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Management control systems

4.2 The 'Beyond Budgeting' approach

 The manager sets their own 'stretch targets' (therefore takes more ownership).

 The manager is given full support to achieve the targets but carries sole
responsibility for meeting them.

 Targets are both strategic and financial.

 Monthly balanced scorecards are produced and measures are compared to
last year, other divisions and competitors.

 Performance reviews are called on an ad hoc basis when there is a blip in
performance. These reviews focus on action plans and possible improvements.

4.3 Advantages of the beyond budgeting approach:

 Managers are not punished for failing to reach the full target (improving
motivation).

 The use of the BSC promotes a balanced range of performance measures.

 Managers set their own targets increasing ownership.

 Reviews of action plans encourage feedback and learning.

 Beating internal and external competitors is motivational.

 Managers share a bonus pool that is based on share price or long-term
performance against a basket of competitors (encouraging teamwork and a
long-term perspective.

Illustrations and further practice

Now try TYU 1, 2 and 4 from Chapter 6

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