How are budget awareness and value perception connected?
While staff-level folks typically never deal with budget questions (other than asking for a raise!), managers are expected to be budget aware and, at minimum, work within their budget limitations. As you ascend the management hierarchy you are expected to propose budgets for your team, as well. Executives often define budgets for their organizations and, in many cases, may be required to create budgets for entirely new departments or programs.
And while middle managers may approve compensation changes for their team members, they may not actually be responsible for the actual cost of their employees in their budgeting process. For example, a marketing manager might control the spend for advertising, tradeshows, lead generation, and associated travel, but those numbers won’t include the full cost of the marketing team. Those people expenses roll up to the head of marketing.
Why is this important?
Because it gives us understanding of various management levels with respect to comprehending large monetary numbers. A SaaS company generating $40 million in revenues might allocate $4 million to marketing overall. For the head of marketing, this number includes the marketing team in addition to marketing programs and associated expenses. $4 million is a meaningful amount to that head of marketing; it is a number that can be visualized in terms of the team and their activities.
A product marketing manager, on the other hand, is given a portion of this overall budget to promote their product(s), which might amount to a few hundred thousand dollars for content creation, placement, lead generation, and related costs. This person can comprehend $250,000 accordingly but may have difficulty picturing what $4 million represents.
At one point in my career, I was responsible for managing a team of over one hundred individuals to generate $30 million in revenues. My budget was about $20 million which included all the costs and activities required to deliver $10 million of profit (pretty good ratio!). $20 million was a meaningful number for me, as a result.
Executives are often a special case with respect to their ability to picture the value of large monetary numbers.
Resources:
Value Numbers Need to Align with Job Title: Why?
https://greatdemo.com/value-numbers-need-to-align-with-job-title-why/
How Does 3 Minutes Equal $24 Million?
https://greatdemo.com/how-does-3-minutes-equal-24-million/
Let’s Talk About Value – Uncovering the Delta
https://greatdemo.com/lets-talk-about-value-uncovering-the-delta/
Doing Discovery:
https://www.amazon.com/Doing-Discovery-Important-Enablement-Processes/dp/B0B8RJK4C2/
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