Five Myths (and Realities) about Zero-Based Budgeting
Companies often shy away from the method because they fear it or believe it means “budgeting from zero.” In reality, it’s a structured process that can build a culture of cost management.
Content: Article | Authors: Carey Mignerey, Kyle Hawke, Shaun Callaghan | Source: McKinsey Quarterly | Subjects: Accounting, Finance
Kyle Hawke, Matt Jochim, Carey Mignerey, Allison Watson
Standard cost-cutting programs typically start with a directive to reduce the previous year’s spending levels. As a result, executives naturally focus on the largest expense categories—the tallest trees in the forest. Xero-based budgeting (ZBB) instead asks everyone to rebuild their budgets from the bottom up, with no carryover from the preceding year. This process identifies many small pockets of waste that add up to big … [ Read more ]
Content: Quotation | Authors: Allison Watson, Carey Mignerey, Kyle Hawke, Matt Jochim | Source: McKinsey Quarterly | Subjects: Finance, Management