There are probably as many different philosophies of creating an annual budget as there are companies. When I came to Thomas Nelson initially, the philosophy was the push-up, pull-down philosophy. Management would try to get the individual units to push up their revenues budget as high as they could and push down their expenses as low as they could go.

This inevitably became a sort of dance. The business unit leaders would propose a low revenue budget and a high expense budget, knowing that they would go through several rounds of negotiations with management. The biggest problem, though, was that once people agreed to a higher revenue budget, it would have the effect of pulling expenses up, too. Then, if the revenues didn’t materialize, the unit had already compromised its margins.
In: Leadership
Tags: stand commitment budget planning






















