As budgeting season approaches, many organizations begin preparing financial forecasts, sales targets, and operating plans for the coming year. After working with multiple companies throughout my career, I have seen two very different approaches to budgeting. The difference between them often determines whether a company starts the year with a motivated team—or one that is already disengaged.
The first approach is unfortunately the most common. Senior management, owners, investors, or even lenders determine the financial targets they expect to see. Those numbers are then pushed down through the organization with little or no involvement from the people who are actually responsible for achieving them.
Department heads receive their budgets and are simply told, “These are your numbers. Make them happen.”
In many cases, the finance department is forced to fill in unrealistic monthly figures simply to satisfy annual expectations. Seasonal fluctuations, local events, holidays, staffing realities, and operational challenges are often ignored. The result is a budget that looks acceptable on paper but has little connection to reality.
When employees know the targets are unrealistic from day one, something important happens: they stop believing in them. Instead of feeling motivated, they become frustrated. Instead of taking ownership, they feel that success or failure was decided before the year even began.
This becomes even more damaging when bonuses are tied to these unrealistic budgets. Many professionals accept a position with the understanding that a significant portion of their compensation will come through performance incentives. If the targets were never realistically achievable in the first place, those bonuses become nothing more than empty promises. Eventually, talented employees lose trust in leadership and begin looking for opportunities elsewhere.
Fortunately, I have also experienced a completely different way of budgeting.
During my time working within the Starwood Hotels & Resorts organization, budgeting was treated as a collaborative business exercise rather than a finance exercise alone.
The process was incredibly detailed. Instead of estimating the year with broad monthly assumptions, budgets were developed day by day. Public holidays, local events, seasonality, historical trends, occupancy forecasts, and business patterns were all considered.
Restaurant managers prepared forecasts for their own operations because they understood their business better than anyone else. These were reviewed by the Food & Beverage Director alongside every other department head. The General Manager then challenged, refined, and consolidated the entire property’s budget before presenting it to ownership for final approval.
Were adjustments made? Absolutely.
Did ownership still expect growth? Of course.
But the final budget remained challenging while staying grounded in operational reality.
That difference changes everything.
When managers participate in creating the budget, they understand the assumptions behind every number. They believe in the targets because they helped build them. Accountability becomes natural because ownership already exists long before the first day of the new fiscal year.
A good budget should never be viewed as a document created by finance. It should become the company’s operating roadmap.
The people closest to customers, guests, production lines, restaurants, and daily operations possess knowledge that spreadsheets alone cannot capture. Ignoring their input means ignoring some of the most valuable intelligence within the business.
The best budgets are built from the ground up and validated from the top down—not the other way around.
Yes, leadership should challenge assumptions. Yes, owners deserve ambitious growth. But ambition without realism creates frustration, while ambition supported by collaboration creates commitment.
At the end of the day, budgeting is not simply about forecasting revenue or controlling expenses.
It is about building trust.
When people help create the plan, they fight much harder to achieve it. And when success is shared, the entire organization wins.
Cafe de Vie 