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How to respond to budget cuts

by Susie Hills | Aug 4, 2017 | Strategy & Transformation

With the pressures of Brexit, along with economic and demographic changes, many institutions will be looking to make cuts in their operating budgets.

Senior managers are being ‘do their bit’ and make cuts to their budget. Some are being tasked with saving 5%, 10%, or even more from their budget. They are being asked to ‘do more with less’. Many are also facing a freeze on recruitment to new or existing roles.

Even in those institutions not making cuts there is likely to be an atmosphere that discourages requests for additional budget – a culture of ‘austerity’.

So what is the responsible approach as a leader when you are asked to make cuts to your budget?

1. Focus on performance

You were recruited to deliver impact in a particular area of the institution. You will have key performance indicators which measure the impact your team is having on the overall performance of the institution. It’s your job to show how your budget enables the institution to deliver its goals. As you consider what cuts are possible be realistic about the budget required to deliver the goals and highlight the compromises which would arise if you did not have that budget. Indeed it may be that an increase in budget in your area could deliver an increase in income in some way.

Just because the message is one of cuts does not mean you should not articulately defend or indeed seek an increase in your budget if that is what is required. e.g. Can you really increase international student numbers (and resulting income) and cut the marketing budget for recruitment?

It may be that by disinvesting in your team’s work, your institution will be disinvesting in the very things they need to do to succeed. If budget cuts are absolutely necessary, then you will have provided clarity as to their impact.

2. Compare and contrast

Look at institutions like you and those who are doing better than you in your particular area and try to identify what their budget is. If you are aware of cuts made elsewhere try to find out what the implications have been and use these as case studies. Sharing this information can add impact and authority to the case you make.

3. Articulate risk

Ensure that your area of the institution is on the risk register and highlight how risks might increase with budget cuts. The institution may still decide to make the cuts but it is your responsibility to highlight what risks they are, in effect, accepting, if they go ahead. Its also your duty to outline how those risks might be mitigated. If you see heightened risk alert those responsible for keeping the register – don’t wait until you are asked for an update.

4. Work with others

None of us work in silos (at least we shouldn’t!) and cuts in our area will affect other teams. Discuss the implications with other senior managers, explore what cuts they are considering. Too often there is an element of competition between leaders to protect their budgets with discussions undertaken on a 1:1 basis, not in teams. Collaborative work will ensure that those making the final budgetary decisions understand how a cut might have wider implications than they might immediately expect. It also shows that you are a true team player and that your focus is on the overall institution’s performance not just that of your team/area of work.

5. Think long term

Be prepared to outline how cuts will not only impact your team’s work this year, but subsequent years. It might be that a reduction in your budget this year can be born but if the budget remains at that lower level for several years the combined impact might be significant. How will the risks and impact play out over time? Do your best to predict and articulate this as clearly as you can.

**In summary..

It’s your job as a leader to ensure that your colleagues understand what resources you need, why you need them and what impact you will deliver with those resources.

If you are facing cuts it’s your job to show how a reduction in budget might increase risk, reduce performance or hinder progress – not just this year but in future years.**

Ultimately the cuts may still be required but you will have delivered your leadership responsibilities if your colleagues understand the full impact of the cuts.

Susie Hills is Joint CEO of Halpin, the home of experts in higher education and beyond.