Beyond budgeting
Beyond Budgeting is a research initiative initiated in England in 1998 and a management model for organizations of all kinds “beyond instruction and control”. It is understood as an alternative to the Tayloristic, bureaucratic-hierarchical organizational model and is defined by 12 guiding principles. The model was developed from case study and theory-based research between 1998 and approx. 2002. To this day, the Beyond Budgeting Round Table (BBRT) is supported by a member community of companies from 4 continents.
Comparison with known procedural models
Beyond Budgeting is an alternative to the classic forms of management as a control system for functionally and hierarchically divided "pyramid organization". The 12 principles of Beyond Budgeting outline how organizations can achieve a "radically decentralized", functionally integrated network structure instead of the functional pyramid structure. The initiators of the Beyond Budgeting movement have already found various successful case study organizations in practice for such structures. In theory, Beyond Budgeting makes use of a. in systems theory , cybernetics , chaos theory and concepts such as the learning organization .
history
Beyond Budgeting developed out of the attempt in financial management to escape its own stringent and often highly traded approaches to formalized budget planning . These well-known specifications are referred to by adepts of beyond budgeting as the management model of steering and control . This corresponds to a corporate management concept that is primarily defined by internally defined key figures and a pecuniary focus. Now, through Beyond Budgeting, market-oriented corporate target planning is to come back to the fore.
One of the first beyond budgeting organizations to be identified is the Swedish commercial banks , which went through a radical process of change as early as the 1970s. Handelsbanken was one of around 25 organizations that were visited by the directors of the BBRT during the development phase of the Beyond Budgeting model and described in the form of case studies. Other companies described in this way in the form of case study-based research were AES (USA), Schneider Electric, Ikea, Borealis, and Guardian Industries. A principle-based model was gradually derived from the case study-based research, which subsumes the common characteristics of the various companies. The publications of the BBRT between 1997 and 2002 document this research and development work. The definitive "set" of 12 principles crystallized in 2001 and 2002. Further case studies were added in the second research phase, including the German company dm-drogerie markt , which abandoned traditional management of budgeting, annual plans and fixed service contracts and monitoring compliance with them at the beginning of the 1990s. Other pioneering companies named and researched in various Beyond Budgeting publications are Aldi , Southwest Airlines, Toyota , WLGore, Google , Egon Zehnder International , Trisa, and others.
Concept and principles
The term beyond budgeting describes a "paradigm". At the same time, Beyond Budgeting is a "movement" supported by a membership organization called the Beyond Budgeting Round Table (BBRT). A key feature of Beyond Budgeting as a "paradigm" is that it defines principles that run counter to traditional management based on Taylorist principles. In contrast to other management concepts, Beyond Budgeting is neither a tool nor a standard solution. Rather, it describes a model in a systemic sense and at the same time a “way of thinking”.
The Beyond Budgeting Round Table was founded in 1998 by Robin Fraser, Jeremy Hope and Peter Bunce as a working group within the industry association CAM-I ( Consortium of Advanced Management, International ). In 2001 BBRT became an independent non-profit organization independent of CAM-I.
method
The procedure is based on a set of interdependent principles. These principles stand in contrast to the implicit and explicit management model, which goes back to Frederick W. Taylor and others and which Beyond Budgeting representatives call "traditional", which is often also called the "command-and-control" model (instruction and Control). According to Beyond Budgeting, twelve principles are important for the success of an organization in dynamic, non-linear environments, which have been identified since 1998 on the basis of case study-based research and, from 2001 onwards, have been broken down by the BBRT into six performance management and six leadership principles:
Leadership principles
- Values - steer with a few clear values, goals and limits, not with detailed rules
- Responsibility - enable all employees to think independently and act entrepreneurially; do not encourage adherence to plans
- Independence - giving teams the freedom and the space to act without micro-management from above
- Organization - create a lean network of teams responsible for results, not a centralized, functionally divided pyramid
- Customers - align all employees with their customers; not on hierarchy and power relations
- Transparency - making information freely accessible for the purpose of self-regulation, not restricting access hierarchically or allowing information power
Performance management principles
- Goals - Set relative goals for continuous improvement, not negotiate fixed performance contracts
- Reward - reward mutual success based on team performance; do not motivate or incite individual employees by achieving goals
- Planning - practice as a continuous and integrated process, not an annual top-down event
- Resources - make them available when they are needed, not through annual allocation and allocation
- Coordination - Coordinating cooperation in a market-dynamic manner, not via planning cycles
- Control - based on relative indicators, trends and target / actual comparisons, not by means of deviations from the plan
Case studies, pioneers, associations within beyond budgeting
Companies are counted as pioneers who have made the transition to a principle-based, flexible, decentralized and economically successful organization, following the 12 principles of the Beyond Budgeting model. Typically, this transformation to "beyond budgeting" took place before the beyond budgeting model was developed. Each of the pioneering companies developed its own business model.
The pioneers of the beyond budgeting model include companies such as Aldi , dm-drogerie markt , Svenska Handelsbanken , WLGore, Semco, AES, Guardian Industries, Dell , Toyota , Southwest Airlines , Ahlsell, Ikea , Egon Zehnder International, Google , Flight Center , Herman Miller, Statoil, Whole Foods , Trisa, WM-Group, Schindlerhof and Resource Informatik.
Beyond Budgeting Round Table
The Beyond Budgeting Round Table (BBRT) was founded as an interest group. The work of the BBRT aims to show how companies proceed more successfully with Beyond Budgeting than with traditional methods. There the 12 leadership principles were described.
These principles have been developed by the Beyond Budgeting Round Table (BBRT) since January 1998 and have been maintained so far.
The BBRT had over 150 members between 1998 and 2007 (the not-for-profit organization is primarily financed by membership fees), including well-known corporations and public organizations such as Unilever , Statoil , the World Bank , Wachovia , T-Online , UBS , Japanese Tabacco and others. Most of the member companies are from North America and Europe.
See also
literature
- Bjarte Bogsnes: Implementing Beyond Budgeting. Unlocking the performance potential. Wiley & Sons, New York NY 2008, ISBN 978-0-470-40516-1 .
- Jürgen H. Daum (Ed.): Beyond Budgeting. Impulses for the fundamental reorganization of corporate management and control. Martin Meidenbauer Verlag, Munich 2005, ISBN 3-89975-533-2 .
- Jeremy Hope, Robin Fraser: Beyond Budgeting. How managers can free themselves from the annual budgeting trap. Schäffer-Poeschel Verlag, Stuttgart 2003, ISBN 3-7910-2144-3 .
- Niels Pfläging : Beyond Budgeting, Better Budgeting. Target-oriented management and successful management without fixed budgets. Haufe-Mediengruppe, Freiburg (Breisgau) et al. 2003, ISBN 3-448-05643-X .
- Niels Pfläging : Leadership with flexible goals. Beyond budgeting in practice. Campus-Verlag, Frankfurt am Main et al. 2006, ISBN 3-593-37918-X .