Often, when variances are negative to plan, managers may look for some other part of the organization to blame for the variance. “It’s not our fault that costs are higher for raw materials than we projected. We were misled by purchasing,” or, “Marketing didn’t get ads out in time for the holiday purchases,” or, “Customers aren’t happy with service support, and it’s affecting repeat business.” I don’t need to tell you how unproductive such an approach is. Look beyond apportioning blame. Dig for real causes and seek actions to address controllable variances.
Sometimes, where the problem demands actions by many managers from different parts of the organization, forming a cross-functional team may be more effective than pointing fingers. If your department is one of those accountable, talk to your manager about the problem and get approval to put together a corporate team to remedy it.
The point is: once unexpected variances have been identified, you and your unit can do a lot about them, either alone or in cooperation with other parts of the organization. Whether a negative variance lies in costs or income, senior management will expect you and your peers to do something about the situation.
If we’re talking about controllable costs, and if you can’t reduce the dollars spent by seeking a cheaper alternative, you may want to look at the budget as a whole, choosing not to spend money elsewhere. Possible examples include training, travel, or technology. During the recent economic downturn, for instance, many managers held off purchasing new computer equipment, putting money into maintenance until sufficient funds to purchase new hardware and software became available.