Who Needs Budgets? (HBR OnPoint Enhanced Edition)
by Jeremy Hope, Robin Fraser

Our Price: $6.50
Availability: Available for download now
Category: Book
See more book details and other editions

Book Summary Information

Book Reviews of Who Needs Budgets? (HBR OnPoint Enhanced Edition)

Book Review: Traditional budgeting versus key performance indicators
Summary: 3 Stars

The authors believe that budgeting, as most corporations practice it, should be abolished. In the absence of budgets, alternative goals and measures move to the foreground and every part of the company has to be judged against performance comparisons with its peers' and world-class benchmarks. The authors explain that organization have to break free from the traditional, fixed annual targets and set longer-term goals based on benchmarks. The elements or factors measured are key performance indicators (KPI), which fulfill the self-regulatory functions of budgets. These KPIs should result in rolling forecasts that look five to eight quarters into the future and help managers to continually reassess current action plans as market and economic conditions change. The authors use a simple table to show the five main differences between fixed and relative performance targets. The authors complement the article with a detailed description of the problems with budgets, examples of new performance management at Scandinavian bank Svenska Handelsbanken and Swedish wholesaler Ahlsell. Through these changes, "knowledge flows between frontline people and headquarters should increase, realizing the full potential of a radically decentralized organization."

The authors take on a highly ambitious issue - the traditional budgeting process - and I believe that they do not succeed. They make it sound somewhat too simple and do not really provide us with a road map. I believe that readers are probably better served by Kaplan & Norton's balanced scorecard. The article is written in simple business US-English.

Summary of Who Needs Budgets? (HBR OnPoint Enhanced Edition)

General Books

• Business & Investing
• eDocs > Formats > PDF (printable) > Business