Zero Based Budgeting
The trend
This approach to annual budgeting has swept through many industries over the last few years. The old way of doing annual budgeting was to start with what your budget had been last year and then explain how much your budget was going to increase this year (it seldom went down) and explain the reasons for the increase with all kinds of documentation to justify the increase.
The new approach isn’t much different except for the starting point. Now, instead of starting with last year’s budget, you’re starting point is zero. Zero Based Budgeting. Now the justification includes everything and everyone from the ground up. If fact, the really disciplined versions start with the purpose of your group, department or project itself. Every expense from paperclips to the senior vice president must be justified.
Meeting madness
I think the verdict is still out on how this idea will fare over time but for now, it’s certainly in vogue. But there’s one aspect of corporate life that I haven’t yet seen this applied where I think it would be particularly useful: Meetings!
The average corporate life these days seems to be; arrive at the office, grab your coffee and get to the first meeting of the day, followed by back-to-back meetings for six, seven and often eight straight hours or more. People are burnt out and suffering. Ah, but there’s more, they still need to get their work done. When does that happen? Early mornings when the office is quiet or at the coffee shop before you hit the office or get in an hour before the rest of the family wakes up. Staying late, get home when you can see the kids off to bed, get in a few more hours before you collapse. Saturdays, Sundays, holidays, vacations! All because meetings are taking up the entire work day.
The proposal
But what if meetings were required to take the approach of Zero Based Budgeting? Start by justifying the purpose of the meeting itself. Then justify the resources you need; materials, equipment, people and time. Why do we need 12 people in the room when three of them will make the decision? Why do we need to sit through one or two hours when the only piece we needed to be there for happened in the first or last ten minutes? Why do we schedule in full hour increments? Why not 17-minute meetings? All meetings fill whatever time is allocated to them.
A client of mine put together one slide that explained the Vision and Mission of the company followed by the three key initiatives that needed to be accomplished that year for them to be successful. All meetings were required to start with that particular slide along with an explanation (justification) of how that particular meeting contributed to one or more of the key initiatives. If the meeting couldn’t be justified on those terms, the meeting was not allowed to be scheduled. Zero Based Meetings! That approach provided two great benefits. One, the purpose and goals of meetings became abundantly clear and two, they eliminated about 40% of the meetings from the calendar. Zero Based Meetings!
Zero-based budgeting for meetings.
