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Beyond Budgeting Movement

Beyond Budgeting Movement. “Who Needs Budgets?” Jeremy Hope and Robin Fraser, HBR, February, 2003. http://www.inc.com/magazine/20031001/breakingfree.html http://www.juergendaum.com/news/07_04_2003.htm. Traditional vs. BBM. Fixed perf. contract. Relative perf. contract.

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Beyond Budgeting Movement

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  1. Beyond Budgeting Movement “Who Needs Budgets?” Jeremy Hope and Robin Fraser, HBR, February, 2003. http://www.inc.com/magazine/20031001/breakingfree.html http://www.juergendaum.com/news/07_04_2003.htm

  2. Traditional vs. BBM

  3. Fixed perf. contract Relative perf. contract The New Performance Contract Fixed targets lead to only incremental improvements Relative targets push employees to outdo themselves Rewards based on rel. perf. give people the confidence to take risks Fixed incentives instill fear of failure Rigid plans focus people on compliance Continuous planning focuses people on value creation Preset allocation of resources encourages hoarding On-demand allocation of resources minimizes costs Centralized decision making ignores market feedback Decision making by local units in touch with one another makes full use of market feedback

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