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What are the Beyond Budgeting principles?

For the past 12 years we have been studying organizations that have abandoned command and control and looked at the common principles they have adopted. This model is derived from the ‘best of best practices’ of leading-edge organizations and consists of 12 principles that redefine the management model. The first six “leadership” principles provide a framework for the devolution of responsibility to front line teams thus enabling them to respond quickly to emerging events and making them accountable for continuously improving (internal and external) customer outcomes and relative performance. The second six “process” principles support a more adaptive set of performance management systems that enable front line teams to be more responsive to the competitive environment and to customer needs. These principles represent a holistic model (not a menu of options) but different organizations will place different emphases on different elements at different times.

12 Beyond Budgeting Principles (2011)
Governance and transparency
1. Values Bind people to a common cause; not a central plan
2. Governance Govern through shared values and sound judgement; not detailed rules and regulations
3. Transparency Make information open and transparent; don't restrict and control it
Accountable teams
4. Teams Organize around a seamless network of accountable teams; not centralized functions
5. Trust Trust teams to regulate their performance; don't micro-manage them
6. Accountability Base accountability on holistic criteria and peer reviews; not on hierarchical relationships
Goals and rewards
7. Goals Set ambitious medium-term goals, not short-term fixed targets
8. Rewards Base rewards on relative performance; not on meeting fixed targets
Planning and controls
9. Planning Make planning a continuous and inclusive process; not a top-down annual event
10. Coordination Coordinate interactions dynamically; not through annual budgets
11. Resources Make resources available just-in-time; not just-in-case
12. Controls Base controls on fast, frequent feedback; not budget variances

 

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