The start of a new year brings not just fresh opportunities, but also the first collisions with the reality of approved budgets. Managers now have to deal with what was decided at the end of the previous year, and start planning how to make effective use of the resources they've been allocated. From my years of experience and conversations across companies and management levels, I've seen how rules and standard practices within companies can start to distort the behavior of both managers and teams. That's the topic I'd like to dig into today.
I most often come across two kinds of situations.
The first is a manager of a “support function” team (say, finance, asset management, or HR) whose team doesn't visibly generate any revenue, and so is entirely dependent on whatever budget it's given. Very often, more is expected of this manager than what they've been allocated, because there's no internal valuation of the activities the team is supposed to deliver. And what impact does that have on the budget? Such a manager might be the best “steward” of resources, but the team suffers, because savings get made on things other teams enjoy. Employee events don't run overnight, because that's too expensive; there's not much fun involved, because that costs money too — so instead, people just work, so that with their time they can create yet more value to add to the team's endless list. And if they happen to go over budget, they get reprimanded, because after all, that raises overhead costs and worsens the company's results — meaning everyone else's bonuses.
This first team looks sideways — or often flat-out envies — the second team. Its manager runs “production” or “sales,” and large sums of money flow through their profit center. If business is doing well, nobody minds if costs run a bit over, because after all, that manager is the one bringing in the money. And if they have any money left over, a clear rule kicks in: “You have to spend it, or hide it away!” A publicly traded company wants to present consistent results, not surprises in either direction. The ability to forecast accurately is valued, and alongside that comes the risk that whatever isn't spent today might not be allocated tomorrow — or will have to be painstakingly justified all over again.
These two situations create tension within companies. Whatever budget is left needs to be spent fairly quickly, so money goes toward things that aren't strictly necessary but that make people happy — an expensive team-building event, say, or a lavish year-end Christmas party, or buying phones, computers, a second monitor, office chairs. All of these are visible symbols of unfairness that, instead of good collaboration, plant a negative feeling in people's heads that teams get split into different, unfair categories.
How do you think someone feels in a meeting when their old laptop takes several dozen seconds to boot up before a presentation, while the colleague across the table opens a new tablet and sketches their ideas directly onto the shared screen with a stylus? What attitude does a colleague bring to a meeting after enjoying an international team trip, now dictating from their position as “the one who earns the money” which activities will happen and which won't?
And how much could your company save or gain if leftover budget were saved, or allocated more sensibly, and put toward activities that are genuinely needed?
If transparent, fair dealing with customers is a core value at your company, and you notice similar dynamics between your teams, the best first step is to raise this topic openly in management discussions, and gradually strip these toxic patterns out of how individual teams behave, turning it instead into concrete actions. That might mean a shared Christmas party for support and production teams, a standard for organizing events, rules for office and computer equipment, or tracking equipment age — and then allocating resources to individual teams accordingly.