|
Anneke Zwart
Student (University), Netherlands
|
Weaknesses of Traditional Budgeting
Fraser and Hope mention the main weaknesses of annual (traditional) budgeting that gave rise to the development of thinking beyond budgeting:
1. Time Consuming - Budgeting takes a lot of time. Average time needed for budgeting lies between two and four months according to the authors.
2. Costly - Despite developments of high quality and fast computer networks, the process of budgeting still remains to be expensive.
3. Useless - After visiting several companies, it appeared that many companies perceived the results of budgeting differently. Budget gave some companies more control, while in other companies budgeting was perceived as being unimportant and not meeting any needs.
4. Bureaucratic - The continuous pressure on prices of goods and services asks for decreases in structural costs and in bureaucracy.
5. Frequency - Initially changes in the competitive environment resulted in budgeting more often in a year, but its only result is a rising workload that is especially high in reorganizations and M&As.
6. Changing Environment - Budgeting has been successful in more stable environments, but it is no longer efficient in the changing competitive environment.
Are we missing any further weaknesses of classical budgeting, or is this list complete?
Hope, J. and Fraser, R. (2003) “Beyond Budgeting: How Managers can Break Free from the Annual Performance Trap”. Harvard Business School Publishing Corporation.
X
All about management
Welcome to the (Beyond) Budgeting best practices: "Weaknesses of Traditional Budgeting".
Please sign up now to read all responses and to join this discussion yourself. It's free.
Log in
| |
|
Nita
CEO, United States
|
|
On Weaknesses of Traditional Budgeting 6b: Changing Economic Enviroment
Hi, Anneke,
I like your observation that budgetin (...)
|
| |
|
Arif ur Rehman
Professor, Pakistan
|
|
On Weaknesses of Traditional Budgeting 5: The Trisemester Way
In academics the fundamental shift from annual exa (...)
|
| |
|
Jagdish B Acharya
Consultant, India
|
|
Weaknesses of Traditional Budgeting: 7. Budgeting is Often not Integrated with ERP
From past business results, vision of business lea (...)
|
| |
|
KALOGO PAUL
|
|
On Weaknesses of Traditional Budgeting 3: Now Useless
This weakness of traditional budgeting in many org (...)
|
| |
|
Alpin McGregor
freeelance, United Kingdom
|
|
On Weaknesses of Traditional Budgeting 3: Use Budgeting Appropriately
Surely problems arise with budgeting when it is no (...)
|
| |
|
George Kerstholt
|
|
On Weaknesses of Traditional Budgeting 3: Don't Use Budgeting for History Only
If budgeting is used as a means of reference for a (...)
|
| |
|
Donald Liveley
Teacher, United States
|
|
Budgets... They Have a Place But When Misused!
Budgets are about compliance (tactical) rather tha (...)
|
| |
|
Hakvoort
Business Consultant, Netherlands
|
|
Weaknesses of Annual Budgeting: 8. Perspective of Cost Control
What's the definition of traditional budgeting? Tr (...)
|
| |
|
palermo
ICT Consultant, Chile
|
|
On Weaknesses of Traditional Budgeting 3: Not Useless...
Hello Anneke, I agree with your statements except (...)
|
| |
|
CHIEDU UDE
CEO, Nigeria
|
|
Weaknesses of Traditional Budgeting: 9. Included in Project Management Tools
Ensuring discipline and control are essential attr (...)
|
| |
|
ADAM SAID
Student (Other)
|
|
Another Weakness of Budgeting: 10. Vulnerable for Cost Cutting
The mentioned weaknesses of (traditional) budgetin (...)
|
| |
|
Sergey Baltin
Manager, Russian Federation
|
|
All Mentioned Weaknesses do not mean Budgeting is Useless
When you at the very beginning of installing budge (...)
|
| |
|
K.Narayana Moorthy
HR Consultant, India
|
|
Further Weaknesses of Traditional Budgeting
- It is not oriented to long-term vision.
- If it (...)
|
| |
|
JC de Jong
Director, Netherlands
|
|
Waste of Energy, Causes Sandbagging
Hello Anneke, I agree with your points and the two (...)
|
| |
|
jiun
Student (University), Malaysia
|
|
On 3. Useless: Managers don't see the Value of Budgeting
The weak points and strengths of budgeting should (...)
|
| |
|
Istvan Szeman
Consultant, Hungary
|
|
Budgeting-Rocket Science?
@George Kerstholt: My observation is budgeting is (...)
|
| |
|
Istvan Szeman
Consultant, Hungary
|
|
Missing Process and Software Support
One essential (and missing) building block is a we (...)
|
| |
|
NANG Theophile
Student (University), Cameroon
|
|
Weaknesses of Traditional Budgets
Hi all, I appreciate what is previously said by @J (...)
|
| |
|
Dobson
Project Manager, Canada
|
|
Weakness of Traditional Budgeting
I agree with @ADAM SAID that typically budgeting t (...)
|
| |
|
RUBEN ACOSTA
Manager, Mexico
|
|
Weaknesses of Annual Budgeting
Dear Anneke, you are just right in your observatio (...)
|
| |
|
Donald Liveley
Teacher, United States
|
|
Lack of Process and Software..
The reason that processes and technological suppor (...)
|
| |
|
Adam Mohammed Baba
Director, Ghana
|
|
Weaknesses of Traditional Budget, 3 Useless
Political interference as a result of political ex (...)
|
| |
|
K.Narayana Moorthy
HR Consultant, India
|
|
Weaknesses of Traditional Budgeting
I agree with Adam Mohamed Baba - budgeting must be (...)
|
| |
|
ADAM SAID
Student (Other)
|
|
Careful with the Effectiveness of Numbers
I think indeed numbers are effective tools for dec (...)
|
| |
|
Michael T Iorngurum
Manager, Nigeria
|
|
Weaknesses of Traditional Budgeting
Your reasons are cogent (Editor: ~convincing). Par (...)
|
| |
|
George Kerstholt
|
|
Weaknesses of Traditional Budgeting
@Istvan Szeman: unless I misunderstand you. Imho b (...)
|
| |
|
K.Narayana Moorthy
HR Consultant, India
|
|
Weaknesses of Traditional Budget
While it is agreed that a budget is important, it (...)
|
| |
|
Istvan Szeman
Consultant, Hungary
|
|
Weaknesses of Traditional Budgeting
@George Kerstholt: I agree with you very much with (...)
|
|
|
|
|
More on (Beyond) Budgeting
|
Summary
| Weaknesses of Traditional Budgeting |
|
|
|
Copy this into your study materials:
and add a hyperlink to:
|
|
|
Copy this HTML code to your web site:
|
|
|
|
|
|
|
|
|
Sign up
Start a new forum topic