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Wed, 31 December 1969. Becoming Lean, Adaptive, and Ethical: How to Move Beyond Budgeting

Compensating based on relative performance accounts for the external environment and motivates teams to always strive for improvement. Even if one's performance is up substantially from the year before, one must still work to reach the top of one's peer group. Relative measures make success more challenging because the target moves up or down depending on how well others are performing. However, they eliminate the crystal-ball tactics required by traditional budgeting. One useful tool for performance comparisons is the league table, which provides rankings of various internal units from best to worst.

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