Is Budgeting Destructive? - Real Life Example

Flashback:  You can sense the tension in the board room as 3 of my Product Marketing LOB (line of business) management peers enter the darkened board room, only lit by the presentation screen, filled with Executive VPs and the CEO. All 4 LOB managers must accomplish 3 things, 1) present YTD budget results, successes, failures, causes, lessons learned, impact on business and financials and 2) present the best way for the remainder of the year's budget to be applied so as to optimize business objectives and, 3) propose the next year's budget requirements for their respective LOB's with enough external market trend data, internal sales projections and financial sensibility to just hope, that they appear to know what they are talking about. One by one, we each present, 60 - 90 minutes in length during which time we receive, absorb, deflect or down right choke on questions dished by the corporate governing body. Questioning is aggressive in a "take no prisoners" style. The body heat in the room noticeably rises with each presentation. We all know what's on the line. Some of us will be winners and receive what we asked for. Others will be loosers and not receive even what was approved in the current year and someone could be (and one was) terminated for presenting flawed data. That's a 25% mortality rate, which is pretty high.


The fact is, that we (each of 4 LOB managers) logged in on average 50+% of our time for 2 - 3 months of preparation for this annual blood bath, and about 10% - 15% of each week (or approximately 240 hours) during the remainder of the year was dedicated to budget analysis and reporting. In fact, all of our year-long actions and programs were enabled solely by the budgeting and approval process. Performance against budget remained central to our individual reviews. Bonuses were measured against revenue and budget management. The thick of politics constantly revolved around the budget. It was a never ending cycle...

An Executive MBA graduate school professor asked a room full of experienced EMBAs, is budgeting bad for business?  The overwhelming answer...The typical budgeting process has been, and still is one of the most destructive processes within a corporation. Good opportunities are missed, destructive politics and the character of good people become questionable. It's bad but, it's a necessary evil.

Question: Is it a necessary evil? How can we make it less destructive?