The best way to explain the Bogey response is with an example.  As controller of a five-hundred-person division of a very large technology-based conglomerate, my responsibilities included negotiating an annual operating budget with the controller of corporate finance and accounting.  While neither of us exercised any direct authority over the other, it was obvious that the corporate controller held a more influential position than I did.

The corporate controller asked what my division needed for the year.  I was prepared to go into considerable detail but was cut off after I made a request for $20 million, just a million more than the year before, and began to offer an explanation for the modest increase.

He responded immediately by saying, “We in corporate would love to give you the $20 million but we can’t.”  He acknowledged that my department had done a good job the previous year, but that all the corporate could allot this year was $17 million because the company was under competitive pressure and outside capital and credit sources were drying up.

A reduction in our budget would require cuts in staff and commitments. I brought my staff together to search for a way to handle the $17 million Bogey.  Four approaches were discussed to bridge our difference with Corporate.

  1. Test the bogey. Almost all budgets are flexible to some extent. Money can be shifted from one account to another, from one purpose to a second or from direct to overhead accounts. Working together we might find some relief that way.
  2. The time shape of funding can be changed. If the other side doesn’t have enough now, they may have it later or early next year. They may prefer to cover the budget shortfall by using investment or borrowed funds rather than direct revenue.
  3. Change the time shape of performance. Not all work need be done between January 1 and December 31. Some parts can be completed later; some must be done early in the year. Changing the scope of work, leaving some things out, adding others and doing some later can serve to bridge the gap between parties in whole or in part.
  4. Shift the work. If our department expects trouble meeting its responsibilities with the $17 million budget offer, we might offer to shift some work to other departments or to farm it out overseas. We could ask for temporary help or assistance to meet overload requirements. The lines of authority and responsibility between departments are never rigid over time. Some of our work could be done by another department if several of our people had to be transferred to meet the Bogey.

My staff and I met with the Corporate Controller once more.  The negotiation closed with an $18.2 million settlement.  Together we pared some costs, maintained our 3% salary increase target and transferred three people to an adjoining department.  The corporate people accepted our reduced statement of work and the phasing of some parts to a later time.  Overcoming the bogey by collaboration led us to a budget we could live with.

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