Discussion Post: Variance
Variance refers to the differences between the planned and actual figures on a firm’s revenue and expenses for a particular reporting period. The measure of variance is used to interpret whether the firm is performing well or poorly in the reporting period. Various expenses may contribute to the negative variance of a reporting period, which should be avoided.
This discussion presents the personnel expenses that would have contributed to the negative variance from the Yolder wise (2019) text, possible causes for each variance, how as a nurse manager, I can avoid negative variances, and characteristics of emotional intelligence that I would use to discuss the solutions with the budgeting committee.
The personnel expenses that have a negative variance in the current month are Managerial/Professional Expenses, Net Salaries and Wages, Benefits Expenses, and Net Personnel Expenses. The negative variances for these personnel expenses are -750, -550, -200, and -750, respectively. Various possible causes could have contributed to these negative variances.
The probable cause of negative variance for managerial/professional expenses is having additional meetings that were not initially planned to be held in the current month. Furthermore, the possible cause of negative variance in net salaries and wages expense is the additional recruitment due to high workloads in various units and increased salaries for some workers against the budget.
On the other hand, the negative variance in benefits expenses would have been caused by increased enumerations and workers working additional overtime to attract more benefits. Negative variance in net personnel expenses would have been caused by additional external training in the current month and unplanned educational advancement workshops.
As a nurse manager, I would ensure that impromptu meetings that are not planned for are minimized and that more funds are allocated to managerial/professional expense since some unplanned meetings may be inevitable. Additionally, I would avoid future negative variances in salaries and wages by using controlled recruitment and ensuring that salary and wage increments are budgeted for in advance.
Moreover, I would prevent future negative variances in personnel benefits by regulating personnel benefits and advocating for additional allocation for benefit expenses on the budget. According to Tsuru et al. (2019), personnel expenses on benefits can be reduced by reducing overtime for nurses and other workers.
Emotional intelligence can be used to enhance and discuss solutions to negative variances with the budgeting committee. The characteristics of emotional intelligence that are important for nurse managers include motivation, self-awareness, self-regulation, social awareness, and relationship management (White & Grason, 2019).
The emotional intelligence characteristics I would use while discussing the above-mentioned solutions with the budgeting committee are self-regulation, motivation, and relationship management. Self-regulation is verbal restraint and behavior surveillance when interacting with others. Self-regulation while discussing the solutions with the budgeting committee would enhance the implementation of the solutions.
Motivation means understanding the deeper meaning of personal goals and desires (White & Grason, 2019). My motivation will display the desire to see a change in addressing the variance problem, thus pushing the committee to implement such changes. Relationship management means maintaining a positive interaction and intentionally engaging with others. Appropriate relationship management will ensure I can follow up with the budgeting committee to enhance the implementation of the solutions.
In summary, negative variance should be avoided at any cost, especially on expenses. Allocating more funds for expenses and regulating expense increases are some solutions for addressing negative variance in the hospital operating budgets. Emotional intelligence characteristics can be used to influence changes in the budget.
Tsuru, S., Nakao, A., Yahagi, N., Tanizaki, K., Sudo, K., Morimatsu, S., Takaki, T., Takakusaki, N., Higashi, T., Nakashigeg, K., & Takahashi, M. (2019). Reduction of Overwork Time of Nurses by Innovation of Nursing Records Using Structured Clinical Knowledge. Studies in Health Technology and Informatics, 264, 1061–1064. https://doi.org/10.3233/SHTI190387
White, D. E., & Grason, S. (2019). The importance of emotional intelligence in nursing care. Journal of Comprehensive Nursing Research and Care, 4(152), 1-3. https://doi.org/10.33790/jcnrc1100152