Craft a respose to the following discussion post that defends centralized budgeting

Centralized budgeting

Our text (Barr & McClellan, 2018, p. 89), defines the centralized approach to budgeting as one which locates all decisions regarding the budget at the institutional level with institutional priorities and goals driving the process. While critics argue that this approach can leave employees feeling removed from the process with little incentive to control costs, this is an approach to budgeting that I have seen work successfully within an organization.

Like many business decisions, financial conditions of the organization, short-term and long-term strategic goals, and organizational complexity were all factored into the decision to take a centralized approach to budgeting. During the timeframe when centralized budgeting was utilized, the organization was facing several financial challenges, and immediate drastic actions were warranted. While top management did its best to keep middle and frontline management aware of and engaged in the financial state of the organization, it was the executive team who had the best view of the full scope of the organizations issues. With limited resources and a short runway to correct the financial condition of the company, a centralized approach to budgeting yielded a disciplined approach to expense management and a greater focus on revenue-generating activities.

While it is true that some managers felt the budget was being thrust upon them, several mitigation steps were taken to curb that perception. First, the participants at the executive level represented the interests of every area of the organization. Every employee, whether directly or indirectly, reported to someone at that table. Therefore, there were no holes in representation. Further, each of these executives was tasked with engaging their mid-level and front-level management ahead of time to get an accurate picture of the concerns and input of each area at a more granular level. This could be characterized as a mini strategic planning discussion. Lastly, all employees were educated on the financial condition of the organization, its progress against budget objectives, and needed modifications along the way via a monthly all-employee call covering financials, a weekly CEO message, and the posting of a strategy map with quarterly budget progress (via a red-yellow-green coding system) in all locations. So, while the initial budget was created in a centralized fashion, that didnt mean that all employees didnt have involvement and ownership of how the budget would be executed.

By giving the Chief Financial Officer and other top executives ownership of a centralized budgeting process, budget priorities were closely tied with the strategic plan. In my experience, centralized budgeting was a faster process (since it took a more top-down approach), and any expenditure not deemed relevant by top management really had to carry with it a strong argument by middle and front-line management to be reconsidered.

Again, while I believe the circumstances of an organization, educational or otherwise, need to be carefully considered when choosing an approach to budgeting, centralization is certainly an efficient and effective one in my experience when an organization is attempting to right its ship quickly.