Budgets? We Don’t Need No Stinkin Budgets: Ten Things We Think We Think We Know about Budgets and Performance

Yearbook of Swiss Administrative Sciences 2012: Pages 53–66

18 Pages Posted: 24 Aug 2010 Last revised: 29 Dec 2012

See all articles by Ken Smith

Ken Smith

Central Washington University

Fred Thompson

Willamette University - Atkinson Graduate School of Management

Date Written: August 24, 2010

Abstract

Learning is the only sure way to achieve ongoing performance improvement. Budgeting and learning are fundamentally orthogonal processes. Budgeting stabilizes, which is a good thing in itself, and promotes economy, but it discourages understanding of variation. Learning requires perturbation and measurement. Given the processes through which service accomplishment and operational excellence are realized, it is unlikely that budgeting, as generally practiced in government, can promote continuous improvement in enterprise performance.

Keywords: Budgets, performance measurement, performance management, targets, annularity, transparency

JEL Classification: H60, H61, H72, E61

Suggested Citation

Smith, Kenneth A. and Thompson, Fred, Budgets? We Don’t Need No Stinkin Budgets: Ten Things We Think We Think We Know about Budgets and Performance (August 24, 2010). Yearbook of Swiss Administrative Sciences 2012: Pages 53–66. Available at SSRN: https://ssrn.com/abstract=1664771 or http://dx.doi.org/10.2139/ssrn.1664771

Kenneth A. Smith

Central Washington University ( email )

Ellensburg, WA 98926
United States

Fred Thompson (Contact Author)

Willamette University - Atkinson Graduate School of Management ( email )

900 State Street
Salem, OR 97301
United States
503-370-6228 (Phone)
503-370-3011 (Fax)

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