In weighing the incentives to replace spreadsheet-only budget management practices with automated budgeting and planning software, CFOs typically focus on gains in productivity, control, fiscal accuracy, and time savings. But along the path to achieving those goals through a performance management approach, many companies also encounter a surprising side benefit: a noticeable improvement in employee satisfaction, retention, and commitment to excel.

While it may not be a core driver of ROI, the influence that intuitive and collaborative budgeting technology can have on keeping good employees happy in their work is well worth a CFO's attention. According to an October 2004 study by The Corporate Leadership Council (CLC), turnover-related productivity losses and out-of-pocket expenses can total 200 percent of the annual salary for a position. In addition to the time and direct costs involved in recruiting, screening, interviewing, and training a replacement, companies lose valuable expertise when an employee walks out the door.

How does business performance management (BPM) software improve employee satisfaction and retention?

By freeing employees from the manual grind. Many managers who have overseen the process of creating budgets in spreadsheets will attest that the stress and monotony involved is a recipe for employee burnout. Dale Hosack, CFO of Western Container Corp. in Midland, Texas, says one of his accountants used to spend 12 hours a day entering data into the company's huge budget spreadsheet and was on the verge of resigning before Western Container implemented its current Web-based budgeting software. Before the upgrade, finance employees often left Western Container within 18 months to take more rewarding jobs.

Similar situations play out in many organizations where the budget document resides in siloed spreadsheets and department heads cannot enter their fiscal planning information directly into the system. Besides requiring the same data to pass through multiple people's hands and potentially creating a logjam on one accountant's desk, this scenario ups the potential for human error considerably.

By contrast, budgeting software that lets managers enter their own cost-center numbers into templates with a central data repository can immediately reduce the stress and workload of the finance staff. Also, by making preliminary budget figures broadly accessible, data quality is improved because more pairs of eyes analyze the data for accuracy.

By building confidence and buy-in among employees. As more people become directly involved in budgeting and planning, their commitment to the organization tends to grow. BPM software that is simple to deploy across all employees' desktops, and easy to learn, can palpably improve their sense that the budget is meaningful, accurate, and results-oriented. It enables every employee to see the connections between their performance and the company's bottom line, which inspires greater buy-in to the company's objectives, nurtures job satisfaction, and culminates in higher retention rates.

A performance management system that supports broad-based collaboration also can help dispel competitiveness among cost centers for money, equipment, and personnel. Friction often occurs when managers are working in separate, disconnected spreadsheets that get knitted together at the end of the budget cycle. Each manager may focus only on the budget parameters that he or she directly controls, which can lead to incorrect assumptions and ill-advised spending. With performance management software that provides companywide access to continuously updated data on both projected and actual expenditures, aligning all the cogs in the budget machine becomes a shared responsibility.

By bringing individual employees validation. Because financial performance routinely trumps all other standards for measuring value within an organization, a company's most rewarded -- and, usually, dedicated -- employees tend to be the ones who feel empowered to influence the bottom line. That involves having both a voice in the goals for one's position and insight into the data used to measure performance against those goals. The reporting, analysis, and planning tools that make up a collaborative BPM system encourage an organization to deliver frequent and relevant performance feedback that helps employees stay oriented and motivated. Broad-based access to these tools also gives workers the chance to contribute new ideas for improving the team's fiscal effectiveness, productivity, and quality of service.

Automating the budget process quickly frees up finance staff to focus on tasks that accrue to business growth, rather than chasing after spreadsheets and tracking down formula errors. That could mean getting an earlier start on the annual audit, generating year-end accounting reports, analyzing and reconciling the organization's financial statements, or countless other productivity improvements. These represent valuable opportunities for employees to broaden their skills and advance their career opportunities as they gain more in-depth knowledge of the organization's entire budget process. Case in point: The former number-crunching accountant at Western Container who spent 60 hours a week on menial tasks is now overseeing logistics for three of the company's manufacturing plants.

Also, as employees view the numbers for different departmental budgets side by side, this transparency can trigger discussions -- such as how a certain group lowered its supply costs or increased its profit margin -- that lead to broadly adopted innovation. Every change to the budgeting system can be viewed immediately, thereby fostering transparency that helps everyone stay within the boundaries set by their budget. People throughout the organization are empowered to think more strategically.

By making budgeting and planning worth the effort. For finance managers who are immersed in budgeting and planning year-round, the most satisfying benefit of standardizing on BPM software may be that it fosters respect for the budgeting process among their fellow employees. Once people see how their input directly influences the budget, they no longer dread budgeting season but rather embrace it as a worthwhile investment of their time. Plans that were once regarded as belonging solely to finance, because that's where they were controlled, become everyone's responsibility.

There are countless reasons why people leave one organization to join another. In terms of relative importance, it's a safe bet that the average employee's opinion of the corporate budgeting system isn't remotely on par with factors like compensation, location, managerial rapport, or even commute time. However, as companies in many industries face increasing competition to attract and retain highly skilled professionals, the subtle yet genuine boost to employee satisfaction created by a collaborative budgeting software system can be potent.

Andy Kamlet is director of FRx Software marketing and sales at Microsoft Corp. Before joining FRx Software, he was the director of product management for Exodus Performance Optimization Solutions.