Office for National Statistics
Going Beyond Budgeting
Report

Going Beyond Budgeting

CFOs say it’s finally time to slay the three-headed corporate budgeting monster.

Sebastian Stange, Bjarte Bogsnes and Hardik Sheth
Boston Consulting Group, 2021
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Editorial Rating

8

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Recommendation

The ravages of COVID-19 on company balance sheets have opened executives’ eyes to the need for new approaches to budgeting and forecasting. Current processes often misalign incentives and force rigid decision making. Financial experts Sebastian Stange, Bjarte Bogsnes and Hardik Sheth explore a new process, “Beyond Budgeting,” that spurs agility, transparency and delegation within a customer-centric enterprise. Finance managers will find this a practical guide to better budgeting.

Summary

Traditional budgeting encompasses three central but contradictory goals.

Managers draw up budgets to guide business decisions. But conventional methods of budgeting rely on three contradictory goals: 1) Budgets aim to establish motivational, performance-driven targets, but 2) those targets require realistic forecasts, and 3) budgets limit future resource allocations so that CFOs can cut costs, if needed. These purposes of motivation, objectivity and control are inherently at odds.

Traditional budgeting can hinder firms’ agility and resilience in confronting the unexpected, like the COVID-19 pandemic. Corporate leaders at companies as diverse...

About the Authors

Sebastian Stange is a partner and an associate director of corporate strategy at Boston Consulting Group. Bjarte Bogsness is chairman of the Beyond Budgeting Roundtable. Hardik Sheth is a partner and associate director of the Center for CFO Excellence.

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