Keep an eye on the budget which funds your job
Every role/job in an organization is funded by a budget.
Which budget is funding your job?
Identify it and understand what can lead to an increase or compression of this budget. Events which trigger increases or compressions in the budget can be early indicators of the downstream impact on the jobs being funded by it.
Most budgets within an organization fund activities and roles to:
Generate demand/order booking
Service clients
Monitor and report the health of the business
Build for the future
Sustain or sponsor individual relationships
Budgets allocated for demand generation & order booking
These spend heads are targeted at generating new business - from new or existing markets & customers.
Funding for the sales organization, business development teams, inside sales, direct marketing, and all teams directly involved with winning new business comes from these budgets.
Changes in these budgets are linked to the current and expected changes in new business wins.
Companies tend to ensure adequate funding to capitalize on any opportunities to win new business and explore new avenues for business growth. In addition, these budgets fund the teams who have built relationships with clients, distribution channels, and sales influencers over years, and these relationships are hard to replicate.
For these reasons, companies will shrink this budget cautiously and hence roles tasked with winning new business tend to be less vulnerable to sudden cuts in budgets.
If you are in a role being funded by budgets for new business acquisition, keep an eye on the health of the client(s) who you are engaged with or the market which you are growing business in. Healthy business growth facilitates budget growth and hence continued funding or growth in your role. Reciprocally, shrinking markets are a predictor of shrinking budgets, spend, and job reductions. A short downturn may not be a risk to business development jobs, but should it extend, time to start looking for alternative roles.
Budgets allocated to servicing clients
This spending is done to source, produce and deliver the goods and services promised to clients – i.e. to fulfil orders.
In a services company, these will be project budgets, while in a goods company like an auto manufacturer; these are the budgets for manufacturing and distribution of automobiles.
Teams working to deliver and service current customer commitments are funded from this budget as also those in customer service, invoicing, and accounting.
Most companies will aim to increase or reduce this spend rapidly to align with order inflow and backlog. Hence these budgets tend to be very sensitive to changes in current demand and market conditions. Vivid examples of this are in the hospitality and retail industries where these budgets increase significantly in the peak holiday and shopping seasons respectively, and then fall equally rapidly thereafter.
Another profession impacted frequently by swings in these budgets is consulting. Consultants understand that projects & budgets are of a finite duration and can also sometimes swing up or down at short notice. They network continuously to explore alternate projects which they can transition to when their current on ends as planned or unexpectedly.
If you are in a role which is funded by this budget, be vigilant and keep an eye on near term order inflows and backlog. Changes to those are predictors of budget changes and hence on the funding for your role. Keep networking and exploring alternative roles which you can move to if order pipelines start to shrink.
Corporate budgets
Corporate budgets fund activities which monitor the health of the business and also articulate it to the external world.
Many of the costs & roles funded by these budgets are linked to regulatory, legislative, and compliance requirements.
These activities are ongoing costs which the business needs to fund as a going concern, and often referred to as the “cost of being in business”. Derivatively, these are costs which a company needs to incur for long periods of time, and tend to also be less impacted by short term changes in the rise or fall in market demand. For this reason, these are also referred to as “fixed costs”.
Since these spends have long horizons, and often seen as costs which are not directly impacting business growth, companies aim to continually find means of driving these costs (and budgets) down. These are the spend heads which are most amenable to long term outsourcing contracts, migration to lower cost destinations, and aggressive automation – all of which may entail investment, pain or cost upfront but the horizon of benefits is long enough to ensure payback.
There will be a steady and ongoing compression of these budgets, and of the jobs funded by them. If your role is being funded from these, be mindful that any routine and repeatable work which you do will get automated or outsourced. To ensure resilience in your role continuously upgrade your skills. Be on top of new trends in your field - legislation, accounting, technology – and a step ahead of the competition from automation and outsourcing.
Development budgets
Development budgets are aimed at building new capabilities, products/services, and markets for a company. These are investments into the future health of the business.
These often tend to be a % of the overall revenue or profits of a company – i.e. x% of revenue for R&D, and y% for training.
Since they can be altered without impacting the current operations and health of the company, these can be increased or reduced to align with the current health of the business. If the business is doing well, these tend to rise, and reciprocally, when the business is faring poorly, these will tend to shrink. For that reason, they are sometimes referred to as ‘discretionary budgets”
If your role is funded by these budgets, be watchful of the financial health of your company. A change to it is a predictor of downstream impact on these budgets and also to the jobs being funded by them.
Sponsor budgets
Within each budget head, there is latitude with the budget owner to fund initiatives and people who he or she favors.
Clients may want to work with a specific account sales representative or project manager. Similarly, an executive may want specific individuals on his/her team. This preference can be triggered by long standing relationships or by expert knowledge of the client’s or company’s business/processes and hence the ability to be a valued advisor.
If your role is being funded because a client or an executive wants you on the job, work on enhancing your relationship with them and building intimacy with their business/business drivers so that you can make an ongoing contribution and be seen as an asset.
The resilience of the budget, and of you role can tend to be linked to the success of your budget owner and of your relationship. If the client or internal sponsor is doing well, working on your relationship with them can ensure the continuity of your role too. On the other hand, any risk to your sponsor or your relationship with them is also a risk to your role
In closing
Your job is being funded by a budget and it helps to understand which one and what factors impact it.
Budget heads range from those aimed at generating demand for goods and products, to those funding “lights on” operations. Budgets linked to specific clients (supervisors) or markets are most sensitive to changes in the health of the sponsor. On the other hand, those funding activities for corporate “lights on” activities like compliance and reporting tend to be more enduring but under constant pressure for productivity.
A change in the events which impact your funding budget can be an early indicator of changes to it and hence the jobs it funds.
Know your funding budget, recognize the trends which impact it, keep an eye out for any changes in those trends – they are early indicators of what could be downstream budget boosts or cuts and related impact on jobs.
Keep swinging!
This post is also published on LinkedIn if you would want to share it with your network - https://www.linkedin.com/pulse/keep-eye-budget-funding-your-job-sanjay-gupta?published=t
