| What Nippon Broadcasting News does differently is that they don't attempt
to predict the future. Managers are responsible for putting together a
sheet of financial norms that reflect expenditures if everything goes normally.
Then each manager has the responsibility to spend what's needed to get
the job done, but no more; much like my early experience at Mervyn's. Both
companies are by nature fiscally conservative
This is the alternative. Instead of being responsible for predicting
the future needs of their areas of responsibility, managers are responsible
for developing a series of financial norms that describe fully how much
they will spend--if things continue as they are currently. Adjustments
to these norms are submitted as things change and, under most conditions,
quickly authorized. The manager is responsible for making both positive
and negative adjustments (surprises can also result in a necessity to lower
the norms). This process will have a significant positive effect in the
following areas:
1) It doesn't ask the manager to predict the future and then punish
him when he is wrong.
2) It provides a way of dealing with surprises (turbulent times). |
3) It doesn't take an inordinate amount of management time. In
fact, most of the time will be spent considering how to handle surprises.
This is how the available time should be spent.
4) It is extremely flexible, designed to handle unforeseen situations.
5) It eliminates the tendency to spend to maintain budgets at their
current level.
6) It gives managers the authority equal to their responsibilities.
The process believes, has faith, that managers will make the right decisions,
that they understand and support the company's commitment to being fiscally
conservative.
It is my hope that companies all over the world will see the necessity
of developing a system of financial responsibility along these lines, and
that we will see the end of a process that has failed to provide business
with any tools capable of accomplishing the goals set for it.
Brad Fregger
June, 26, 2000
Copyright 2000, Brad Fregger |