How To Establish A Budgetary Index System Based On Strategy

In implementing traditional budgetary management, budgetary objectives are often inconsistent with strategic objectives.

At the same time, in the process of budget execution, the target replacement problem is prone to occur, that is, replacing the general objective of the enterprise with the budget target of the responsible department.

The main reason is that there is a lack of direct and explicit connection between budgetary indicators and enterprise goals (strategies), so that all responsible departments can not see the impact and role of their actions on enterprise goals, thus ignoring the overall objectives of enterprises.

In practice, many enterprises only use

Or budgeting based on financial indicators, so that financial personnel become slaves of budget management. The formation of financial budgets lacks interaction and participation in various business links, and others can not understand them, making financial personnel a punching bag for budget management.

At the same time, the lack of indicators and the lack of business sources also make the accuracy and rigour of budget indicators greatly reduced. Excessive attention to cost control and too little attention to financial, customer, learning growth, internal processes and other performance indicators also make budget management only the cost of control.

The setting of budget indicators should reflect comprehensively the key factors of enterprise operation. The Balanced Scorecard describes the strategy and budget indicators from four aspects.

Financial aspects.

It reflects the financial objectives of an enterprise.

Indicators are usually some traditional lagging indicators. Typical indicators include gross profit, profitability, growth rate of income and economic value added.

Customer side.

By identifying the value orientation of the target customers and services, the design evaluation indicators usually include market share, customer acquisition rate, customer satisfaction, customer loyalty and customer profitability.

Internal business process.

In order to support the value orientation of service customers and meet the requirements of shareholders, internal business processes are improved or rebuilt, and corresponding evaluation indexes are designed, such as timely delivery rate, break even time, average cost per paction, reaction time of customer demand, etc.

Learning and growth.

In order to ensure that employees have skilled skills, close to reliable information, be motivated and consistent with business goals, design evaluation indicators for staff learning and growth, such as each customer training input, employee suggestions, employee satisfaction, motivation index, income per capita, etc.

It should be noted that the above four indicators should be enterprises.

The result.

That is to say, the starting point of budgeting should be the breakdown index from the above indicators, and the responsibility network of "who will do things, who will spend money, who budgets, who manages, who cares, and what budgets".

These indicators and responsibility networks form the dynamic operation model of enterprises. They can describe strategies from a micro to macro perspective, from a more comprehensive perspective, and observe the strategy implementation and adjustment strategies from the budgetary perspective, so as to make strategy landing.