aligning resources with strategy, organizations can see the tradeoffs that should be made but aren’t working. This becomes more important in turmoil. Agile organizations anticipate what could be cut without sacrificing strategic objectives and how they should respond to unexpected events and results.
Frequency matters.
If budgets are inflexible and a forecast can’t be adjusted, the people making the budget obsess over accuracy. Left unchecked, it becomes a flywheel too large and too fast to handle compounding mistakes. However, if you adjust every quarter, month, or week, you can improve accuracy in far less time and with far less effort. Setting objectives and then adjusting plans to incorporate lessons learned is the best way to improve.
Successful outcomes from long term strategies are hard to predict. Planning should describe an expected path, estimate uncertainty, and adapt plans in the dynamic environment to achieve the best possible results considering current information. For most organizations, planning and budgeting have a comfortable certainty to it. Government relations professionals like knowing what is expected of them. Leaders like the control it provides. But being precise is not the same as being accurate, and plans that are flexible focus on what truly creates value for your organization and its constituents.
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