ESCP Europe

Langue

English

Publication year

01/04/2018

Process and leadership principles are the most important principles in every organization. Implementing or modifying new principles is mostly considered as a strategic change. However, there are some processes that have not been changed. Due to bureaucracy, conservative management and leadership principles, financial processes have been treated as universal without any needs for changing. Budgets have always played a big role in controlling the business performance of organizations. This paper emphasises the importance of making strategic changes in budgeting processes. Recently, budgets as the result of the budgeting process have become a subject of criticism. Budgeting as a concept of controlling has made businesses less flexible, even though nowadays flexibility is one of the most important factors which could determine the success of an organization. In a highly turbulent environment, traditional budgeting started being treated as a non-efficient way of controlling and running a business. This paper will summarize the reasons why companies all over the world start abandoning the concept of traditional budgeting and start implementing a new, more flexible concept, called Beyond Budgeting. Originally, the concept of Beyond Budgeting was implemented by Svenska Handelsbanken - a Swedish bank. This company has made an increase in almost every business process considering the relevant performance indicators. Beyond Budgeting modifies business processes and the need for a certain level of radical changes followed through the implementation of Beyond Budgeting principles. The author will point out which factors are possible limitations in using Beyond Budgeting. On the other hand, the author will show the necessary conditions which need to be fulfilled in order to implement Beyond Budgeting concept and get the benefits of using the business methodology. [ABSTRACT FROM AUTHOR]