How to tell if a company prioritizes budget over productivity

Budget driven companies

I know a senior manager at a large company who did not meet his direct manager for 18 months due to a travel ban. Finally, the ban was lifted and he made the trek to corporate headquarters to meet his boss. One hour after meeting with him an announcement came out reorganizing the senior manager to a different group. Needless to say he soon left the company for greener pastures.

DollarSign

Following up on my recent articles about slavish devotion to budgets at the expense of business goals, the travel ban is one way to tell if a company is budget driven instead of productivity driven. Budget driven companies often make dramatic policy changes to try to affect their numbers on a short-term basis. Travel bans and hiring freezes are knee-jerk, quick fix policies implemented when it looks like the business is not performing in a given quarter.  While easy to enforce, these are rarely the best solutions.


United Airlines commercial about the consequences of pinching pennies

Regarding travel bans, if you think people are traveling excessively or extravagantly then those issues should be addressed, but a blanket policy is rarely good for the company. Also, the travel ban almost never applies to the CEO or other members of the executive team. I have seen travel bans put in place for the rank and file while the executive team continues to fly around solo on the corporate jets. These are the kinds of behaviors that give CEOs a bad reputation.

A hiring freeze often causes a company to miss top performers when they come on the market. I believe to be a great company you must have great people, and they aren’t necessarily available on your schedule. I want managers in my companies always looking for superstars they can add to the team. If the company can’t afford the additional headcount, then people who are not performing should be let go to make room. I have never seen an organization so full of great people that they did not need to hire any more superstars.

The best time to look for opportunities is often when economic conditions are poor. It was surprising to me that many companies shut down all acquisition conversations in 2008 after Lehman failed. Of course, the smart companies went into the market and bought assets at highly discounted values. I often see companies pass on acquisitions that could provide tremendous value just because buying something in that area wasn’t part of the annual plan. Strategy should be about intent not dictating specific actions.

What are some other ways to tell if a company is budget driven vs. productivity driven?

Related article:

The budget is set so no brilliant ideas until next year

How to balance the budget with the business

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