Communication with management is an essential part of making a proper PC&B calculation, both before the analysis and to present the results. Certain assumptions for the calculation can only be obtained by discussing them with management; examples include plans for reorganization and staff changes as well as bonus and cash award policies.
The purpose of the analysis is to inform management, so the results must be presented in ways that are readily understood without leading to confusion. The presentation should also lead to addressing the matters on which management has to make decisions, such as increasing or decreasing recruitment efforts.
A good rule of thumb for communicating with management on PC&B matters is to take no more than ten rows in a spreadsheet to lay out the numbers. If it takes more, the analyst should take a close look at what is to be conveyed to management. The summary for management for the example could look like this:
|Our Organization's FTE and PC&B Use for FY XXXX
(Dollars in thousands)
|FY XXX-1 use||213.7||$18,850||Projected use as of July 31, XXXX-1|
|Pay raise||+581||Expected pay raise effective Jan.|
|Other changes||+1,367||Mostly due to lower vacancy rate. We expect to use budgeted FTE.|
|FY XXXX use||228.5||$20,798|
|FY XXXX budget||227.0||$20,650||"Best guess" op plan numbers.|
This example of a summary for communicating with management is quite different from the example calculation. The point is that the analyst must make detailed computations to know what the numbers will be, but communication is not the same as computation. Note the points being made in this summary:
- The projection indicates that current management actions will result in exceeding the budget, which may or may not be acceptable at this point. (Note that the op plan is still a guess since there is no appropriation yet.) This is a point to discuss with management. They may want to play it safe and scale back hiring, or set aside more money to cover the payroll. This point is to be kept in mind as the year goes on and budget execution calculations are done. For differences of this magnitude there is time for corrective action at mid-year.
- The expected increase over current year costs is pointed out, and reasons for the increases provided: An across the board pay raise, and the organization had a high vacancy rate and is making efforts to staff up to authorized levels, which results in a large increase in payroll costs over the current year.
The smart analyst briefs her management using this summary. Of course, she also has the detailed calculations handy in case anyone challenges her simplicity and efficiency. Nothing is more pleasurable than being asked to overwhelm your management with numbers when you tried to spare them in the first place! Eventually they will learn to trust your judgment. But make sure that you do have the numbers right all the time.