Schneider Electric Argentina: Beyond Budgeting

Abstract

Nowadays, Schneider Electric is the world leader of electrical distribution, industrial control, and automation - at both product and service levels. Worldwide, Schneider consists of 105.000 employees in 190 countries, 25 research and development centers, 207 production plants, 60 logistic centers, 15.000 sales outlets and consolidated revenues of euro 14 billion. In 2003, Schneider Electric Argentina ceased to use the budget as a control tool - a cornerstone foreseen in the Managerial Performance Project (MAP). This Project promoted by headquarters and implemented in the whole company, implied the joint use of three tools: rolling forecast, consolidated accounting and balanced scorecard instead of the traditional budgeting and local profitability concepts. Three years later, it is time to make a management balance and questions about advantages and future fears arose. The case allows deepening into advantages and problems appeared when implemented a model aligned to the Beyond Budgeting concept. The discussion lets know the alternative model to the traditional budget considering problems and advantages; analyze the existent alignment between compensation, control and performance measurement systems; deal the issue of slacks creation and think about the impact generated by variable and fix compensations. To write this case was used information provided by the company and interviews to leading actors of the case.