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The importance of involving people in budgeting

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The importance of involving people in budgeting

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I wrote recently about some new research from Insead into the importance of engaging all employees in the strategy making process.  The research showed that when that's done, it then makes it much easier to disseminate the strategy to all employees, and more importantly for them to act upon it.

Does the same apply for budgeting? Several government offices have dabbled in a more inclusive management style in a bid to both re-connect with the electorate and to make better decisions.  A prime example of that is the American city of Hampton.

Their shift was triggered by historic attempts at budgeting tending to be led astray by special interest groups.  Thus, despite painstaking cost/benefit analysis, voters were often very disengaged by the whole process.

So in 2010 a change of approach was attempted.  In each subsequent year new attempts were made to engage the public in the process very early on.  This has culminated in an 800 person live event, with reality TV style keypad voting.  Such live events run alongside online polls, phone surveys and other physical outreach events.  What's more, staff also regularly visit local community group meetings in a bid to further engage with the community.

“I wanted [the public] to understand the complexity of the budget and the tradeoffs,” city manager Mary Bunting said. “The biggest thing I was trying to do was to build a body of evidence, so that [the council] understood that there was a larger group of residents that supported the cuts.”

The research backs up such an engaging approach.  The study, conducted by the Department of Public Administration at Florida International University, explored the relationship between citizen participation and measurable performance outcomes.  The basis of their study was a 2005 survey on state transportation agencies and their civic engagement strategies across four stages of the budget process.

As befitting a transport agency, the desired outcomes included things such as lower fatalities and better quality roads.  The findings are fascinating.  They found that there is a clear relationship with the level of engagement and the outcomes achieved.  Literally more engagement events meant fewer fatalities and better roads.

What's more, they found that the best results were achieved when the engagement was done at an early stage of the budgeting process.  Indeed, the earlier it happened, the better the outcomes.

“You need to engage them early. I think that’s the point we’re trying to make,” the researchers said.

The results match the outcomes witnessed in areas such as Hampton, and whilst the researchers were keen to explore whether the findings would be replicated in non-transport areas, the Hampton example does suggest that it may well do.

So both this and the Insead research provide some pretty clear evidence that if you want good strategic decisions, the key is to engage your stakeholders as early as possible.


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