Leading without a budget- A case study of managerial leadership

Abstract

In decentralized organizations, control and decisions are pushed out by central management down in the organization. There are several ways that management can control the organization and for managers to control their employees. A standard tool to use is a budget, which has been a central part of many organizations for a long time. There are a few examples of companies that are working without a budget, and this concept is referred to as Beyond Budgeting. Research has suggested that managers in organizations that practice Beyond Budgeting require to practice good managerial leadership. With a qualitative study, we study managerial leadership in organizations that practice Beyond Budgeting. Our research question is: How is Beyond Budgeting affecting managerial leadership? We have interviewed managers and employees at the case company Handelsbanken, which is practicing Beyond Budgeting. According to our findings, the managers had created several different mechanisms for organizational steering and management instead of using a budget. These mechanisms are qualitative instead of having a quantitative tool as a budget. This had implications for the leadership and made the managers work closer to the employees. We found out that the leadership was more about taking care and supporting employees rather than telling them what to do. There were also signs that managers and employees got a high level of responsibility, both since they had no budget to follow and since the organization promoted self-leadership. Managerial leadership in an organization that practice Beyond Budgeting requires a strong corporate culture. The culture helps and guides managers in their work.