Strategic Alignment and Assessment of Resources Flashcards
The previous year’s budget is a starting point for the next year’s budget, and program and function leaders are told that they may increase or decrease it by a certain percentage. This is less time-consuming, but it does not recognize changes in business circumstances or practices that should affect spending.
Incremental budgeting
The previous year’s budget is “zeroed out” and no funding commitments for the coming year are assumed. The budget for every item must be proposed anew. This process can be time-intensive at first but becomes more efficient with experience. Its benefit is that it tends to reduce wasteful spending practices that can go unchallenged in traditional budgets.
Zero-based budgeting
The cost factors for specific activities are identified and used to estimate funding requirements. Once the function has accumulated historical information about cost factors, estimates can be more precise. This gives leaders more control over spending decisions.
Activity-based budgeting
The total amount of a function’s budget is apportioned to departments or activities according to defined percentages.
Formula-based budgeting
Presentation to management that establishes that a specific problem exists and argues that the proposed solution is the best way to solve the problem in terms of time, cost efficiency, and probability of success.
Business case
The condition or change impelling the function’s acton.
Statement of need
The objectives for an ideal solution are defined (the desirable outcomes of such an initiative), and the proposed action is described in sufficient detail to show how it meets these objectives.
Recommended solution
Risks should include outcomes that could decrease the project’s chance for success, outcomes that could present new opportunities that would require action, and the risks of doing nothing at all.
Risks and opportunities
The project budget should include all foreseeable elements (labor, equipment, fees, travel, etc.) plus a reserve for the unforeseeable based on the project’s risk.
Estimated costs and time frame
- Commit long-term
- Measure consistently
- Connect engagement to business results
- Seek employee input
- Gain leadership support
Engagement Efforts to Take
Broader concept than employee satisfaction, commitment, and morale.
Employee Engagement
Employees show high levels of energy and invest effort into their work.
Vigor
Employees are involved in their work and have a sense of pride and enthusiasm about it.
Dedication
Employees are fully concentrated on and completely engrossed in their work.
Absorption
Describes the inherent personality-based elements that make an individual predisposed to being engaged - a natural curiosity, a desire to be involved, an interest in problem solving. These traits may figure into recruiting and hiring efforts.
Trait engagement
Influenced by workplace conditions or practices (e.g., task variety, opportunities to participate in work decisions) that can be improved through organizational interventions directly under management’s control.
State engagement
Evident in the effort employees put into their jobs, which leads to greater value, creating higher performance than from their less-engaged counterparts. It can occur when both trait and state engagement are present.
Behavioral engagement
Encompassing three different aspects of employee health:
- Physical
- Psychological
- Social
Well-being
- Power resides with top-level management.
- Employees have no involvement in the decision-making or goal-setting processes.
Authoritarian
- Tasks and responsibilities are defined clearly to the employees and shaped by formal rules and standard operating procedures.
- Communication processes follow the direction given by the organization.
- Accountability is a key factor.
Mechanistic
- Collaborative decision making and group problem solving are embraced.
- Employees actively participate in the decision-making or goal-setting processes.
Participative
Organizational conventions, values, practices, and processes encourage individuals - and the organization as a whole - to increase knowledge, competence, and performance.
- Shared and continuous learning are embraced.
Learning
- Talent is championed.
- Innovation, elevated performance, customer-centric strategies, relationships, communication, and other characteristics are driven from the bottom up.
High-performance
One indicator of the organization’s financial health. It is a statement of the organization’s financial position - its assets, liabilities, and equity - at a particular time.
Balance sheet
What an organization owns. They can be tangible or intangible.
Assets
The money an organization’s customers owe the organization.
accounts receivable
What an organization owes. Can include items such as rent, loans or notes, wages and benefits that have been earned but not paid, reserves set aside to cover potential liabilities, unpaid fines or legal judgments, tax debts, and accounts payable.
liabilities
The money an organization owes its vendors and suppliers.
accounts payable
Combined with liabilities in the balance sheet because it represents what a company owes to either its owner(s) or its stakeholders. It is what is left of a company’s assets after liabilities have been discharged.
Equity
Compares revenues, expenses, and profits over a specified period of time - usually a year or a quarter.
income statement
Referred to as the “bottom line” and provides key information about the organization’s performance. = Revenues - Expenses
Net income
Compares gross profit with sales.
Gross profit / net sales
Gross profit margin
Net income / net sales
net profit margin
Illustrates the effect of all organizational activities - activities that both consume value (e.g., production, administration) and produce value (e.g., sales, investments) - on how much cash or cash equivalents the organization has on hand.
cash flow statement
