Budget Development Best Practice 1 – Maintain Confidentiality During Budget Development

Budgets are the financial representation of an organization’s business plan. As such, they convey a great deal of information regarding the organization’s direction – its ongoing operations, market pursuits, future investments, and staffing levels. And while it is important to include the workforce in the formulation of these plans, it is equally important to maintain the confidentiality of information providing competitive advantage or that may unnecessarily alarm workers. Such information should be communicated in a deliberate, sensitive manner at an appropriate time and place. Therefore, managers should ensure an appropriate degree of budget confidentiality is maintained throughout the development process.

Practices for Maintaining Confidentiality

While not intended to be all-inclusive, the following actions should be taken to maintain budget confidentiality:

• Do not leave budgets in plain sight of subordinates during interactions not specifically focused on the budget or its development
• Do not leave budgets unattended and unsecure in offices and conference rooms
• Password protect budgets stored on computers or other electronic storage devices
• Limit access to budgeting and other financial applications
• Provide subordinates with views to only those portions of the budget they need to see for assigned work
• Do not verbally communicate budget information that you would not share electronically or in writing

Particularly Sensitive Budget Information

Budget information related to personnel matters is particularly sensitive and may be disruptive to the organization if unintentionally leaked. Examples of this information includes:

• Staffing levels and overall staffing budget allocations
• Efficiency savings to be realized by concluding projects (assuming that staffing reductions are one area of savings)
• Workforce pay increase percentage and bonus allotments
• Executive and management pay increase percentage and bonus allotments
• Individual project budget information

Communicating the Budget

The final organization budget should be communicated in a deliberate and coordinated manner. In our experience, communication of the budget best occurs shortly following a presentation of the organization’s annual business plan. Individuals should not be allowed to infer staffing reductions, pay cuts, lost bonuses, or disruption of their workgroup tasking through their own interpretation of the budget but should have these points conveyed to them outside and prior to the specific budget discussion. Individual compensation must remain a private conversation between a manager and his/her subordinate.