Negotiating skills for budget officers.

• Author: Bestor, Mike

Whether presenting before the board of elected officials or one-on-one with a department head, the budget officer needs a tool kit of negotiating tactics for keeping the process moving forward to a favorable conclusion.

A budget is a contract with many parties. A budget is a contract between citizens and their elected officials whereby a specified amount of taxes and fees will be exchanged for services and physical improvements. A budget is a contract between the elected officials and the administration to provide certain resources in exchange for a series of accomplishments. A budget is a contract between the organization and its employees to exchange pay and benefits for work.

In the private sector, good contracts are entered into by both sides with a sense of anticipation as each party agrees to give up some of what is already owned in exchange for something owned by another. All parties involved in buying and selling a new home or starting a new business venture generally feel like winners. In international relations, the entire world can eagerly embrace a contract for peace between warring nations. A good budget in state and local government may not have the drama of an international peace treaty or the tangible feel of a real estate transaction but should generate much of the same positive excitement.

Business contracts, international treaties and governmental budgets that go on to fulfill their promise are not quickly adopted. The process of reaching the agreement is as critical to its complete acceptance as the final terms. The process of negotiating can build trust, understanding of the issues, new solutions and a feeling of accomplishment. The process and the progress are in the hands of the negotiator who may be called the buyer, salesperson, ambassador or budget officer.

Today, the negotiation process, when done properly, involves a mutual search for alternatives that let everyone win and help move the organization toward its goals. Negotiating a budget is not

* playing ping-pong where the department head asks for a 5 percent increase, the budget officer offers 3 percent, and both finally settle at 4 percent;

* intimidating a department head into submission because the budget person has better access to the top;

* smiling a lot and trying for the budget that angers the fewest people;

* generating reams of spreadsheets, charts and graphs to prove there is only one correct budget; or

* feeding data, ideas, printed reports and maybe gossip to the chief executive officer and letting the CEO, who "is the only one with power," handle the personal confrontations.

Any of these tactics may work in the short run but are destructive to real organizational achievement. The traditional approach to negotiation was often mistaken for confrontation and negotiators were thought of as either strong or weak, aggressive or compliant, winners or losers. Gaining concessions with threats may or may not gain the concessions but will surely damage office relationships: a bad relationship will not be improved by making concessions, and winning at another's expense is not an appropriate goal.

The good news is that negotiating skills can be learned, and adding these skills to the technical ones already possessed will make for a more confident--and consequently, more effective--budget professional. The paradox here is that negotiating is a stressful undertaking, and stress inhibits the creativity needed for a successful outcome. Negotiating a budget in the public sector is stressful because it is complex, conducted with a large audience, and under intense time pressure. The key to handling this stress is preparation, and negotiating should be approached as any other managerial assignment, one that requires the same five universal tasks of management: planning, organizing, staffing, directing and controlling. The initial four are, ultimately, building blocks to the fifth.

Planning

The planning process itself includes five steps: organizational goals, departmental goals, personal goals and analysis, information gathering and power analysis. The budget negotiation worksheet shown in Exhibit 1 will help the budget officer plan and prepare for the negotiation. The mission statements of the organization, the budget office and the department in question are combined with the specific directives from the CEO that apply to the current budget process as a constant reminder of the purpose behind the budget process. The budget officer then looks for the quantitative and the often-overlooked qualitative pressures that face the department to better understand the other side. If additional research must be done, the budget officer should identify it now and set specific deadlines for completion.

Organizational Goals. The budget officer must first step back and review the organization's mission statement, goals and strategic plan. Budgets, after all, are not a goal but a tool the organization uses to achieve its own reason for being. If the organizational goals and plans have not been formally written and adopted, then interviews with the elected and executive officials may be required to focus the budget process.

Departmental Goals. The budget department should have a clear definition of what makes a great budget. As GFOA's Distinguished Budget Presentation Awards Program recognizes, a great budget is a policy document, a financial plan, an operations guide and a communications device. A budget department may add other criteria, like empowering staff and encouraging an energetic debate, but should know in advance what a successful process will look like.

Personal Goals and Analysis. Budget officers also must consider their own personal plans and goals, reviewing them and committing them to writing. Will the same process be undertaken with the same players next year? What about the year after that? A sobering thought and one that can prevent many stupid mistakes. Failure to recognize and understand what is really desired leads to stress and...