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Measuring the success of annual budgeting
It's as much a feature of corporate life as computers and monthly pay slips. Virtually all organisations do it. Yet it has few supporters. Too bureaucratic, static and formal, takes too long, out of date too quickly and excessive focus on financial measures. These are only some of the accusations levelled at the annual budgeting process.
So how do we know if our own budget process is successful? Set out below is a framework to make that judgement, starting with the barriers that have to be overcome. These include:
So what's to be done? Assuming you are directly responsible for the budget process or a key player in deciding what form the budget takes, the buck stops with, or at least near, you. Three ways to improve the measurement of the process are to clarify the objectives, get better measures and recognise the limitations of measurement.