1/8/2021 Better Budgeting or Beyond Budgeting?

An Analysis of Turkey’s Top 500 Industrial Companies | FP&A Trends

 

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Better Budgeting or Beyond Budgeting? An Analysis

of Turkey’s Top 500 Industrial Companies JANUARY 2021

March 26, 2020 Su Mo Tu We Th Fr

By Efe Can Tugbay, Business Analyst at SuzoHapp Netherlands 1

FP&A Tags: Better Budgeting, Beyond Budgeting,

3 4 5 6 7 8
Planning and Budgeting
10 11 12 13 14 15
The business environment today requires fast and ef cient adaptability. We
are living in the information age after the industrial revolution. Budgets are 17 18 19 20 21 22
one of the most critical components of Management Control Systems, and
they are prone to various adaptations. Traditional Budgeting systems have 24 25 26 27 28 29
been criticized many times by business managers and academicians. For the
last 20 years, Better and Beyond Budgeting approaches are taking their 31

place.
All events for the year
This article summarises the research conducted in Turkey’s top 500 industrial
companies. The aim of the research was to test the criticisms towards
Traditional Budgeting and to understand if Better and Beyond Budgeting Future Meetings
approaches are desirable in the current environment.

Traditional Budgeting De nition

“Traditional budgeting is a method of preparation of the budget in which last The Digital UK & Ireland
FP&A Board: Moving from
year’s budget is taken as the base. Current year’s budget is prepared by
Traditional Management
making changes to previous year’s budget by adjusting the expenses based Accounting to Extended
on the in Cookies onconsumer
ation rate, FP&A Trends website
demand, market situation, etc. Past year’s AcceptPlanning and Analysis
No, thanks
revenues and costs form an integral part ofusing
Cookies help us deliver our Services. By theour
current year’s
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1/8/2021 Better Budgeting or Beyond Budgeting? An Analysis of Turkey’s Top 500 Industrial Companies | FP&A Trends

those items in traditional budgets need to be justi ed which are over and
above the last year’s budget.” Source: eFinance management.

Better
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Budgeting and Mostly Used Systems February 4, 2021

Better Budgeting should be considered a better version or upgrade of

Traditional Budgeting. According to that, certain Better Budgeting systems
should be implemented to x some of the apparent problems encountered
while using Traditional Budgets:
The FP&A Trends
Activity-Based Budgeting. Activity-Based Budgeting is an extension Webinar: A New Age of
Zero-Based Budgeting
of Activity-Based Costing and Activity-Based Management theories.
February 9, 2021
This theory is identi ed as a system that records, researches, and
analyses activities that lead to costs for a business.
Zero-Based Budgeting. Zero-Based Budgeting theory, a widespread
technique in the 1970s, which dictates to build a new year’s budget
fromCookies
scratch, on
rather
FP&AthanTrends
taking website
last year’s actuals, forecasts or budget
numbers as the base. AcceptTheNo,
Digital
thanksMiddle Eastern
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1/8/2021 Better Budgeting or Beyond Budgeting? An Analysis of Turkey’s Top 500 Industrial Companies | FP&A Trends

Value-Based Management. The Value-Based Management system can Traditional Management

be thought of as a supplementary system for Traditional Budgeting and Accounting to xP&A
requires creating value for shareholders over time with a formal and February 17, 2021
systematic approach.
Pro t Planning. Pro t Planning is a set of actions to achieve a targeted
pro t level, rolling up to master budget. It does not abolish the
budgeting or forecasting processes of a company.

Beyond Budgeting De nition

According to the Beyond Budgeting Round Table (BBRT), Beyond

Budgeting means “beyond command-and-control toward a management
model that is more empowered and adaptive. Beyond Budgeting is about
rethinking how we manage organizations in a post-industrial world where
innovative management models represent the only sustainable competitive
advantage. It is also about releasing people from the burdens of sti ing
bureaucracy and suffocating control systems, trusting them with information
and giving them time to think, re ect, share, learn and improve. Above all, it is
about learning how to change from the many leaders who have built and
managed ‘beyond budgeting’ organizations”. As de ned earlier, Beyond
Budgeting is the opposite of traditional and betterment approaches, and it
has been invented to ful ll the need that traditional and betterment approach
created.

Research Results
Advanced
The majority of the companies’ management spends around 20% of their Analytics Arti cial
time on budgets, and most of the time, budgets are prepared within three
months. These results are at acceptable levels considering global statistics. 
Intelligence
(AI) Behavioural
What were the identi ed weaknesses? Finance Better
Budgeting Beyond
Turkey’s top industrial companies’ nancial planning managers/CFO’s do not
think Traditional Budgets have any signi cant weaknesses pointed towards Budgeting Big
them. With a very tiny difference, managers think budgets are costly to Data Brexit Cash
prepare and takes a long time.  Planning Collaborative
Planning Corporate
The research results con rmed a weakness that budgets increase vertical
Performance Manageme
command and control. The strategic focus is denied by managers as a
weakness. 88% of managers declared that they are linking budgets to (CPM) Cost
company strategies and do not nd budgets contradictory. Planning COVID-
19 Dashboards Data
Management Data
Quality Data
Visualisation Driver
Table 1. Sample size of opinions about Traditional Budgeting weaknesses
Based
Pearson’s Cookies AcceptPlanning
ontest
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correlation resulted one strong relation between budgets’
‘gaming’ and guess-work
Cookies clauses.
help us deliver It may
our Services. By be stated
using that iforthe budgets are
our Services Planning & Analysis
prepared with guesses,
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1/8/2021 Better Budgeting or Beyond Budgeting? An Analysis of Turkey’s Top 500 Industrial Companies | FP&A Trends

bad intentions. A budget data provider, for example, a line manager, may
provide unrealistic numbers to conceal a planned fraud.
Financial
(xP&A)
Planning and
Better Budgeting or Beyond Budgeting?
Analysis Forecastin
Better Budgeting results show that Turkish industrial companies are
commonly using Better Budgeting techniques such as Activity-Based
Quality FP&A
Budgeting and Zero-Based Budgeting. Almost three-quarters of Turkish Analytics FP&A
industrial companies are already using Better Budgets. Beyond Budgeting is Business
known only to 24% of managers. Research reveals that respondents do not
wish to implement Beyond Budgeting; instead, they would prefer Better
FP&A
Environment
Budgeting, because abandoning budgets would cause problems for Business
management.
Partnering FP&A Ca
Studies FP&A
Digitalisation FP&A
Maturity Models FP&A
People FP&A
Skills FP&A
Storytelling FP&A Talks
Table 2. Empirical ndings of budgeting methods around the world FP&A
Series

According to results, 83% of the participants declared that they are a part of Technology FP&A
a larger entity, and 26% of participants do not have the authority to adopt Transformation FP&A
the budgeting process. They follow the instructions of global/regional
Trends E-Books FP&A Trend
headquarters of multinationals to contribute to nal budgets. 
Initiatives Integrated
75% of participants declared that they do not prepare budgets for stock FP&A Key Performance
market analysts, which is reinforcing the nding that most of the companies Machin
Indictators (KPI)
are a part of a larger entity, for that reason, they do not share local budgets
with local analysts. However, research results reveal the fact that the
Learning
companies aim to focus on Competitive Strategy and Business Process, while (ML) Management
Organizational Capability is being ignored by the majority. Accounting Modelling
According to results, Beyond Budgeting principle – Autonomy, is the least and
implemented principle in Turkish industrial organizations. At the same time, Forecasting Plannin
participants strongly disagree that budgets make people under-valued and
show the least amount of interest to Organizational Capability, consisting of and
human interactions. Please see below the list of all principles of Beyond
Budgeting Predictiv
Budgeting and average results of Likert 5 scale test:
Analytics Pro tability
Analysis Risk
Management Robotic Proce
Automation (RPA) Rollin
Forecast Scenario
Planning Strategic
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Planning Team
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1/8/2021 Better Budgeting or Beyond Budgeting? An Analysis of Turkey’s Top 500 Industrial Companies | FP&A Trends

Building What is
FP&A Zero-Based
Budgeting (ZBB)

Conclusion

The majority of Turkish industrial company nancial planning managers

believe that Traditional or Better Budgeting approaches are working for their
companies very well. They do not see any signi cant weakness for
Traditional Budgets. Executives think the majority of the criticisms are false.
The motivation to use Beyond Budgeting is mostly related to competitive
strategy and business processes. 

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