Commercial
Zero-based budgeting
Rebuilding a budget from nothing each cycle instead of adjusting last year's.
Definition
A budgeting method where every line has to be justified from zero each period rather than inherited from the previous one with a percentage change. Applied to staffing, it means asking what team you would build today if you had none, rather than which roles to add or cut.
Why it matters
It is a useful exercise and a poor policy. Run from zero it exposes roles that exist only because they existed last year, but applied literally every cycle it destroys the institutional knowledge that makes a team cheaper than its replacement. Use it to test a structure, not to churn one.
Related
Read next
Year-one cost
What a role or engagement really costs in its first twelve months.
Read the definition ›Total cost of ownership
Everything a hire or a project costs, not just the invoice.
Read the definition ›Capacity planning
Matching the work you expect to the people who can do it.
Read the definition ›Burn rate
How fast a project is consuming its budget against its progress.
Read the definition ›Next step
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