"The result is a target that is inwardly comfortable to you, yet appears outwardly difficult to your superior. There is no focus on the maximization of customer or shareholder value."
Dean Meyer, one of the proponents of performance-based budgeting, adds that within project-based and service industries, budgets cannot support sound financial decision making, because they do not accurately reflect the full cost of individual projects and services.
Rather than driving strategy forward, budgets are said to be a barrier to change and innovation. Entrepreneurial managers tend to find themselves under fire for incurring costs on projects that were not included on their budgets.
Here are 10 reasons why, and how, budgets can cause your company problems:
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