16. Control Systems and Incentives as Value Drivers: Separating Financial Objectives from Action Planning and Control Through a New Control Model

Many CFOs of larger companies may be familiar with the following ‘spectacle’: It is budgeting time again, and after a target and many, difficult, energy-sapping bottom-up planning rounds, top management sits in the final budget approval discussion and listens to number-heavy lectures about planning and budgets for the next few years by the respective business managers. They use more or less tactical skill to keep the ‘budget bar’ low over which they have to jump at the end. After all, they also want to receive a bonus next year. The spectacle then regularly ends with the CFO or the CEO—in the case of a well-coordinated team of both—announcing that X million still has to be improved on the bottom line. The lowest denominator in the agreement is then regularly the infamous ‘lawnmower approach’, i.e. everyone has to contribute proportionally to fill the gap. By now at the latest, those who have worked with open sights or tacticked less well feel they have been treated as losers and unfairly and resolve for the next round to prepare themselves better for the game and now also or even more tactically.