Which of the following is a Beyond Budgeting principle?

The Beyond Budgeting model consists of 12 principles designed to create a more adaptive and empowered organization. One of its core management principles is to move away from fixed, negotiated annual targets. Instead, it advocates for setting relative and ambitious goals based on external benchmarks (like competitors) or internal benchmarks (like other teams) to foster a culture of continuous improvement. This approach prevents the gaming of targets and encourages performance that is competitive in the current market environment, rather than just meeting an arbitrary internal number.

A. Centralize decision-making for efficiency. This is incorrect. Beyond Budgeting promotes decentralization, empowering frontline teams with the autonomy and authority to make decisions.
C. Allocate resources through detailed annual budgets. This is incorrect. This describes the traditional budgeting process that Beyond Budgeting explicitly seeks to replace with more dynamic, on-demand resource allocation.
D. Reward individuals for meeting fixed, pre-negotiated targets. This is incorrect. Beyond Budgeting advocates for rewarding shared success based on relative performance, moving away from individual bonuses tied to fixed targets.

1. Bogsnes, B. (2016). Implementing Beyond Budgeting: Unlocking the Performance Potential. Wiley. In Chapter 2, "The Beyond Budgeting Principles," principle #8 is "Targets: Set relative and ambitious goals for continuous improvement; don't negotiate fixed performance contracts" (p. 26). This directly supports the correct answer. The book also explicitly refutes the concepts in the incorrect options, such as annual budgets (Principle #10) and fixed performance contracts (Principle #12).

2. Hope, J., & Fraser, R. (2003). Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap. Harvard Business School Press. The authors introduce the 12 principles, with a key focus on establishing "relative performance contracts" (Chapter 7, pp. 131-148) instead of fixed targets, and moving away from centralized control and annual budgets.

3. Frow, N., Marginson, D., & Ogden, S. (2010). "Continuous" budgeting: Reconciling budget flexibility with budgetary control. Accounting, Organizations and Society, 35(4), 444-461. This paper analyzes the Beyond Budgeting model, noting that a key feature is the use of "relative improvement contracts" and moving away from the "fixed performance contract" inherent in traditional budgeting (Section 2.2, p. 446). https://doi.org/10.1016/j.aos.2009.10.004