Zero-Based Budgeting Analysis
Every organization goes through a point where it has to re-evaluate all its departments in an effort to see if they are all working to their full capacity or if there are any cuts and or reductions that can be made in an effort to save the organization some capital. Whenever anyone hears about reevaluations of department the first thing that comes to their mind is that they is a possibility that jobs may be deemed no longer necessary and therefore cut.
Budgeting your expenses is an essential component in managing your internal controls and ensuring that your practice remains financially healthy. Zero-based budgeting dictates that supplier contracts be renegotiated for better rates, and rotating debt be transferred to a card with a lower interest rate. (Smith 2010). Now that I have been given the job to help Windsor Memorial Hospital achieve a zero based budget I must look at each and every department in an effort to see what is working and what is not.
I have look at everything and see what can be cut in an effort to save the hospital some money. One of my first duties is to ask each department manager to outline the job duties of each one of their employees and to outline their overhead expenses including salaries and any reimbursable expenses that are being out for each member. Once I have all these I outlines I will sit down with each department and go over their findings with them and see if we can come up with ways where we can save money.
My objective is to save as many jobs as possible as I know that all jobs are important in providing the best quality of service for all the patients that come through the doors of the hospital. In talking with the managers we will see if it is possible to utilize the employees we currently have to fill any possible job openings by realigning job duties among the staff. When it comes to the complex continuing care we have reevaluate and see if it I worth having this department opened or is the job paying more money just to keep it opened and operating.
We may look to see if there is any possibility that we can reduce the amount of money that the hospital is paying to keep this department opened. We may want to look into the possibility of working with another hospital and cost sharing the cost of the department in an effort to keep the department opened. We can speak to universities in the area that would be willing to use the complex continuing care unit as a learning center for their pre-med students. When Craig Brown took the reins as director of the materials organization at Intel Corp.
in the spring of 2006, right away he had to make some tough decisions. In attacking that bureaucracy, Brown developed a plan, keeping two points always top of mind: Getting materials back to zero-based budgeting and developing and retaining the skilled purchasing professionals working in the organization. (Avery 2008). As mentioned in the article above it is also important to retrain the staff in order to teach them to how to create a plan where they are ordering only as needed and are not purchasing and ordering items that are not needed.
One of the rules being implemented going forward is that all reimbursement for any travel and expenses will need to be pre-approved by manager and then approved by a financial officer. One of the other proposals that I presented to the managers and will present to the board is a lower cost health insurance for all employees. At this time the employees are only paying 20% of their health care with my proposal they will have to pay 35% but will have the option to pick from several different plans as well as be able to have a health saving account that the company will contribute to depending on health care screenings completed.
Sometimes regarded as the best method of prioritizing budgetary expenditures, Zero-Based Budgeting (ZBB) was introduced into China in the early 1990s and systematically adopted since the recent budgeting reform although it has experienced numerous failures in many countries. Interestingly, ZBB has not disappeared but is deliberately applied to budgetary decisions of one type of expenditures under the Chinese style TBB. However, even in the field where ZBB is practiced, its achievements are at best moderate. (Ma, Bunch & Tang 2006).
Zero based budgeting is not something that many employees want to hear because they feel that with this job elimination will soon follow. But that is not always the case in creating my zero based budgeting while I cannot promise that there will not be any job elimination I can assure all the employees that I will try my hardest to make sure that I can save as many jobs as possible. I will present all my findings as well as all the detailed department functions and all expenditures to the board for final determination.
I will also present my findings of sharing the cost of the complex continuing care department with another hospital and or clinic as well as reaching out to universities in the area and offering the department to pre-med students in an effort to keep it open and at the same time reduce the high cost of running the department. While any changes to an organization can make the staff uneasy about their job security.
In talking to the staff they are still a bit apprehensive and uneasy about what I will present to the board and are still worried whether or not their jobs will be on the cutting block. I have shared my findings with the managers of each department in the hopes that they could speak to their staff and calm some of their uneasiness. I have created a detailed report that outlines the current expenses that the hospital has, as well a detailed finding of my zero balance budget that will cut the expenses that the hospital has by more than 25% a year.