Implementing Beyond Budgeting, 2nd Edition

CHAPTER 1Problems with Traditional Management

“Most of what we call management consists of making it difficult for people to get their work done.”

Peter Drucker

Introduction

In this chapter, we take a closer look at the many problems with traditional management, which I have only been hinting at so far. This is where we have to start. If there are no problems, why should we bother changing? Why fix something that is not broken? There has to be a case for change. Some of the problems we will discuss are directly linked to budgets and budgeting. Others are more indirectly linked, but often rooted in the budgeting mindset of command and control.

Let us start with the budget. It is not the only problem, but still a major one. Over the last 20 years, I have asked thousands of managers across the world (and many employees, too) what they think of the budgeting process. It is just like pushing a button. Everybody has a view. The vast majority is very critical, and many are extremely negative. These are the problems they typically bring up:

1. Weak links to strategyThe strategy and the budget are developed in isolated processes, facilitated by different functions without much mutual respect and contact.
2. A very time-consuming processBudgeting consumes a scary amount of time and energy, both when made and when followed up.
3. Stimulates unethical behaviorsThe gaming, lowballing, and hidden agendas that normally would not be accepted are seen as normal and unavoidable in a budget regime.