Beyond Budgeting deviates from the traditional annual incremental budgeting method that Halfpenny uses and implements a rolling budgeting style that it updated regularly, meaning it can be adapted, enabling more flexibility

The main key factors of beyond budgeting are Flexibility with the use of rolling budgets, Decentralisation approach encouraging decision making from all areas and Agility for innovation and empowerment.

Currently within Halfpenny our budget is incremental and set on an annual basis which gives no scope for the current change in the consumer market and inefficiency can be carried forward there is no benchmarks currently used to compare to other consumers and this makes targets less achievable, Halfpenny also use a top down budgeting approach which can demoralise staff and also does not include all the key people required when setting the budget. There is a need for innovation and using KPIS and benchmarks would also help to ensure we are moving forward and identifying the key areas which need improved on.

Currently there is limited used of beyond budgeting within halfpenny, we use a much more traditional way of budgeting which can be quicker and cheaper to implement however it is not given clear indicators of performance and business need

In relation to Halfpenny, we are currently using an incremental budget process. This method of budgeting doesn't allow for the current changing market attitudes towards a more health conscious society and the want for healthier options. Beyond budgeting would cater for these changes of attitudes and help Halfpenny to accommodate for the needs.

Key differences:

Beyond Budgeting uses rolling budgets which are flexible and iterative; continually adding another timespan when another has been completed (quarters, months etc). This allows for the budgets to be more reflective overall of the current consumer landscape, with more relevant costing. We currently use annual budgets so beyond budgeting is not reflected in this area of our budgeting process.

Alongside this, beyond budgeting also includes both qualitative and quantitative measures for the budgeting. This again, is something we don't necessarily do, but it may be an interesting exercise to begin to engage with more, identifying some of our key KPIs with the intention of streamlining our production, and making it more cost efficient while also bringing our metrics more in line with keeping our products competitive in this changing market.

The claimed benefits to halfpenny are that with beyond budgeting it would help the company to innovate and improve by the use of planning continuously and being proactive on their approach by focussing on the change in the consumer needs and wants and the key changes we need to make to adapt to this.

By having everyone participating in the budget and being more decentralised this will help with the decision making process as we will have more relevant and useful information from each business area and this will allow us to act more quickly rather than waiting till quarter or year ends to compare data.

An investment will be needed as beyond budgeting is much more in depth and it will also need to ensure all mindsets are changed to the new way of working, however the new use of information and kpis can then reduce workloads and find bottlenecks

The company will also look more favourable by removing the top down approach this should also help with staff retention allowing us to retain our experienced staff

Another benefit of beyond budgeting is being more interactive and motivational with employees, using a scoreboard for KPI's internally for employees to see would be a form of motivation and would benefit HP as it would keep employees involved and kept up to date with how the business is doing and if we are on target. To meet our innovative performance goals this would be relevant as we would not be able to do this without our employees.

Another beyond budgeting approach would be to use Benchmarking. Benchmarking is using external data and statistics to come up with targets within your company for comparison. Halfpenny do not currently do this they only compare with their own data for example budget vs actual performance.

Beyond budgeting is really about predicting the future with data you have and looking forward rather than backwards. So what could we do rather than what have we done.

The use of a beyond budgeting approach would help with this as it a fundamental to this budgeting style would be that it allows for greater innovation. With Halfpenny wanting to expand on their already outstanding reputation to move into other areas such as artisanal bread this will aid with that.

Managers Engagement

With the beyond budgeting approach being set locally, this is highly motivational to all managers and should be to the senior management team at Halfpenny. Local managers will be setting the budget and will be instrumental in this process. As local managers are close to the ground and are working on the process line through knowledge and expertise can be utilised at a high degree. For example Roger Smith, Production Senior manager, will have knowledge on each process Halfpenny do as they oversee this every day in their role

1. More up to date: Traditional budgeting while budgets normally one year before the actual activity is going to take place, by that time it may not stay relevant. Beyomnd budgetting ensures that we keep on updating our budget through rolling budgets on periodical basis, that makes our planning up to date and relevant to the market. It definitely is required for half penny as it is losing its market share, we need to keep a track of our sales to budget accordingly.

2. Future focus: The budget being created will focus on the upcoming trends and how we should produce accordingly. This is very relevant to half penny whereby its white bread is losing its sales as compared to healthier multi grain and rustic bread. We need to plan sales and production accpordingly.

3. More flexibility: The Best benefit of beyond budgeting is that it provides more flexibility to the organisation to make changes in their processes. They do not need to wait till the end of the year to get budget approved for upgrades or updates. This makes them easier to cater to customer's changing tastes rapidly and effeciently.

Halfpenny need to grow due to the current dip in the market due to the growing health concerns which will just continue to grow overtime, we need to be deemed as being proactive to our response to this and show we are working as a sustainable company by demonstrating we are using the highest and sustainable ingredients and introducing new product lines. Using beyond budgeting will enable us to identify these

Benchmarks being set is a good starting point as per ,y original email showing the comparability to other similar companies and using a score board which will be easy to access and in an easy to read format to show the KPI’s clearly.

The benefits to the approach are instrumental in how Halfpenny can ultimately grow and develop. With the managers involvement, improving processes and innovating being high priority in Halfpenny it seems like the next steps forward are using a beyond budgeting approach

1. Innovative Ideas: by driving improvements in areas other than financial, we can encourage employees to come up with innovative improvements to their work that will drive overall benefits for Halfpenny.

2. Flexibility. Since Beyond Budgeting uses rolling budgets, it could make the business more flexible to changing markets and consumer demands. Rather than working off of budgets set at the start of the financial year, which may now be out of date and less relevant, Halfpenny can adapt to changes and make necessary spends to improve processes. This is vital to Halfpenny since we are competitive and have recognised a need for innovation.

3. Finally, beyond budgeting can be highly motivating for staff, particularly managers who are often burdened by strict financial budgets that can feel limiting and frustrating. By implementing beyond budgeting, we can work closer with our departmental managers to understand the immediate needs of the business, rather than making decisions using a budget that was set at the start of the year.

Improved planning:

By implementing beyond budgeting, we would be changing our budgeting window to an incremental budget, meaning as we complete a window, we would then add another window onto our budget (so at all times we would still have a year's budget). This is a benefit from our traditional annual budget as it allows us to make changes to our budget based on the changing customer landscape. It will allow us to become more reactive in our approach when considering changing customer tastes and preferences, we will be able to react quicker than currently. I would imagine this would be changing in the direction of how we budget our sales, as our sales mix changes to favour our multiseed and rustic loaves.

Flexibility:

Perhaps quite similar to the above, the incremental budget allows us to become more reactive to the market changes faster than we do already, with traditional budgeting. On top of this however, we are able to shift our budgets based on the market need. As we are aware, we are losing popularity in our market due to health concerns, and people opting for more classic, gut friendly breads with different production processes. We are able to make this change a lot faster than we would do with traditional budgeting, which in some cases we may need to make a year in order to make valuable changes to our budgeting system to reflect the consumer, which may just be too late.

Improved metrics:

By introducing qualitative and quantitative metrics of success, we will overall improve the efficiency of the company (for example we can set targets for production efficiency, which can help us ensure we are producing enough loaves to reflect consumer needs). Some other metrics could also involve, our consumer satisfaction, so then we can take directed steps on how to solve this, and employee engagement which would allow us to monitor our social impact as well (which is becoming widely more important to the customer) and again make changes based on this.

One advantage is that planning is continuous, Halfpenny will become more proactive rather than reactive to changes in the market and to it's environment. As we know the market we are currently operating in is rapidly changing, consumers are turning away from the usual breads like white, wholemeal etc to more healthier breads like our fresh artisanal breads. Will we need to keep up with this change in demand to continue to innovate, and look at different ways to keep with these changes. Like developing more healthier options, customised bread and even potentially utilising technology. The beyond budgeting approach will enable Halfpenny to do this, where targets become customer and market focused.

It will also be advantageous to Halfpenny in the sense that Managers will become more involved in the decision making process, which provides better information for decisions as well being a motivator for managers. Managers have proven to be successful in knowing what they are doing, production development introducing our rustic bread, which is meeting the changing in consumer demands.

Disadvantages

The beyond budgeting approach is most effective in industries, that face constant change or where continuous improvement is critical to the organisation success. Bread is a staple product of the economy, so there will always be a demand for bread and Halfpenny being the market leader in Keeland, could it really be argued that the need to continuously improve and innovate is the detrimental to our success.

Adopting a beyond budgeting approach will also require buy in and motivation from operational management. Operations may be used to our traditional incremental approach, which could be deeply ingrained in Halfpenny's culture. Setting new targets which could be vague in their eyes may face resistance. Planning, coordination and performance evaluation becomes more complex, time consuming and effort for managers to implement, so there may be more resistance from managers in that aspect.

Rolling budgets

The beyond budgeting approach involves the use of rolling budgets produced on a periodic basis, such as monthly or quarterly. We currently use annual incremental budgets. Rolling budgets are updated regularly, and for this reason, they respond quickly to changing situations and improve use of resources.

Benchmarking

In beyond budgeting approach, the targets are set based on the external factors for example, our competitors. This would mean that we would set measure base on what our competitors currently do.

Halfpenny currently does not seem to be doing benchmarking.

Future focus

The beyond budgeting pt greater emphasis on the future and tries to predict what may happen in the future rather than react based on past results, what Halfpenny does currently by analysing variances .

Innovation

In the beyond budgeting approach, innovation is encouraged and rewarded. Halfpenny is going to be focusing on the development of new products, which should help the company stay in touch with the times and changing consumers' tastes and health awareness. As part of this, Halfpenny can possibly utilise the new scheme bonus.

Participation

Everyone in the company is encouraged to participate therefore, budgets are often prepared on a bottom-up approach where lower level managers participate in the budget preparation. Currently, Halpenny prepares budgets based on top-down approach where budget is imposed by higher management.

To conclude currently, Halpenny uses a couple of the above practices

This employee engagement in turn is a good opportunity to motivate employees. Further to this, due to the close work of the staff to the operations of the company, this in turn would support better decision making in line with the operations of the company.