January 30, 2017
HOW WONDERFUL YOU ARE:
Back to zero: Companies use 1970s budget tool to cut costs as they hunt for growth (Tim McLaughlin, 1/30/17, Reuters)
The number of U.S. companies using a budgeting tool made famous in the 1970s by former U.S. President Jimmy Carter is surging as they turn their spending habits upside down to boost profits and to re-invest in their businesses.The upswing in zero-based budgeting (ZBB) signals that a broader cross-section of U.S. companies anticipate turbulence in their revenue growth. They face more pressure on profits, too, as wages and interest rates increase, and a stronger dollar makes their products more expensive overseas. [...]A ZBB approach requires corporate managers to justify each line item of spending in their budgets, or even build their budgets from scratch. That is a departure from the typical process of using the previous year's budget as a starting point and adjusting it based on revenue and inflation projections, for example.It often cracks down on the size of a company's real estate footprint, corporate travel, terms of international assignments, redundant technology and outside consultants. Employees get cut, too.
Posted by Orrin Judd at January 30, 2017 5:22 AM