Annual Budget Prep: Ensuring Accountability for High Performance - Essay Sample

Introduction

At the beginning of every year, we keep a close eye on our annual and quarterly goals, project the expenditures and revenue into the future, and set benchmark cash flow forecasts. We need to ensure that you (our employees) are on board before we prepare a budget. It helps us maintain a high level of workplace accountability to guarantee high organizational performance. As you all know, our organization uses participatory budgeting by involving you in the budget preparation process because we value the sharing of responsibility. It is through this strategy that we can give you a sense of ownership in the company.

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The primary goal of this memorandum is to request all employees for the information to be included in the budget. This memo will serve as a request and a thank you note to all the workers who have been taking part in the preparation of the organization's annual budget. The company values your efforts and still needs your contribution to this financial year’s budget. Every staff whom this memo is concerned has the responsibility to respond positively, knowing that their actions will lead to the achievement of the company's goals.

We will use your information to prepare an inclusive budget that meets all the needs of our employees. We will also use your information to make changes in operations and administration, proposed capital investments, and other matters directly related to the revenue and expenses that the executive will see in the proposed budget. After the executive review and approval, this memo will become the final narrative of a budget that supports and explains the budget for the company benefits.

Your information will also help us conduct the following significant processes in our budgeting plan:

Budget Accuracy

The accuracy of preparing a budget may be determined by comparing the actual cost with the projected cost. Budget accuracy is higher when the actual cost is close to the projected cost (Shim, Siegel, & Shim, 2011). To ensure that our budget is accurate, we need to know the estimates of the costs of production materials in the market. We believe most of our employees know these costs, and we need to plan using the information you will provide about the current costs of materials in the market. Besides, we rely on you to identify the types and quantity of resources the company needs to improve its efficiency. We entrust our employees with the assets, and any cost such as maintenance cost needs to be reported to the management to be included in the budget. Therefore, the information you provide should include the company assets that need repair or purchase so that we can adjust our budget.

Performance Measures

Every company measures the performance of employees to determine their productivity. Maintaining the productivity of our employees is one of our priorities as leaders. It is always recommended to direct performance measures to lower levels. That is why we are reaching you to provide any information you have that will help us appraise every employee. Your participation will help us measure the specific tasks of every employee. This can be done by computing revenue per employee, production volume to staff-hours, and staff-hours per employee (Andrews, 2016). Therefore, we request every employee to be honest while providing this information since it will help us determine whether the company needs to hire more workers.

Control Analysis

Your information will also help us perform control analysis, which is important in budgeting. Budget figures may be validated for rationality by checking relationships. The planned production output and the budgeted cost must be closely related (Shim, Siegel, & Shim, 2011). The manager must strongly defend the initial budget and obtain the required facts, which I need to find out from you. We need to examine costs by responsibility. We should note that cost reduction and cost control are dissimilar while providing information about the prices of materials. Cost reduction attempts to reduce costs by improving production methods and procedures, product service quality, and work segments. In contrast, cost control attempts to obtain objectives of cost within the operational setting (Shim, Siegel, & Shim, 2011). Using your information, we will evaluate cost components in operation to reduce them for profit achievement.

For new employees who have never participated in the budgeting process, you need to know that we welcome the views of everyone, and your information is the basis of the company's budget. Any information you think will contribute to the preparation of this budget will be helpful. The main reason we request for your information in the budgeting process is that the company wants to know whether it needs to hire additional workforce, make capital adjustment projects, and add new resources. The company also needs to find out whether it is in the path of achieving business success through employee productivity, employee satisfaction, and organizational performance. Please, do not hesitate to share any information that will help us generate a strong budget this financial year. We bank on you for the growth and success of our company.

References

Andrews, M. (2016). Beyond 'best practice' and 'basics first' in adopting performance budgeting reform. Public Administration and Development: The International. Journal of Management Research and Practice, 26 (2), 147-161.

Shim, J. K., Siegel, J. G., & Shim, A. I. (2011). Budgeting basics and beyond. New York: John Wiley & Sons.