but i have never seen budget cuts on this basis actually happening and i wonder how much of it is an urban legend that gets passed and ends up fueling inflation
‘Look boss I saved x from budget z but we achieved target y anyway!
‘Yeah but I gave you Z for a reason, if you’d have added extra resource you may have achieved y+1’
Only empire building is rewarded. Growth is everything.
Savings are overrated and for household budgets not corps or governments.
It seems so perverse to a layman, so why is it apparently so widespread? Are there contexts in which it's the best system (ie. better than any reasonable alternative)?
It isn't more complicated than that, it is very hard to motivate not reducing A's budget in that case. It does create perverse incentives, but at the same time what are you supposed to do as a manager in that situation?
But the implication seems to be that underspending departments are "punished" with a smaller budget in subsequent years. I would naively hope a good manager would ask for a justification of the spending of both departments, and allocate the forward budget according to reasonably-evidenced projections of value for money based on the organisation's priorities or goals. Perhaps the answer is that that is just too hard, or even more prone to being gamed.
One of those things that are widely true, but rarely admitted to. It seems to be very much a maturity thing. The older,larger and more governed an org is, the more likely such a pattern is.
Habits become precedents. Precedents become rules. A pattern emerges is everyone operates within rules. Staying within the ruleset, represents known safety. Even if something is dubious.. as long as it's within the rule set you are safe.
Is shaky principle tentatively applied once.. it doesn't have that kind of safety. That means it's less likely to be stretched and made absurd.
There is a logic to trimming unused budgets. not perfect, but it wouldn't surprise me if it worked well enough, often enough. If a department keeps going over budget, well.. they need more budget.. or maybe less work. Where is that budget going to come from? Departments without enough budget.
It's hard to get more legible, than last year's expenditure as the starting point for the next years budget. Nothing very notable about birthing this "principle."
I'm sure it makes sense, often. At least in the sense that it's the easiest, good enough method.
If there's a new management, using old methods is helpful. They don't know enough.. and this just gets the job done. If budgets become contentious, sticking to "principles" helps smooth things.
That is the point though.. whether it's a big-hype management method like agile.. or some unofficial budgetary principle that happened to work before these are principles. We like to be principled, especially when we don't really know what to do.
There's a literary trope of a bone casting seer. It takes a wise person to cast bones. It's an art and science. Sure, you have to know what all the bones mean. But, you also have to figure out it's a good idea to fight to fight this particular battle, build a town in that particular place... And also to understand the role bone casting plays in this particular case.
Bones must be cast, because we like external validation. It helps to bring everyone together, and calms underconfident, overwhelmed, or underunited leadership.
Knowing when to cast them, why, all the different implications.. how to define the question, how to approach the answer.. those are jobs for the seer, not the bones themselves.
Things are better when soldiers watch the stones, and chieftains watch the seer. If and when that flips, the paradigm is not at its best.
This applies to any part of the US government, not just the military.
https://teambuilding.com/blog/end-of-year-budget
However that doesn’t fit into the “government=bad” narrative the US likes.
For average person it's easier to change the government than to change Google CEO.
It's a principal-agent problem. Imagine there is $100,000 in front of you. You are absolutely forbidden from taking any of it. However, if you set it on fire, and write a short memo inventing a plausible justification for doing this, your working life will be easier over the next year. A lot of people would do that with only very minor guilt.
From the employer perspective: there's no magic way to find out whether spending is "good" or not. You can add process and reviewers to check. But that also costs money, and slows down all the actual work. That's how you end up spending $1000 of staff time to have a meeting to approve purchasing a pen.
And also ask for stuff you don't need, which you can "give up" during the budget allocation process.
Corporate Budgeting is a game. If you need to play, best you first learn the rules.
Having money left over at the end of the budget year is a failure, as that money could have been used in a profitable projects.
The point is not that investing the company's money wisely doesn't make sense but that looking hat how much each department used and then basing the next budget on that alone is the opposite of wise because those departments are run by humans that will be looking out for themselves first.
Put more bluntly, you cannot convince your bean counters to give you money you didn't spend, because if you didn't spend the money you didn't need it regardless your arguments for wanting/needing a seemingly extraneous budget.
Of course, this leads to the incentive of spending your entire budget no matter heaven or hell so you maintain your budget next year which can lead to actually wasting money rather than saving it.
Pretty idiotic, but it's the army after all.
Sounds about right.
But yeah, I can imagine militaries have a huge challenge stockpiling fuel without it expiring.
Maybe make you hit yourself whilst at it
The frustrating part wasn’t pointlessly dusting off training ammo; it was cleaning the weapon afterwards. The blank fire adapter that was needed to create the back pressure to cycle the weapon meant that none of the gunpowder residue left the barrel behind a round (as there wasn’t one), so all that residue was waiting for us at the barracks.
I don't understand why organizations haven't cottoned on to a rollover model instead. If you have unspent budget, you not only get the same budget the following year but also 10% of the surplus, subject to approval. And in subsequent years, increase the proportion of surplus you can tap. After all, you've clearly shown you can be trusted to spend company money honestly.
Basically large parts of US federal contracting run indistinguishably from a make-work program for contract firms and the COTRs and other contract-management staff working with them. It’s a major reason I’m certain that “modern IT” efforts like 18F or USDS or “groundbreaking” reforms like FITARA will never be allowed to amount to much (absent a Truman-style “integrate the military and I don’t give a shit what anyone thinks about it” mandate) — there’s too much money and too many staff wrapped up in the way things currently work, which is how they’ve worked longer than most of the people now in the system have been alive. None of the modernization or reforms will ever be completely terminated or repealed, because they’re too useful to point to as evidence that “see, we are aware of the problem and we are doing something about it”. Just as long as “something” never has any significant long-term impact on anybody’s budget, allocated FTEs, or revenue.
In the US military, if you want to keep your budget, you have to spend your budget. If you spend less than your budget, your budget will shrink because you don't need it. So, you have some very strong incentives to spend as much money as you possibly can without going over your budget, otherwise the next year you might actually need that money but not have the budget for it.
I'll let you use your imagination on what kinds of things were purchased (because they probably were if they were available to be purchased and the unit was under budget that year).