Beyond Budgeting in Paris

On October 7-8, the 56th BBRT meeting was organized. This time the meeting was held in Paris and the hosting companies were Schneider Electric, one of the world's largest companies with 170,000 employees and 250 production facilities around the world. There was a representative for the network in Sweden Ekan Management of course in place to contribute in discussions about challenges and solutions.

Day one began with roundtable talks about rewards and incentives. A highly interesting topic as well-established research shows that individual rewards do not lead to better profitability while still being widely applied by organizations around the world. Representatives from, for example, sat around the tables Michelin (France), Danone (France), Statoil (Norway), SpareBank 1 (Norway), Leo Pharma (Denmark) and Reykjavik Energy (Iceland). The discussions included, for example, the risk of manipulative behavior, uncertainty in evaluating and assessing performance as well as individual versus group.

Day two began again at Schneider Electric, which presented its control model. They were one of the first Beyond Budgeting companies and have been developing their governance model for more than 20 years. The challenge is, as for most others, to do more with less. For Schneider Electric, the deal itself is about doubling energy consumption by 2020, while reducing carbon dioxide emissions. In the control model, Schneider has separated the target, forecasting and decision process, which greatly simplified the management of the company. Today, the company is much more flexible and it is relatively easy to adapt to changes. Chief Financial Officer Schneider Electric in France, Bernadette Drillat, testifies that:

"I could never go back to the traditional budget control we had before. Not only was it extremely time consuming, it also created no values. It was awful to be in a world full of budgets, as they constantly became obsolete due to changing circumstances beyond the control of the company ”.

Last but not least told Isaac Getz, professor of Leadership and Innovation Management at ESCP Europe, on how businesses can be managed more easily. Getz gave examples of how some large, well-known companies changed their governance models towards more participation and decentralization beyond the traditionally top-managed budget management. Getz particularly highlighted successful companies where the common denominator was that they created participation to motivate employees for better performance. Among the companies included in his research are, for example Nordstrom, Wegmans, Whole Foods Market, Harley Davidsson, FAVI, USAA, SOLAR and Gore. Common to these companies is that they control the companies without detailed rules to create satisfied employees and thus better performance through trust.

If you are interested in hearing more about the Paris meeting or the Beyond Budgeting network, you are most welcome to contact Knut Fahlén.

031-761 60 10

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