Finance for Non-Financial Managers training in ZurichFinance for non-financial managers in the canton of Zurich: does a budget overrun signal poor performance?
In the canton of Zurich, banks, insurers, technology companies and European headquarters bring together international teams working at a fast pace, often in English. How can a non-financial manager explain a budget variance without confusing accounting responsibility with decision-making authority?
What the literature establishes: interests do not automatically align
Michael C. Jensen and William H. Meckling (1976, Journal of Financial Economics) propose a theoretical framework for understanding the costs of delegation when the parties’ interests are not fully aligned. Monitoring arrangements and incentives help structure this relationship without eliminating every disagreement. Applied to budget interpretation, this framework encourages managers to examine the responsibilities and incentives behind an accounting result rather than treating it as a verdict.
A second mechanism: rewards influence action
Steven Kerr (1975, Academy of Management Journal) uses organisational examples to analyse contradictions between desired behaviour and the behaviour encouraged by reward systems. In budgeting, the risk would be to reward low expenditure while simultaneously expecting reliability, skills development or service quality. Postponing training or maintenance can therefore improve the immediate indicator without demonstrating better management.
The hasty conclusion: an adverse variance means failure
An overrun may result from activity exceeding forecasts, a higher supplier price or a new allocation of central overheads. These explanations do not automatically make the expenditure appropriate: they change the questions to ask and the decisions to examine. It is necessary to distinguish what the manager could decide, what they could influence and what they could only anticipate or flag. (our executive and employee training programmes)
The limits: an explanation is not proof
Neither of these classic articles measures the effect of financial training, and neither is a study specific to the canton of Zurich. In practice, breaking down a variance also depends on the quality of the original budget, the available data and allocation conventions. A category labelled “central overheads” does not, by itself, prove that the manager had no room to act.
A practical check in Zurich
In a hypothetical European headquarters in Zurich, a technology team is allocated shared-service costs and presents its budget in English to regional management. An exercise in SHR’s “Finance for non-financial managers” programme could involve reconciling budget and actual figures in a table separating volume, price, local decisions and central allocations, with supporting evidence and an identified scope for action for each line. At the next review, checking that the variances add up exactly to the overall difference and recording the amount still unexplained would test the analysis’s traceability, without claiming that this alone measures performance. To go further: explore the Finance for Non-Financial Managers training in Zurich in the canton of Zurich, or browse our executive and employee training programmes in Switzerland.
In pictures: Finance for Non-Financial Managers in Zurich
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