Wallander (1999, cited in Asogwa and Etim, 2017) critiques the effectiveness of

Wallander (1999, cited in Asogwa and Etim, 2017) critiques the
effectiveness of budgeting in the modern business world, highlighting its
rigidity, complexity, and error-proneness. He contrasts it with alternative
methods like rolling forecast, accrual, and performance budgeting, which are
more flexible, efficient, and accurate. However, Asogwa and Etim (2017) argue
that budgeting is essential for control, motivation, and planning, facilitating
target-setting, accountability, monitoring, and communication. They acknowledge
the budgeting challenges but suggest that the correct application can mitigate
them. They also discuss alternatives and their limitations, stating that
budgeting is crucial for setting and achieving organisational goals.
Bogsnes (2016)
criticises traditional budgeting for its inflexibility, inefficiency,
costliness, and conflict-generating potential. He suggests, beyond budgeting, a
more agile management model based on trust, purpose, values, transparency,
autonomy, and accountability. This model helps organisations deal with
volatility, uncertainty, complexity, and ambiguity while meeting employee and
leader expectations. Bogsnes believes that adopting these principles can help
organisations better manage their financial resources and adapt to changing
business environments, enhancing their ability to adapt.
Question
Budgeting and
its alternatives have been a contention for practitioners and academics for
decades. How can companies weigh the advantages and disadvantages of budgeting
and its alternatives?