How do you justify zero-based budgeting to your stakeholders?

1 Explain the rationale

Explaining why you are using zero-based budgeting (ZBB) and what you hope to achieve is one of the first steps to justify it. You can link ZBB to your organization's vision, mission, and values, and demonstrate how it bolsters your strategic priorities. Additionally, ZBB can encourage a culture of accountability, innovation, and ownership, while allowing you to allocate resources based on current needs and opportunities. It also helps identify and eliminate inefficiencies, redundancies, and low-value activities, as well as enabling you to align your spending with outcomes and measure your return on investment.

2 Involve your stakeholders

In order to justify ZBB, it is essential to involve stakeholders in the process and receive their input and feedback. Identify the key decision-makers, influencers, and beneficiaries of ZBB and engage them through surveys, interviews, or focus groups to gain an understanding of their needs, expectations, and concerns. Additionally, providing training, coaching, or mentoring can help them understand and apply ZBB principles and tools. Cross-functional teams or committees can review and approve ZBB proposals and recommendations. Lastly, sharing best practices, success stories, or testimonials from other organizations or departments that have implemented ZBB can be beneficial.

3 Address the challenges

A third step to justify ZBB is to address the potential challenges and drawbacks of ZBB, and show how you plan to overcome them. It is important to acknowledge the common criticisms or objections of ZBB, such as its complexity, time-consuming nature, and costliness; the uncertainty, instability, and stress it can create for staff and managers; its discouragement of long-term planning, collaboration, and flexibility; and its reduction of employee morale, motivation, and loyalty. To combat these issues, solutions or mitigations can be proposed, such as simplifying the ZBB process with technology to automate and streamline it; providing clear guidance, support, and incentives for staff and managers; balancing ZBB with other budgeting methods; and celebrating achievements, rewarding performance, and recognizing contributions.