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  Budget reduction questions. More With Less
Budget Reduction QuestionsWe've all heard it before. It's no secret that managers of support services are always under exceptional pressure to cut costs and improve overall efficiency.

Funding changes typically lag the economy, so budget reduction is usually not a temporary situation. Once the initial budget is reduced, it is usually some time before spending can be increased, positions refilled, or other operations returned to pre-reduction levels.

You're expected to do more with less. This is particularly difficult for support services since the work is usually directly related to volume which does not change even if a budget is reduced.

Support services do not have a lot of variable costs and are typically responsible for many of the organization's fixed costs such as software licenses, equipment leases and others. Fixed costs are very difficult to reduce, especially in the short term.

Support units usually have a higher ratio of salary to operating costs. Therefore the creation of  soft money through reduction of positions is less available than budgets where there may more soft costs such as publications or events.

However, we still always review our operations to seek out efficiencies or ways in which we can work more effectively and here's are some questions to review when you have pending budget reductions.

What are we doing well?


Budget Reduction QuestionsWe should continue what we're doing well. This will include basic and some enhanced services. It doesn't make sense to eliminate or cut back in these areas, unless what we are doing well causes inefficiencies in other areas. This is also an opportunity to review transactional volumes and see if trends can be established. For example, if we're processing faster, is it because volume is down. If volume is up and we're processing faster, it may indicate that there may be less slack than we thought in the processing areas.

We should look at how well we actually need to do something. You can have a 6 hour turnaround time from gift receipt to generation of acknowledgments, but the cost of achieving this may not be worthwhile in light of other priorities.

What do we need to do better or do that we're not doing?


In some cases a budget increase may actually be required. If we look at what we need to do better, it will help to think about how to adjust resources to make this happen. There may also be ways where the spending of additional money may lead to greater efficiency, such as the purchase of a new higher volume photocopier so staff don't spend time waiting to copy information. The introduction of electronic imaging may reduce the need for filing hard copy documents and make information more accessible for all staff.

In some areas, such as how we deploy reports if we look at solutions like web enabled reporting, the more effective use of technology can lead to productivity improvements for many staff and reductions in paper and photocopying costs.

Is there anything we're doing that some other part of the organization should be doing?

Advancement and development activities cross organizational boundaries and as such we often assume tasks that are more appropriately done by other departments. For example, many alumni associations have a career services department whose functionality may be duplicated by central human resources. There may be opportunities to transfer responsibilities and end duplication.

Consider activities that may be candidates for cost recovery. We may be doing tasks such as sending a departmental list to a national change of address updating service where the cost could legitimately be charged to a department.

We also need to review what we should not be doing. For example, we might consider only sending an acknowledgment for gifts over a certain level. The large majority of transactions processed fall on the lower level of the giving pyramid and account for most of our costs.

What structures/changes will help us to reach our goals?

Organizational re-design can be key to working more efficiently. For example: Our network support group may be doing what is normally provided by central computing and network services. Structural re-design of roles and responsibilities may be a good strategy.

An example of a radical change in structure is to implement decentralized data entry. This reduces central costs and can appropriately re-allocate them to the users of the service.

What strategies do we need to adopt to achieve the goals/outcomes we want?

Strategies are broad based goals. For example, a strategy to reduce user support calls would be to focus more on the initial training when an employee starts with the organization.

It may also be appropriate for strategies to cross organizational boundaries. For example, combine your customer services function and switchboard into one common university wide help center.

What are the cross functional issues that most affect support services?

This is particularly important for support services since we typically work with every area in the organization.

A good example is annual fund, in that gift processing and records staff will need to keep up with the telemarketing. A strategy would be to utilize some of the telemarketing students for tracing phone numbers.

How would you re-deploy staff and budget to accomplish your tasks?

Shifting positions and re-designing the organization along functional areas can help. Analyze the relationship of the number of managers to processing staff. Are there ways to change job responsibilities so staff can accomplish more than one task?

Are there opportunities to move staff from other units, or move your staff to other units and consolidate where tasks and output is related or identical?

Many non-profit organizations are unwilling or unable to do organizational re-design, yet this can be one of the most effective ways to be more effective.

Re-evaluate what you're spending your budget. You may have maintenance contracts in place for office equipment that could be cancelled and simply go to a replace as needed strategy.

Office supplies is also one of the budget lines to review for potential savings.

Are there any savings through attrition, retirements, contract expirations, unfilled positions?

Since the single highest cost of any organization is salary and benefits this area deserves careful consideration. It's always advantageous to encourage early retirement, not fill positions, and evaluate the number of part time and/or contract employees before letting regular full time employees go.

Unfortunately, you'll often lose good staff since staff reductions are always the most painful aspect of any budget reduction exercise..

If you do have to reduce staff, it's better to do at once rather than continuous reductions over a number of months.

Morale can be better if large initial reductions lead to some people being called back to work in the short to medium term.

 
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