How does an agency implement an effective approach to budget and finance?


Strategic Planning Cycle

Many agencies develop and update their written strategic plans annually, in synch with their annual budgeting cycle, and this is sensible timing for the purpose of securing needed resources. But to get the full value out of strategic planning as a participative activity designed to drive continuous improvement and innovation throughout the agency and within its environment, a number of months should be scheduled for its development and revisions to be completed. Strategic and budget and finance plans should be updated as needed with lessons learned from related monitoring activities, making them living documents. These plans should contain multi-year goals, objectives and initiatives, not just those that impact the current year’s budgets.


Change Management

Agencies who find they have significant gaps between the guidance for budget and finance strategy, processes and operations and what they currently do in their organizations (e.g., no related plans to speak of) may need to invest in a broad system transformation effort. If so, this effort will entail major work at the executive, department head, middle management, frontline supervisor and support function levels. Such major changes are possible when the approach taken is both systematic (step-by- step with clearly defined roles) and systemic (taking into account all the moving parts). As opposed to the “war room” or “executive retreat” methods, design and implementation efforts must bring in data and perspectives from all levels of the agency, those being served and a range of stakeholders. Openly testing and refining assessments and draft plans, and involving a broad range of staff in an ongoing feedback loop as implementation efforts are monitored over time, generate buy-in and understanding and help to groom leaders and future executives.


Leadership Roles

Given that effective implementation of changes requires a highly inclusive approach, leadership effectiveness is critical for this approach to thrive. Executive teams develop plans that include the goals and objectives that direct change initiatives, involving staff and stakeholders in the process. They realistically assess organizational readiness for change and provide for its sustainability (e.g., using resources to both build staff capacity and deliver improved front-line services). Sponsor groups charter and set boundaries for continuous improvement teams and review their efforts and progress over time. For leaders who are gauging organizational readiness for making improvements to budget and finance work, effective practices include:


Determining quickly what questions to ask and whom to ask. Effective initial questions include the following:

  • What are the most urgent needs? What programs are “nice to have” versus mission critical? What is the political commitment to addressing those needs?
  • What are the things that are keeping these people “up at night:” 
    • Program Heads
    • Finance staff at different levels 
    • Providers
    • External stakeholders (legislators, budget & program committee members of the board/legislature) 
    • Advocates that lobby on budget issues
  • What worked and did not work in the past, such as using outside vendors (e.g., for revenue maximization studies)?
  • How comfortable with being flexible in interpreting regulation is the agency’s state, such as in the creative use of federal funding?
  • Past and current budgets
  • Past revenue maximization study reports
    • Be aware of how old they are and how much change has taken place. There may have been changes in the agency that make findings less relevant today
    • Be aware of how recommendations from the reports have been received by the agency’s federal regional office Look for an analysis of trends and past disallowance decisions


Commitments regarding any implementation effort must be specific, measurable, within specific timeframes and made publicly by the responsible person, team, function or program area. Monitoring toward successful implementation of initiatives or progress toward goals must be done on a regular basis once implementation begins. Effective monitoring includes evaluating plan progress, impact and lessons learned. Communicating to staff and stakeholders about the findings from monitoring and involving them in these efforts helps to sustain ongoing support for the agency’s efforts to improve. These same principles apply to agency staff, programs and functions as well as private providers.


Overcoming Obstacles

Agencies should anticipate and plan in advance how they will maximize readiness factors and overcome obstacles to implementing their budget and finance related efforts. Here are some typical obstacles to budget and finance implementation and how to overcome them in general:


Budget Shortfalls and Other Unplanned Resource Cuts

Include and adjust when needed the analysis of required and available resources within the agency’s strategic and budget and finance plans, at times limiting or delaying priorities. Use ongoing monitoring and root cause analysis to streamline resources where they do not have a high impact on agency goals and objectives, or where they are inefficient and redundant (e.g., due to lack of collaboration and partnership). When innovations and breakthroughs are successful, celebrate the success and limit further resource investments. Over time, evolve the agency’s influence within the broader environment such that resource cuts are less frequent or less significant.


Internal Politics and Interdepartmental Turf Disputes

Use the readiness assessment and continuous improvement priorities themselves to proactively and transparently address these potential obstacles rather than leave them out of the scope of change and continuous improvement efforts. Use participative methods to build budgets where program and function leads learn to employ an agency-wide perspective.


Lack of Effective Support from Functions like HR and IT

Include strategic support functions like these in both strategic and budget and finance planning to leverage their expertise and enlist their support. Make the alignment of support function capacity an explicit part of strategic priorities and related continuous improvement projects and investments.


Operational or Project Performance below Expectations

Use monitoring efforts to learn from these experiences, deepen the agency’s root cause and remedies work and reinforce the agency’s commitment to managing performance in punitive ways when needed, including redirecting resources from lower to higher performing efforts. Adjust the pace of improvement efforts and priorities in line with current capacity (including staff skills and experience).


Required Organizational Disciplines

On the one hand, it’s common in child welfare agencies for budget, fiscal and financing staff to be former social workers and have limited formal financial training. Agency staff-at-large often do not understand the impact of their decisions on agency finances such as understanding federal financing streams. On the other hand, those agencies who hire financial or accounting professionals with limited child welfare backgrounds experience other challenges such as finding ways to leverage various funding streams and understanding resource return-on-investment strategies that are far different from those in the private sector.

Agencies who experience the knowledge and skill gaps described above need subject matter experts to explain these things to staff, not in theory but in relation to the agency’s programs and specific context. This is best accomplished through peer-to-peermentoring and coaching versus through classroom training.

Change & Innovation Agency
FEi Systems
PCG Human Services
Governing Magazine