Budget-itis: Uncontrollable twitching and/or flinching for no apparent reason; symptoms often correlate with the turning of the leaves in autumn.
Are you in the middle of the annual budget process? If you’re company is like most organizations in America, you’re either right in the middle of the annual budget process, or trying desperately to finish the budget process before the holidays arrive. Having spent the best part of my 30 year career creating and/or managing to corporate budgets, it’s usually when the leaves are turning, like they have been for the last few weeks, that I start to twitch and flinch. Maybe the memory of the long days and late-night hours are part of what causes budget-itis, but a large part of the distress results from a ludicrous budget process that embraces the misuse of comparative benchmarking data to help justify certain budget targets.
Please allow me to explain: Have you ever been asked to perform at the 90th percentile, 75th percentile, or sometimes just to produce above average? Beware if the “performance” benchmark is one-dimensional, measured by one or two simple mathematical calculations such as; Support Staff FTEs per Provider, Gross or Net Dollars per Physician, LAB Tests per LAB Tech, and so on.
The most important element in effective benchmarking is to ALWAYS include several quality measures along with the productivity measurements – what I call multi-dimensional or balanced benchmarking. Consumer feedback, clinical outcomes and productivity can be simultaneously measured and evaluated as dependent variables, all interrelated and ALL critical to contributing to the organization’s success.
As part of their annual budgeting process some service organizations resort to reducing human resources to “fix” their financial situation. When human resources are reduced based on one-dimensional benchmarking data, the organization’s financial situation will almost always worsen. More often than not, the organization’s ability to provide the very product they are in the in business to produce – service! – is substantially diminished! Go figure! (No pun intended).
So, if you’re starting to twitch and flinch as a result of the leaves turning you too may have budget-itis. There’s no cure for budget-itis so far as I know, but a good dose of balanced benchmarking will keep budget-itis in check.
— Jerry Stone