What's wrong with having to justify a budget each year rather than assuming last year's budget was fine and still makes sense as a starting point for this year?
It imposes an enormous amount of operational overhead involved and destroys organization stability. All you need is a single manager in a single year who doesn't understand the benefit of something for its budget to get gutted with ZBB, and once that happens it can take years to rebuild. ZBB starts from the premise that employees are fungible and can either be freely replaced or freely reassigned, which is not very realistic.
I don't know much about how companies really implement a ZBB, if anyone even does, but I'd argue that if organizational changes are om the table every year that's an unnecessary recipe for disaster.
Budgeting doesn't have to mean asking the question of whether you need all the people you have, it's just asking what the priorities are and how to allocate capital. Priority number one should always be maintaining the best team possible, any other priority is going to fail anyway if there's no trust and everyone at the company is worried about getting fired just for budget.
If that's the main issue with ZBB for a company, budgeting really is the least of their problems in my opinion. Employees need to trust leadership and leaderhsip needs to both earn that trust and trust their employees as well.
This is actually really similar to a problem I have with how OKRs are done. They should be done from the bottom up not the top down. The idea of OKRs, and agile, sound great but they're just used as a mechanism for top down control because the company is fundamentally lacking trust.
One issue I can see is a massive performance hit at the year boundary as everyone goes into 'justification' mode to ensure their jobs and projects persist. Or just dusts off the forecasts and justifications they used last year, which sort of defeats the whole point.
Thats a fair point. Trust would definitely have to be a requirement for a functional zero-based budget.
Employees would need to know their jobs are secure and the company is just going through a regular process of deciding where to invest. As long as the perception, whether true or not, is that companies are always willing to fire employees to save a buck then no one really has incentives to honestly propose budgets and priorities.
