Beyond Budgeting Model
In an era of digital information, organisational management is influenced by the transition from traditional methods to information age practice in order to sustain the company’s success in a competitive market. The role of a budgeting system underwent modification throughout the latter decades, initially it represented ‘‘ a set of coordinated financial plans’’ which developed into ‘‘ a wide ranging -management system for controlling the business, driving management behavior and rewarding performance’’(Jeremy Hope & Robin Fraser, 2000, p. 34) while the main motive was to establish control. Hope and Fraser (2000) stresses the importance of understanding that ‘‘there is a fine line between alignment and control’’(p. 35) including the dangers …show more content…
The beyond budgeting model is ‘’ a representation of a set of information-age best practices from organisational design and devolution of authority to planning and performance management’’(Hope & Fraser, 2000, p. 32)
The purpose of this article is to highlight the importance of understanding the use of theories such as organisational design and devolution as well as performance management, how to adapt these strategies and its impact on the level of success attained by a company in a competitive environment (Hope and Fraser, 2000, p.32). Several companies have successfully adapted the beyond budgeting model for a new economy and further research by the Beyond Budgeting Round table indicated that alongside an effective strategic management, organisational redesign and devolution needs to be implemented.
The beyond budgeting model is dependent on the power of the dual approach, ‘‘the benefits of effective devolution ( fast decision making) and the benefits of the effective performance management model (fast, open and relevant information)’’(Hope & Fraser, 2000, p.
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‘’The key to autonomy isn’t to try to empower cost centers but to give more responsibility and accountability to a greater number of business units for value creation’’( Hope & Fraser, 2000, p. 32) , it highlights the issues involved in the enforcement of traditional performance management model and depicts the resulting budgeting systems as a limitation in an age of change as it promotes coercion and aims at cost reduction. The forces of centralization serves an obstacle to the realization of effective
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