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Traditional Budgeting vs. Beyond Budgeting: Three Core Differences

 
  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
   
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  Article Summary  
  This article looks at three core differences between two general approaches to the budgeting process: Traditional Budgeting and Beyond Budgeting. .

Traditional Budgeting we all know well: the top-down, command and control approach with authority firmly seated at the executive level. The Beyond Budgeting approach is a significant shift: executives empower and coach decentralized teams that are more closely connected to customers and to changes in the marketplace.  

The article compares Traditional Budgeting with Beyond Budgeting in three key areas.
 
 
  • Management style: command and control vs. empower and coach
  • Seat of authority: centralized bureaucracy vs. decentralized teams
  • Performance measurement: fixed targets vs. relative targets
 
  Beyond Budgeting and its shift of authority to front-line business units and teams results in quicker and more agile responses to customer needs. The bottom line: companies applying the principles of Beyond Budgeting see continuous improvement in performance and shareholder value.  
   
  Perhaps this is a time for executives to take a deep breath and consider a business paradox: less bureaucratic control with a Beyond Budgeting approach can yield better long-term results.  
     
  Open the entire article as a PDF  
     
     
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