ABSTRACT
Of all of the tried and true management practices of the past, annual budgeting might be the most useless and perhaps the most destructive. In many companies the budgeting process is so complicated and fraught with manipulation that a sales forecast from as early as October for the following year is needed to have time for all of the number crunching back and forth required to lock in on a plan. Quite often the revenue plan is outdated before the budget year even begins. Undeterred, management marches through the year comparing everything that occurs to the fairy tale year the outdated budget describes. Accounting compensates with a blizzard of variance analyses-calculating everything from volume and mix variances to spending variances-all gauging the difference between reality and what has evolved into an utterly meaningless set of numbers.
