'Beyond' Budgeting -- Call it Whatever, It's Necessary

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'Beyond' Budgeting -- Call it Whatever, It's Necessary
Daniel L. Holden, Member
Budgeting, in whatever form at whatever level is a critical process for management to exercise. When properly performed, it is the key cost and operational analysis duty.
True, some companies ignore it (supposedly), but I'd suggest they either call the tasks something else or are very poorly run organizations. They will certainly have very poor cost control processes, and little understanding across management levels of how and why their operations and costs are derived.
My experience, 30+ years, as both an employee and consultant to companies has taught me that much of management has little understanding of cost analysis or cost accounting. This is become the situation more and more as we become a 'service' economy(s).
Cost analysis is much more difficult when the products are a services because typically the product mix is very fluid. Too much math for most accountants.
But a well-defined, well-developed VARIABLE budget is critical.

Budgeting Still at the Core of Planning
Masilo, Member
I think the value of budgets is immense hence companies still do budgeting as it is the core of planning, failing to plan is planning to fail. Beyond Budgeting brings critical information that we should use to improve current methodologies.
Libby and Lindsay did a research and found out that companies still value the budgeting process. 558 managers responded to their survey.
I do acknowledge the work done by Fraser and Hope, especially the article that questions who needs budgets, but perhaps the example of the Swedish bank should be compared to companies who use budgeting process and are successful...

Objectives are Essential and Necessary
Gerhard Tiroch, Member
It's necessary to have financial and non-financial objectives.
Non-financial objectives are the ground you can build the financial objectives on. To meet the objectives you need an action plan for the plan-year. What are the actions to fulfill the plan (budget)?
The content could be measures for earnings and costs like personal and other costs... And figures for FTE, qualities, faults rate, customers...



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