How does the Beyond Budgeting model work ?

The response of companies should be – according to the CAM-I BBRT – to develop a new leadership vision and governance model in order to establish a new performance management climate that allows an organization to react to these external factors and changes and to move to a networked type of organization, where decision power is devolved to those, who know the business the best: to frontline managers (see figure 2). The BBRT calls this a devolutionary framework:

1. Create a performance climate based on competitive success – rather than on internal politics and on the principle that managers have to meet pure internal performance commitments

2. Motivate people by offering them challenge, responsibility, clear values as guidelines (instead of clear orders) and shared rewards

3. Devolve performance responsibility to operating managers; give them the freedom to decide

4. Empower operational managers by giving them the capability to act, by removing resource constraints (but agree on certain limiting parameters such as for example “cost-income-ratio” in bank)

5. Organize around customer oriented teams that are accountable for profitable customer outcomes – not around functions and departments that are accountable for meeting just the budget

6. Support transparent and open information systems that provide “one truth” throughout the organization

Figure 2: The new environment is driving the case for change of a company’s governance mod