The legal framework of public sector organistions would prevent such a system being introduced. For example, UK local authorities are prevented by law from borrowing funds for revenue purposes or budgeting for a deficit.
If the beyond budgeting model is to allow greater freedom for managers then it will take a considerable change of mindset in the public sector to achieve the flexible agenda envisaged, especially where such flexibility would involve considerable and increased delegation to managers.
Need for organisational, managerial and cultural changes.
Such an adaptation would require a mindset which not only moves away from control but also requires a reduction in the internal political power of large departments which has been at the heart of public sector budgeting for many years. In addition, individual managers might become overwhelmed by the complexity of decision-making in such an unregulated decision-making environment.
In the public sector, the budget process inevitably has considerable influence on organisational processes, and represents the financial expression of policies resulting from politically motivated goals and objectives.
Whether the public sector can adapt to the concept of greater flexibility - which lies at the heart of beyond budgeting - remains a matter of ongoing debate.
Such an adaptation would require a mindset which not only moves away from control but also requires a reduction in the internal political power of large departments which has been at the heart of public sector budgeting for many years.
The desire to generate improved performance - essentially considered the driver for the beyond budgeting model - is present in the public sector evidenced in initiatives such as key performance indicators and 'best value' plans. But this is not matched by a desire for the flexibility inherent in the model.
In terms of beyond budgeting, managers in such organisations are likely to remain constrained by the inability of their organisation to change.
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