Budgetary health warning issued.

PositionNews Round-Up - Brief Article

Using budgets is "a habit that harms", delegates were told at the first annual "Beyond budgeting" summit, hosted by CIMA Mastercourses. Steve Player, North American programme director of the Beyond Budgeting Round Table (BBRT), said that, while governments and investors were calling for increased honesty and transparency in company reports, budgets encouraged managers and staff to act dishonestly.

"If you begin your main management game with a game of liar's poker, when are your people ever going to learn to tell the truth?" Player asked. One problem with conventional budgets, he said, was that they penalised managers who came up with great results one year but couldn't repeat them the year after. "When you use budgets to cap expenses, you create a very small room, because the ceiling is also the floor," he said.

Preston Steen, of IBM Business Consulting Services, agreed. He said that his company had drawn up a web-based diagnostic survey in conjunction with the BBRT to help managers determine where their firms could improve their...

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