Linking Budgets to Strategy
‘Business as usual’ - i.e. the resources that will be expended within departments based on their current day-to-day activities.
‘Initiatives’ - i.e. those resources that are targeted at projects and other activities not currently being done that are considered by management as being of strategic importance.In order to monitor the impact of both types of budget we can add two extra sets of measures (if not already present):
- Measures that capture the work being done by individual departments. These are likely to be unique and should be kept to a minimum. The aim is to capture the effort that the budget resources allow us to perform. For example, the marketing department might capture the number of mailings or social media comments made. Sales may record the number of prospective client calls, and so on.
- Measures that capture the output of each department. I.e. the results the workload is hoping to achieve. Where activities are linked, the output of one activity is likely to form the input to the activity that follows.