Beyond Budgeting as a model for greater empowerment and innovation

empowerment

 

i would like to share with you my personal journey of the beginnings of the transforming an organisation from a traditional top-down command & control hierarchy based organisation into a desired empowered organisation where employees at the lowest team levels are empowered to serve the customers better, create more value and drive better organisational performance.

i was working with a large local organisation with a long history.

as with many local corporations, its management model is very top down, and hierarchical. this perhaps stems from our culture of respect for elders and obeying orders from the top.

initially when i join, i felt quite important when people took instructions without much of a debate. however when the organisation faces very tough challenges, waiting to issue instructions without having “ground zero” visibility is a very risky affair to say the least.

these are times when i wished that the many people in the organisation would be able to make the right decisions to face the turbulent times.

unfortunately, the reverse has happened. the turbulence can be said to bring paralysis.

in amongst these challenges, i faced people who are doing things for their own self. these self serving needs gives me a picture of detachment between the customer and organisational issues from the employee issues.

much of this i found was due to the personal targets set to these employees – which ultimately determine their year end bonus and career progress.

individual goals were thus incongruous to the customer and organisational goals.

the immediate solution was to fix these goals. or as consultants would say: “align employee goals to corporate strategy”. sounds easy. we attempted this. but how do you ensure that all employees are aligned – especially in a large organisation? a fraction of misalignment could cause a significant drag and worse, drive an organisation off course. this is further complicated when the business environment the company operates in keeps shifting and changing: despite the external changes, our employees are given targets that are fixed and fast outdated.

the first step to fixing this was to look at how targets were set.

typically many organisations follow a very traditional target setting process. the annual plans are converted into targets and budgets and then “cascaded” to every individual in the organisation as personal targets which are tied to year end bonus payouts.

no matter what initiative and improvement programmes we ran – the benefits were often diluted by the employee links to their fixed targets and bonus.

this was the root cause.

we came across the idea of beyond budgeting. actually, it is a misnomer as the concept had very little to do with budgeting, but more of the whole end to end management model which includes the values, team accountability, planning, performance rewards, and leadership aspects of the company.

we found that the beyond budgeting model had some principles to address these common issues with the traditional management model. on top of this, it was a model that heavily promoted front line empowerment and transparency that drives inescapable accountabilities. it also emphasised the use of intrinsic peer-driven motivation as opposed to individual incentives. all this would operate in a budgetless, the absence of fixed targets in a dynamic control environment centred around values and transparency.

we are convinced that this was the right model for the organisation.

in the past year we did many leadership and employee engagement sessions, and have so far received many positive feedback. the team shall soon be working on the implementation in the coming months.