The controversial concept of beyond budgeting is a better approach for financial planning and analysis (FP&A) than traditional budgeting

Prior to beginning work on this discussion, please read the articles Who Needs Budgets?, Traditional Budgeting vs. Beyond Budgeting in the Financial Planning page of the CFO Edge website, and Traditional Budgeting Versus Beyond Budgeting: A Literature Review.

In the words of GE’s legendary ex-CEO Jack Welch, Jack Welch, “The budgeting process at most companies has to be the most ineffective practice in management. It sucks the energy, time, fun, and big dreams out of an organization (…) [and] brings out the most unproductive behaviors (…)” (Welch & Welch, 2005, p. 189).

Don't use plagiarized sources. Get Your Custom Essay on
The controversial concept of beyond budgeting is a better approach for financial planning and analysis (FP&A) than traditional budgeting
Just from $13/Page
Order Essay

Some argue that the purposes of budgeting can be achieved without the conventional budgeting process. These companies espouse an idea called beyond budgeting that proposes to replace annual budgets with rolling forecasts of key performance indicators (Hope & Fraser, 2003). Others disagree, pointing out that the work of continuous planning is costlier than budgeting and that doing something continuously tends to make the process superficial.

So, the jury is still out. But so far, GE still prepares budgets! Discuss in an initial post of 200 words whether the controversial concept of beyond budgeting is a better approach for financial planning and analysis (FP&A) than traditional budgeting.

Leave a Reply

Your email address will not be published. Required fields are marked *