Unit 4 Performance-Based Leadership in TSL Budgetary Practice

Overview

In this unit we address Performance-Based Leadership in Transformational Servant Leadership (TSL) Budgetary Practice.

Looking at TSL and Money and various levels of the Service improvement Flow Chart (or TSL pyramid) affected by finance, we see that regardless of what we think about finance, the top of the pyramid is represented and defined by results. The second line from the top in the same flowchart includes resources as important to the move toward results. When we look further down the pyramid, we see accountability and transparency are also included as part of service improvement practices within TSL. This leads us to conclude that in handling money and budgets, through practice and effective development processes to create effective results and use of resources, transparency and accountability are central to success.

One important review area is Financial Analysis Ratios. When reviewing the four types of Financial Analysis Ratios: liquidity, asset utilization, profitability and leverage, we see the ratios are important for a fuller understanding of budget development and preparation related to reporting in financial statements, balance sheets or income statements. Generally understanding Financial Analysis Ratios provides a good baseline of information for outlining the important financial results for completing the results-based leadership picture a TSL organization needs.

As we examine the wide variety of accounting types available to organizations, it provides us with an understanding of the many principles used by industry professionals. Looking at the practices of Certified Accountants (CA), Certified Management Accountants (CMA) and Certified General Accountants (CGA), and the accounting information (control and report activities, from simple to complex) they use to inform, understanding of different accounting approaches and the different things they accomplish is important for rounding out a clearer understanding of TSL organizational results necessary for success.

In this unit, we review principles related to developing a budget, addressing budget purpose for transparency and accountability to help establish clear reporting expectations in processing relevant budget information. Knowing the importance of developing balance sheets for reporting organizational assets and liabilities by showing revenue and expense patterns, also helps provide a better picture for obtaining results.

By the end of this unit, we will develop a clearer understanding of general TSL budgetary practice and have opportunity to connect these practices to what occurs in your organization. Results based budgeting requires approaching the task of budget leadership confidently, even if we are not generally financially oriented.

Topics

This unit covers the following topics:

  1. TSL and Money
  2. Financial Analysis Ratios
  3. Different Types of Accounting
  4. Developing a Budget

Learning Outcomes

When you have completed this unit, you should be able to:

  • Interpret and articulate organizational structures and how they inform or detract from healthy organizational practice in their organization.
  • Compare qualitative and quantitative measurements; practice and research to determine when to use them.
  • Identify important principles required for understanding budget forecasting statements and tools related to organizational budgetary responses and their roles as TSLs.
  • Develop, track and interpret theoretical recommendations for addressing budget issues influencing and affecting/effecting budget performance and results in their organization.
  • Describe the impact measurement has on organizational practice of mission, vision, values, finance and structure

Activity Checklist

Here is a checklist of learning activities you will benefit from in completing this unit. You may find it useful for planning your work.

Learning Activities

  • Learning Lab Activity: Budgeting and the Importance of Asking the Right Questions: The focus of this Learning Activity is on understanding how effective budgeting practice requires that we ask the right questions. As part of this Learning Activity, you will be using your own organization as the basis your for your review - be sure to compile this information prior to the Learning Lab. Take some time to carefully consider each step and how it ties into the content we have been studying.
  • Learning Lab Activity: TSL Stewardship and Budgeting: The focus of this Learning Activity is applying your knowledge of TSL Stewardship and Budgeting. As part of this Learning Activity, you will be using your own organization as the basis for your review - be sure to prepare this prior to the Learning Lab. Take some time to carefully consider each step and how it ties into the content we have been studying.

Assessment

  • Unit 4 Assessment: Discussion Question/Reflection Post: Assessment for Unit 4 will be a post on the discussion forum. Be sure to carefully read through the instructions as you are responsible for completing three separate posts (and responding to your peers). Click on the “Assessment” tab for additional information.

Resources

Important: You need familiarity with core course texts. The course texts listed below are for your daily preparation. Pre-reading course texts, prior to the course start, then re-reading content for each day of assigned reading will deepen understanding of content and allow you to engage materials more completely.

All other text resources for daily reading are available online where you can retrieve them on the Unit page where the reading is required for completion to fulfill learning outcomes for the unit.

Here are the required resources you will need to complete this unit:

  • Delahaye Paine, K. (2011). Measure What Matters: Online Tools for Understanding Customers, Social Media Engagement, and Key Relationships. - Read Chapters 12, 13 & 14
  • Eurich, T. (2013). Bankable leadership: Happy people, bottom- line results, and the power to deliver both. - Read Part 1
  • Friedman, Mark (2005). Trying Hard Is Not Good Enough. How to Produce Measurable Improvements for Customers and Communities - Read Chapter 3
  • Ulrich, D., Smallwood, N., (2013). Leadership Sustainability: Seven Disciplines to Achieve the Changes Great Leaders Know They Must Make - Read Chapter 7

4.1 TSL and Money

Before we move forward, take a moment to review the TSL Pyramid (Service Improvement Flow Chart) from Unit 1: Topic 3….

Looking at the Service Improvement Flow Chart (TSL pyramid), we see every descriptor on the pyramid leads, step-by-step, to results. Whether we focus on resources, accountability, or transparency, they all flow toward an end purpose: results. Handling money, budgetary process, reporting, and developmental processes all lead to results creation and uses resources transparently and accountably. When a Transformational Servant Leader (TSL) handles money for Service Improvement, they act as stewards of the resources used for obtaining the organization’s best results, in as transparent and accountable manner as possible.

Money is the instrument used for dealing with economics and budgets. The conventional understanding of economics promotes the idea that organizations served, exist to add funds to national economies by trading products on a simple level. In its simplest explanation, organizations exist to make money for shareholders, owners, employees, and every stakeholder involved in the overall process.

Whether the organization represents a national, regional, or local economy, they all exist to create money. We need to understand that everything organizations participate with must create a profitable money base. Your money turns back to the people, or the organization served, and is paid out in taxes, salaries, and dividends. Profit margins still drive the services and monies engaged with accomplishing organizational budgetary goals with the results of those recorded and measured activities.

People-centric economic organizations exist to contribute high-priority value to the community. They promote and contribute high priority value to communities, whether they run as a local enterprise or larger organizational construct. People-centric economic organizations promote specific products or services related to commodities like oil, gas, electrical, utilities or services to the community. The interest generated and capital invested contributes to the creation of high priority value to the communities where they invest.

As organizations make an effort to meet needs through creating a profit, conventional competition allows organizations to keep options open, by pursuing the ones working toward meeting goals, but also creating an equitable (financial and social) response to money output. Competition for scarce resources exists. Organizations compete for similar resources in every sector. No matter what resources or organizational structures represented, they provide similar services.

Budgets

Sometimes budgets are an impression of what people have and not always a true representation of what is. Looking at budgets as a scorecard, we see budget performance as a central focus for every budget. Paying attention to the details allows budgets to work well as long as performance is a central measurement for managing the budget - if you are losing funds, in any area of your budget, you are failing to meet budget targets. A budget, as a scorecard, requires moving the budget forward successfully in every area and reporting line.

Working with any increases, requires asking whether budget lines and projections are improving or requiring a full review to bring those increased reports into alignment with the anticipated budget expenditures. As more resources are developed, it is important to keep budgets and reporting focused and transparent. Whenever we handle resources, we need accountability and transparency to maintain operational focus. Collaborating across organization lines requires managing resources effectively to look at making products, or offering services, effectively and efficiently. The result is a corresponding results focus in the development of a stewardship culture. Addressing this requires asking the right questions:

  • Can you focus the activity to require fewer resources?
  • Who performs the budget activity best?
  • Should the activity occur at all?

4.2 Financial Stewardship

Financial stewardship is the careful and responsible management of money entrusted to one’s care. Looking at values and stewardship in budgets, we become guardians of budget validity and are responsible for setting priorities. It also forces us to ask questions to focus our efforts:

  • Where do we spend?
  • What do we spend?
  • What is important for us to spend?
  • What is less important for us to spend?

When we establish budget priorities, and focus on things needed for our budgets, we need to guard against getting lost in the idea of what we want to do versus what we need to do. Establishing priorities requires a commitment to establish, focus and determine what is best. Questions like the ones appearing below can help us stay on track.

  • How are values and good stewardship principles incorporated to determine where we spend our money? What do we spend our money on?
  • How do we project our future?
  • What does the budget need to meet the needs for the company and the people served?

Budgets provide a synthesized analysis of a budget. You can look at it to tell you how things work together to give you the opportunity for creating a clearer picture for people to see, check on progress, and translate this budget picture through representative graphs, forms or reports. This allows analysis of relevant budgetary information, by breaking down the various parts to determine:

  • How well the budget is doing?
  • How poorly are they doing? What areas are doing well? What areas are doing poorly?
  • What areas need improvement?
  • How you will improve the budget, break it down and analyze the information received?

An effectively developed budget tell you the impact it has on results. If a budget says you’re going to make $100,000 a year and you only make $50,000 a year, you need to examine what impact these results have on the budget. If you planned to spend $30,000 on materials to create a product to sell and you only have $15,000 to spend, what is the impact on the budgeted results? This carries through to every part of a budget. If you set aside $50,000 for employees and salaries and you only raise $25,000 in the budget, what is the impact on the results of your product, your process and your organization?

Going forward, budgetary responsibility provides accountability. If you go over-budget through the year, you need to answer the BASIC accountability questions: Why, why, why?:

  • Why do you have less than projected?
  • Why did the reports not catch this earlier?
  • Why is your budget in shortfall?

Accountability

Accountability helps us answer questions about what we do well (and not so well) to confirm budget validity. Good budgeting enforces budget directives and the decisions regarding what the budget should look like. Compliance focuses us toward accomplishing goals, values and results. Budget compliance allows the organization to understand and fulfill mandated goals.

Auditors are an important part of the values and stewardship process. Whether a comprehensive or social impact audit, they reveal things requiring attention to ensure a continued commitment to values and good stewardship principles of. Audits express an opinion of financial health through financial statements presented through generally accepted accounting principles. The audit process indicates the whether particular practices within the budget are reasonable and provide a report indicating whether the budget can do what it says it can. It is important to look at audits as ways to ascertain organizational economy, efficiency and operational effectiveness.

Comprehensive audits look at every part of the budget, from value for money related the various parts of the budget, to ensure corporate compliance and review of operational procedures. By understanding budgetary responsibilities, we ensure organizational compliance for the budget to meet its obligations and stabilize spending to maximize profit margins for the organization. Comprehensive audits outline the responsibility for the people handling the budget, by examining and identifying their particular responsibilities for the areas covered.

This is where people can improve their performance in budget responsibility through suggestions made in the audit. A comprehensive audit includes recommendations to improve procedures and activities for enhancing the organizational economy, and identifying efficiencies and effectiveness in all areas covered by the audit and inclusion of auditor opinion in the financial statements.

Social Impact Audits

Social impact audits identify and validate corporate social responsibility programs and their intended purpose and objectives. Audits enhance efficiency through structured value-added mechanisms, to align programs with structured process-based frameworks for directing organizational best practices.

Social impact audits need assessment of baseline purposes to assist project stakeholders and implementation partners to ensure agreed upon processes follow due diligence guidelines to help the people they serve.

Due diligence requires carrying through with independent mid and end-term assessments. They don’t just happen on a yearly basis. Social audits generally focus on non-governmental, nonprofit or charity-based agencies. Social audits and assessments require reviewing the documentation and official records related to the social responsibility the organization undertakes. The social audit process determines how expenditures reflect the money spent for projects, through the methodology and process to assist the social activities and interventions implemented.

Content Ethics

Content ethics requires due diligence in making content clear and that there is nothing in the reporting language that causes people to be uncertain about what is revealed in the budget. There’s a transparency around results. Nobody is trying to hide anything. Everything in the budget is stated clearly so everyone sees what is spent to meet the social needs engaged and there is nothing hidden through process and amendments added. If amendments need to occur, they are an ethical response to changing budget parameters through the year. These are crucial changes from to what we now understand are necessary to assist the amendment process for constantly improving budgetary practice.

4.3 Financial Analysis Ratios

As part of our study of the financial considerations of TSL practices, it is critical that we explore financial analysis ratios. Generally, financial analysis ratios include four types of ratios: liquidity, asset utilization, profitability, and leverage. Data for understanding ratios derives from financial statements, balance sheets, or income statements.

Liquidity Ratios

Liquidity ratios examine the ability to pay off short-term obligations and are commonly used by creditors and lenders to decide whether to extend credit or debt by comparing liquid assets to current liabilities. The higher the ratio, the better the ability for the organization to pay its obligations in a timely manner.

Liquidity Ratios Include… - Click to expand

Current Ratio

  • Compares current assets to current liabilities.
  • Main flaw is the inclusion of inventory as a current asset - Inventory does not easily convert to cash.

Quick or Acid Test Ratio

  • Same as current ratio, but excludes inventory.
  • Remaining assets should be readily convertible into cash.

Cash Ratio

  • Compares cash and convertible investments to current liabilities.
  • Most conservative of the liquidity ratios. Useful when current liabilities are due for payment in the short term.

Asset Utilization Ratio

  • Calculates total revenue earned for every dollar of assets owned.
  • This ratio frequently compares company efficiency over time.
  • An increasing asset utilization means the organization is more efficient with each dollar of assets.

Formula: Asset Utilization = Revenue / Average Total Assets

Asset Turnover Ratio

  • Measures the ability to generate sales from assets by comparing net sales with average total assets.
  • Shows how efficiently a company uses assets to generate sales.
  • Calculates net sales as a percentage of assets to show how many sales generate from each dollar of assets.

Fixed-asset Turnover Ratio

  • Used to measure operating performance.
  • Specifically measures the ability to generate net sales from fixed-asset investments, namely property, plant and equipment (PP&E), and net depreciation.
  • Higher fixed-asset turnover ratios indicates an effective or ineffectively utilization of investment in fixed assets to generate revenue.

Inventory Turnover Ratio

  • Shows how many times a company sold and replaced inventory during a given period.
  • Calculates inventory turnover to help businesses make better decisions on pricing, manufacturing, marketing and purchasing new inventory.

Accounts Receivable Turnover Ratio

  • Quantifies effectiveness in extending credit and collecting debts on credit.
  • Measures the efficient use of assets.
  • Calculated by dividing net value of credit sales by the accounts receivable during the same period.

Average Collection Period Ratio

  • The average number of days between the date credit sales occur, and the date the money was received/collected.

Profitability Ratios

Profitability ratios, on the other hand, assess a business’s ability to generate earnings relative to associated expenses.

Some Profitability Ratios Include… - Click to expand
  • Gross Profit Margin Ratio: Measures how much of every dollar of revenue left over after paying the cost of goods sold.
  • Net Profit Margin Ratio: Measures net income earned with sales generated by comparing net income and net sales.
  • Profit Margin Ratio: Shows the percentage of sales left over after all expenses are paid.
  • Return on Assets Ratio: Measures the amount of profit the company generates as a percentage of value of total assets.
  • Return on Stockholder’s Equity Ratio: Measures the ability to generate profits from shareholder investment by showing how much profit stockholder equity generates.
  • Return on Investment: Measures the gain or loss generated on an investment based on money invested and usually expressed as a percentage to compare profitability to the efficiency of different investments.
  • Return on Assets Ratio: Measures profit generated as a percentage of the value of total assets.
  • Earnings per Share Ratio: Measures profit generated and reported through earnings per share on a quarterly or yearly basis.

Leverage Ratios

Finally, we turn our attention to Leverage Ratios. Leverage ratios are used to assess the ability to meet financial obligations.

Some Leverage Ratios to Consider Include… - click to expand.
  • Debt to Total Assets Ratio: Tells percentage of total assets financed by creditors, determined by the total liability divided by total amount of assets.
  • Debt to Stockholder’s Equity Ratio: Calculated by dividing total liabilities divided by shareholder equity.
  • Times Interest Earned Ratio: The ability to meet interest payments on debt.
  • Common-Size Ratios: Tells whether a line item on a balance sheet or income statement is big or small when measured against other items.

4.4 Types of Accounting

In this section we will be looking at the various types of accounting (used by Certified Accountants (CA), Certified Management Accountants (CMA), and Certified General Accountants (CGA)), results-based leaders rely on. They use financial information gleaned from these professionals, or in-house financial experts, to inform and control organizational income and expenditures.

Types of Accounting Include…
  • Financial Accounting: Prepares financial statements for decision makers in the organization.
  • Management Accounting: According to CPA Canada, Management Accounting identifies the information needs of management and developing systems to meet those needs. They include planning, forecasting, budgeting, cost and revenue management, as well as performance measurement.
  • Financial Accounting: *A specialized branch of accounting to keep track of financial transactions, by using standardized guidelines, where you record, summarize, and present transactions in a financial report or financial statement (a.k.a income statements or balance sheets).
  • Forensic Accounting: *Analysis of financial information for use in court, to legal standards by utilizing accounting, auditing and investigative skills and practices for conducting an examination of financial statements. It also provides accounting analyses where forensically trained accountants look beyond numbers and deal with business realities of various real time situations to review past practices and look for discrepancies in general accounting practice or data entry.
  • Cost Accounting: *Creates financial records to track financial progress in projects to capture costs of production by assessing input costs for each production step as well as fixed costs, like depreciation. Cost accounting measures and records costs individually, then compares results to aid measurement of financial performance.
  • Social Accounting: *Communicates social and environmental impacts of organizational activities by translating it into traditional financial accounting terms.
  • Bookkeeping: Recording, storing and retrieving financial transactions and tasks involving:
    • Billing for goods sold or services provided.
    • Recording receipts.
    • Verifying and recording invoices.
    • Paying suppliers.
    • Payroll and the related governmental reports.
    • Monitoring individual accounts receivable.
    • Recording depreciation and adjusting other entries.
    • Providing financial reports.

4.5 Developing a Budget

Developing a budget requires addressing transparency and accountability in budget purposes and practices, where clear reporting expectations are in place for processing information. This involves, but is not exclusive to developing a balance sheet to allow for asset and liability reporting in the budget statement to prioritize revenue and expenses from the time of the report, and into the future.

Under traditional definitions, operating budgets usually list day-to-day monetary activities for the entire organization. With traditional operating budgets, program budgets report the activities for one program to disseminate revenue and expenses and describes program aims noted by the budget and its defined constraints.

Grant-based budgets report activity supporting the activity related to a single grant. The budget records cash flow (cash in/cash out) and how it relates to expenditures within the grant budgetary framework for organizational activities.

Capital budgets track income and expenditures related to infrastructure development, to building physical parts of the infrastructure outside normal operating for the organization. Like regular budgeting practices, budget reporting is time bound, reflecting a reporting schedule based on yearly reporting.

With generalized budgetary structures, reporting is monthly, with the full year represented by 12 monthly reports gathered together. This style of reporting is the most precise for organizations closing monthly, but also used where there is greater cash flow.

Budgets can project a multiyear projection for strategic planning to project multiyear budgets to gain approvals, and frame the material and information into multi-year reports and assist with providing information the granting organization.

Top-Down and Bottom-Up Budget Creation

Two standardized approaches to creating budgets – top-down and bottom-up approaches – represent common approaches organizations use in budgetary practice.

Top-down approaches are very authoritarian, originating from the top down (president or CFO’s office) through the organization with remaining organizational members made aware of the budget and its requirements. Resources tend to centralize, with simple process requirements. They measure what goes in, what goes out, what’s planned, spent, and what income you report. Ownership belongs to top management, and does not belong to anyone else in the process, and time frames are generally shorter than bottom up approaches.

Bottom up approaches decentralize control and is more complex when working through the processes required. Because so many people are involved in reporting, framing, developing and reviewing the budget, involving all levels of management, it often takes longer to develop and largely depends on process outcomes to determine which one gets used.

Top-down and bottom-up budgetary processes are equally good and both produce results. To determine which works best requires an organization choosing what works best for them in their context and the purposes they promote.

In traditional budgeting models, the starting point is a modification of the previous year’s budget, with increases or decreases dependent on results interpretation. Budget review generally seeks information regarding how the organization met (or didn’t meet) the previous year’s budget. From there, the organization makes decisions regarding whether to follow a status quo approach or aggressively focus on a growth budget. Seasonal down trends also affect budgets, regionally or nationally, and may require a reduction to budget projections, to modify previous budget projections as well.

Zero based budgets start budget preparations and projections from scratch. Advantages relate to shaping the budget based on what we see and what we need at the time, then building the budget from there. Basing budgets on past history encourages managers to spend every penny in their budget when it may not be efficient or effective do so. While mistakes creep in or replicate year after year through traditional methods, introducing zero-based budgeting can reduce or replace those mistakes with new practices and attitudes toward resources, spending and debt.

Budget development requires the creation of line items to provide an effective template to determine how to spend its money.

  • How much is enough?
  • Is it going to meet the needs of the organization?
  • Is the budget representing people who work within those areas to make sure they agree, or at least understand the challenges and opportunities?

In zero based budgets, you start with a volume goal for each program to determine necessary inputs for achieving costed out volumes with each input aligned with cost revenue. With estimated revenue, you can assess current funding assets based on the probability of obtaining funding based on market trends and other revenue. Creating a responsibility timeline allows senior management to determine appropriate budget processes for the organization. Managers draft budgets for their areas. Finance department program managers justify draft budgets. Finance checks and compiles drafts, and then senior management sets priorities for aligning revenue and expense.

From there the finance department finalizes the budget, then the CEO, Finance Committee, or Board approve it, with the finance department disseminating and monitoring the implemented budget throughout the year.

There are three ways of reporting the budget.

  • What’s coming in?
  • What’s gone out?
  • The variance.

Looking at what the budget says represents actual reporting. A variance tells you whether your budget numbers are up or down (by actual numbers or percentage), or whether you’re ahead or behind. Regular reviews of variances help everyone understand the reason for the differences and responding accordingly.

One example. Some organizations find budgets in deficit the first month/quarter of a budget cycle because a line item (or several line items) payout yearly amounts in the first month/quarter. Though in deficit, the line items are really on track because they report the full year budgeted expense in the first month/quarter of the year. When reporting variances, as described, organizations need to understand how the budget pays out complete annual costs on a line item in one month, and how the reflected cost will balance out in budget reporting, over a 12-month period.

Whether a small or larger issue, everyone needs to understand the reasons for variances, which otherwise cannot be explained, can indicate improper expenditures and require further investigation. Someone needs to find out where the money went and why it was spent. It isn’t good enough to say it will all work out in the end without accounting for what the variances represent. Good financial control and processes need to be in place to effectively understand and process involved with the variances reviewed.

To help people make good decisions with variance, requires accounting for unpredictable impacts (outside reasons). Variances explain a variety of issues affecting/effecting the budget, whether political upheaval, fire, natural disaster, or miscalculations. Challenges or errors need correction to address miscalculations or errors through variance.

Looking at how budgeting works is important for leaders. Understanding the reasons for variance helps understand the fuller budget process, by keeping organizations focused toward important areas of the budgeting process.

Learning Lab

The Learning Lab for this Unit will center on providing you with opportunities for personal reflection about your own organization (or an organization you have been part of in the past). With the help of your Facilitator, we will apply concepts from Unit 4 in our discussion to help better understand the important relationship between leadership and responsible, empowering budgeting practices.

Learning Activity: Budgeting and the Importance of Asking the Right Questions

The focus of this Learning Activity is on understanding how effective budgeting practice requires that we ask the right questions. As part of this Learning Activity, you will be using your own organization as the basis your for your review.

To begin, consider the following questions:

  • Can budgetary activity in your organization require fewer resources?
  • Who performs the budget activity best?
  • Should the specific budget activity in your organization occur at all?
    • What would you exclude in reviewing your organizational practice?

Looking at values and stewardship for budget activity in your organization, as a TSL budget guardian:

  • Where does your organization spend?
  • What does your organization spend?
  • What is important for your organization to spend?
  • What is less important for your organization to spend?

When we establish priorities and focus on things needed for our budgets, we need to guard against getting lost in the idea of what we want to do versus what we need to do. However, establishing priorities requires us to commit to what we establish and focus on determining what is best. Questions like those listed below can help you stay on track.

  • How are values and good stewardship principles incorporated to determine where your organization spends its money? How does your organization spend your money?
  • How does your organization project our future?
  • What does the budget need to meet the needs for your organization and the people it serves?

Budgets provide a synthesized analysis of information. A budget is the financial picture in front of you. Budgets tell you how things work together to create a clearer financial picture for people to see, check on progress, and translate results through representative graphs, forms or reports. This allows analysis of relevant budgetary information, by breaking down the various parts to determine:

  • How the organizational budget is doing?
  • How poorly your organizational budget is doing? What areas are doing well? What areas are doing poorly?
  • What areas of your organizational budget need improvement?
  • How you can improve your organizational budget? Take a moment to break it down and analyze the information received.

Budgetary responsibility provides accountability. If you go over budget through the year, you need to answer the BASIC accountability questions. Why, why, why?

  • What is the reason you have less than projected?
  • Why is your budget in shortfall?

Answering these question can help understand accountability and stewardship in the organizational budget.

Learning Activity: TSL Stewardship and Budgeting

The focus of this Learning Activity will be on applying the TSL Accountability Principles. Once again, students will use their own organization and apply these principles to assess where their organization stands.

To begin your review, follow the steps below:

  1. Look at your present/previous organization.
  2. Evaluate the environment your present/previous organization operates and how it adds value.
  3. Review the four approaches for developing/working with a budget:
    • “Standard” Top-Down Budgeting process
    • “Standard” Bottom-Up Budgeting process
    • The Beyond Budgeting principles (p. 8) and process improvement points (p. 16)
    • The Collaborative Funding model.
  4. What would a TSL budget process look like for your present/previous organization?

Be prepared to share your results as part of a group discussion.

Assessment

Assessment this week will consist of Discussion Questions/Reflection Posts that draw upon your understanding of the content from Unit 4.

Note that each student is expected to make an initial post, followed by two responses. Follow the guidelines below:

Unit 4 - Discussion Question/Reflection Post

Each student is required to submit a Reflection Post for Unit 4. This Reflection Post should include your thoughts about how the content for this unit ties into your own practice as a leader.

For this unit’s Discussion Question/Reflection Post, the approach is different than in previous units. Your initial and response posts deal with two differing topics. The first post is an observation post, wrapping up previous learning on RBL/TSL - carefully read the structure:

1. Initial Post

Discuss the four approaches for developing and working with a budget as it relates to the practices of your present organization or previous organization.

  1. Standard Top Down Budgeting process.
  2. Standard Bottom Up Budgeting process.
  3. The Beyond Budgeting Principles and Process Improvement points.
  4. The Collaborative Funding model.

2. Response Post:

Compare the practices of one other organization described in this posting section.

  1. Identify how their approaches differ or are similar to your identified practices as it relates to:

    • Standard Top Down Budgeting process.
    • Standard Bottom Up Budgeting process.
    • The Beyond Budgeting Principles and Process Improvement points.
    • The Collaborative Funding model.

  2. From your observation, suggest one improvement the organization might apply to improve their budgeting practice. Do not limit your thinking by any belief about the ability for changing the organization you review.

  3. Make the recommendation you see makes sense to you (based on the principles noted) for the organization reviewed.

3. Concluding Post

Based on the options reviewed in this unit’s posting cycle, and TSL accountability principles:

  1. What would the principles of a Transformational Servant led budget process look like for the organization under review?
  2. Any other observations you see as relevant to the discussion for the week.
  3. Any course questions related to this unit’s Discussion Question/Reflection Post or the material reviewed during the unit.

Refer to the Reflection Post rubric for more specific information.

For additional information, and to submit your response, please scroll to the bottom of the screen and click on the Unit 4 - Discussion Forum/Reflection Post link.

Checking for Learning

Before moving on to the next unit, be sure you are able to:

  • Interpret and articulate organizational structures and how they inform or detract from healthy organizational practice in their organization.
  • Compare qualitative and quantitative measurements; practice and research to determine when to use them.
  • Identify important principles required for understanding budget forecasting statements and tools related to organizational budgetary responses and their roles as TSLs.
  • Develop, track and interpret theoretical recommendations for addressing budget issues influencing and affecting/effecting budget performance and results in their organization.
  • Describe the impact measurement has on organizational practice of mission, vision, values, finance and structure

Resources

On this page, you will find resources that help further your understanding of the content explored in this unit. This resources have been provided to support, and enrich, your learning. While they are not all “required” reading/viewing, it is strongly recommended that you take some time look over them - if there is a topic that you are struggling to understand, consider spending more time looking through the resources on this page.

Video Resources

Research Resources