Beyond Budgeting is a very catchy and rather provocative name that stands for the possibility of managing organizations more effectively, by making measurements and financial tools into a support for people’s entrepreneurship and the creation of successful products rather than a limiting factor. For now, in fact, the budget is considered by many to be a limiting element: it does not concern reality but it is an ambition and establishes in perspective data that must remain fixed for an entire year. But with the increase in complexity and the appearance of continuously new emergencies, it happens all the time that we have to deal with scenarios that are very different from those we had planned.
And that’s why people frequently talk about how to change financial planning. But more often than not, the reasoning only addresses the mechanistic aspects. Beyond Budgeting, on the other hand, proposes something different in terms of organization management and collaboration between people. In fact, in this new trend, you don’t have to look only at what you do with the budget or any performance measurement, although obviously you need to have clear tools and goals, but the focus must shift to the way you choose to arrive at these goals, which can be radically different.
It happens very often, for example, that if a department receives a budget, even if it is higher than what is actually needed, it is not returned for reallocation because there is a fear of a budget cut for the following year. So currently most finance departments that audit companies assume that people cannot be trusted. Instead, at Peoplerise, we support organizations to look at what they’re doing and figure out if it’s efficient or effective, if it’s in the best interest of the consumer and the company, or if it’s just being done because you think that’s the way it should be done. So what we are proposing is a real change in mindset.
Our aim is to make organizations aware and autonomous in adopting a new approach to performance measurement, with the purpose of supporting departments to work better together and not to control them. We focus on developing an effective and generative dialogue within organizations in order to develop relationships that add value. Because while it’s true that numbers will still remain important indicators, it’s how these metrics are defined and achieved that can change. For example, if everyone has different targets to meet, everyone will work by focusing on their own outcome. However, by identifying the standards to be pursued with common measurable data and objectives, such as Net Promoter Score, the whole organization will start to think very differently.
Thus, Beyond Budgeting is a very realistic approach of looking at work. What can happen, for example, if I start treating my suppliers reliably? What is the risk of my behavior? It’s not about hierarchy or power, it’s about understanding what your own role is within a larger framework.
Read more https://bbrt.org
