hello everyone, me and my boss are having problems with the budget control,
i am trying to install a sistem of reguards and penalties, do you have some advices for me?
could you be more specific about your goals here? Guards against what? Penalties for what?
Do you have an authorisation process? I agree with jhack we certainly need more information danie.
iam sorry for the little information the first post, actually I thought that no one was going to reply,! but lucky for me I was wrong,
my company`s sector is R&D, for vegetal seeds, so we have a breeding department (easy to control costs because is just salaries), laboratory department (easy as breeding), general department (easy as well), the problem is the farming department,
the farming department is formed by 4 different crops: tomato, pepper, cucumber and melon, (each have a manager)
this is beacuse they consume a lot of goods all the time and is dificult to control when they take the products and it is a waste of time to make them fill a form each time they take something,
so my idea was to assing a expenses when they ask us to buy them (iam in the financial and purchasing department), but my boss dont let me, I think this is a good idea but for the time i cannot use it (at least until my boss stays in the company),
so resuming: we cannot assing costs to the centers, (we can use the square meters to assing them but i dont like that, is not fair for me),
on the other hand lets supose we manage to assing costs in a fair way, i would like to implement a system of rewards and penalties, does anyone knows anything about this?
ok mates thanks in advance and looking forward to read the replies,
(sorry for my english, not native)
I feel we should put things in the right order.
The first thing is with your boss : [i]what are your main goals for the organization (as defined by your boss)?[/i]
my main objective is that the expenses in the company are controlled and that we spend exactly or less than the budget,
Danie when you set a budget to each area do you also set an objective of reducing the budget by X% year on year?
If each manager has no PERSONAL objective of reducing costs it will not be their main focus.
Do you have a graphical representation of the budget within the farming department, breaking it down between areas.
Your system of rewards and penalties needs more information, what kind of rewards and penalties?
NOTE: I have limited financial background in business.
OK I’ll have a go:
Setting the budget correctly per crop is the key factor. Do you know how much they SHOULD be spending? If you are farming indoors in a controlled environment, then you will be less affected by pests etc and can determine estimated costs more easily. Outside and there is are greater variables involved.
You say you are in R&D. Can you make contact with research facilities elsewhere and establish best practice?
Once anticipated costs are determined and accepted by the ‘farmers’ responsible for each crop, then controlling how the resources are used is essential. I am totally ignorant of your buildings and how much space is needed to store supplies.
On a large scale you can separate the resources into different stores close to the point of need and you can check usage occasionally. If the ‘farmer’ for each crop is the one who controls access to their store, any deficit will be readily apparent (assuming honesty). They will come to you for more supplies if they are running low and you will already know if you are checking levels. Then it is entirely acceptable to make them fill in forms explaining why they need more than was planned. Results can be fed back into next year’s budget.
On a small to medium term, can you assign someone the task of delivering the supplies to the individual areas? This person (yourself if necessary) can then log who needs what.
On smaller scale you may need an honesty system with each farmer marking off stock when delivered. Avoid from filling and rely on simple recording methods with you collating data. Each farmer could have a different chalk or pen to mark off when something leaves a shelf.
Year on year reductions will be hard currently as material price rises are particularly high at present. Future budgets should assume an inflation figure that you use as a base for identifying savings. E.g. 3% rise in costs over last year, but allowing 10% inflation adjustment a saving was made.
Contingency. Absolutely essential. Closely guarded and used on pain of death. Contingency is hard to get approval to when agreeing budgets and impossible to get after they are agreed.
Recording. Year on year build up budget projections and actual outcomes with reasons for divergence. Build up a picture which will allow you to forecast more accurately and incidentally show how you are performing against your objective.
Good luck. Disclosure – I am not a farmer.
[quote="danielon"]my main objective is that the expenses in the company are controlled [b]and that we spend exactly or less than the budget[/b],[/quote]
So I suppose your boss gives you the numbers for the company and you have to make people spend the budget or less.
Then you say : "[i]so my idea was to assing a expenses when they ask us to buy them (iam in the financial and purchasing department), but my boss dont let me, I think this is a good idea but for the time i cannot use it (at least until my boss stays in the company), [/i]"
Maybe am I wrong, but I feel there is a problem here. And maybe it would be better to solve it before going into technical things...
1) Why does your boss refuse to let you assign the costs? What do you mean by "until my boss stays in the company')
2) Are you sure he gave you as a goal to limit people spendings? It would mean :
a. You have the power to limit people's spending. Do you have it?
b. You will be judged on this goal.
I want to thanks everyone for your replies! very helpful!
sorry for the delay cedwat, been busy, i´ll try to anwser all your questions:
he doesnt want me to assing costs based on the purchasing orders, and thats what i want, and he says that it isnt possible beacuse they buy for all of them, saying that if one of the managers needs one thing they ask betwen them so only one does the purchase request, and to assing on consuption is very difficult as i told before,
when i said until he stays in the company i meant that i think that the new company will fire him and i will be the manager of the purchasing department and budget control,
i dont have the power to limit people spending and i realised this week that neither my boss have, jeje is quite funny and strange, iam new in this company but they spent 15 years spending practically everything they needed but that changed, and americans are coming now so that is why i think that my boss is not going to stay in the company,
iam not going to be judged on this goal if they dont comply with the budget but it will very good for my experience in the company if they comply with the budget, because iam helping a lot with reports and everything,
so anyways next year (i will start this at the end of this year) i will recomend this system: when they request a product they have to ask for only why they need and i will use that to assing costs, and i will divide the warehouse into 4 crops spaces so they can manage their products there,
ok man if you need any help let me know,
I NEED MORE POWER
[quote]he doesnt want me to assing costs based on the purchasing orders, and thats what i want[/quote]
Well, you know, he is your boss and if you have had a conversation about that and he told you not to do it, I don't think you should do it.
[quote]when i said until he stays in the company i meant that i think that the new company will fire him and i will be the manager of the purchasing department and budget control, [/quote]
Mmmm, well, in general, I don't think you get promoted by "killing" your boss. You get promoted by doing the best job you can under his supervision.
[quote]iam new in this company
iam not going to be judged on this goal if they dont comply with the budget but it will very good for my experience in the company if they comply with the budget, because iam helping a lot with reports and everything,[/quote]
I think you should first spend some time with your boss understanding what he wants from you, why he hired you, and how you can be useful.
[quote]I NEED MORE POWER[/quote]
What do you mean ?[/list]