Zero-base budgeting in the private sector

Zero-base budgeting (ZBB) has become a popular management tool in the private sector. Users have indicated that they consider ZBB most helpful in controlling discretionary areas within firms-staff and supports-which cannot be controlled easily by standard methods. Surveys have given the overall succ...

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Bibliographic Details
Published in:Business horizons 1979-08, Vol.22 (4), p.73-83
Main Authors: Dean, Burton V., Cowen, Scott S.
Format: Article
Language:English
Subjects:
Budget, Business
Budgeting
Business budgets
Control systems
Effectiveness
Evaluation
Management controls
Objectives
Polls & surveys
Private sector
Users
Zero base budgeting
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Summary:Zero-base budgeting (ZBB) has become a popular management tool in the private sector. Users have indicated that they consider ZBB most helpful in controlling discretionary areas within firms-staff and supports-which cannot be controlled easily by standard methods. Surveys have given the overall success of ZBB good marks; in one comparison of ZBB versus other formal management systems, 67% of the users rated a ZBB "better". The primary objectives in utilizing ZBB have been for better resource allocation, improved decision making, facilitation of planning, and a reduction in costs and personnel. However, there are indications that ZBB may not be at its most effective when used for resource allocation. Two primary requirements for making ZBB effective are: 1. top management must be committed to the technique, and 2. training programs as well as documented systems and procedures. Some problems that ZBB users have encountered include: 1. difficulty in ranking a large number of decision packages, 2. more time involved as well as increased administrative efforts, and 3. difficulty in obtaining cost/performance information.
ISSN:0007-6813
1873-6068
DOI:10.1016/0007-6813(79)90072-7