Return-to-office mandates and cost cutting have revived tight budget rituals. At the same time, many leaders talk up transparency and empowerment to fight malaise. The gap is visible in the numbers. Global employee engagement has slid to 20 percent, with managers themselves markedly less engaged than just a few years ago, a drag Gallup estimates at about 9 percent of world GDP (Gallup, 2025). In that climate, opening the books without opening decision rights is not neutral. It looks like surveillance.
What actually replaces the budget
One of the few in-depth looks at Beyond Budgeting in the wild found that control does not disappear when the annual budget does. It mutates. Studying a large oil and energy company after it abandoned budgets, researchers observed new control mechanisms taking root, shifts in how corporate influenced divisions, and fresh dependencies between business units (Østergren and Stensaker, 2011). The architecture of control changes form. It does not evaporate. The study is qualitative and rests on a single firm, which limits generalization, but the practical point holds for any executive tempted to equate budget cutting with laissez-faire. You are not removing control. You are redesigning it.
The classic counterpoint comes from banking. In the early 1970s, Svenska Handelsbanken dropped formal budgets and pushed accountability to local branches. It measured relative performance, not adherence to a centrally fixed plan, and made branch-level profitability the unit that mattered. This system, developed under CEO Jan Wallander, became the founding example of what later was codified as Beyond Budgeting principles (Lindsay and Libby, 2007). The case is a teaching note on one firm, so it should not be read as proof for every sector. It does show that a large organization can operate, and be held to account, without an annual budget as the central spine of control.
Put these together and a lesson emerges. When budgets go, they are typically replaced by comparative targets, peer benchmarks, and direct accountability for outcomes. Headquarters still steers, often by framing rules of the game and setting reference points across units, while local managers make more of the day-to-day calls. The Statoil example shows how interdependencies can even increase as units coordinate in new ways (Østergren and Stensaker, 2011). This is not hands-off. It is hands-different.
Transparency without authority backfires
Giving people access to financials is often sold as empowerment. In practice, transparency only helps if people can act on what they see. Research on self-managing organizations is blunt on this point. The defining feature is not rhetoric but the formal, systematic decentralization of authority across the firm, including the elimination of the traditional manager-subordinate relationship as the default way to coordinate work (Lee and Edmondson, 2017). Information and authority have to move together. Otherwise, “open the books” feels like another way to watch the shop floor while decisions stay upstairs.
There is also a human systems constraint. Teams will not use transparency to learn if speaking up is risky. The foundational study on psychological safety in work teams found that when members believe the team is safe for interpersonal risk taking, they engage more in learning behaviors, and that learning mediates better performance (Edmondson, 1999). That finding came from a single manufacturing company and a cross-sectional design, so it should be applied with care. Even so, it is a powerful lens for open-book practices. Numbers surface errors, trade-offs, and uncomfortable variance. If people fear blame, they will hide the story behind the numbers. If they feel safe to question and admit uncertainty, they will use the data to experiment and improve.
A 2020s reading of a 1970s idea
Why revisit these designs now? Because the engagement slump is not a mood problem. It is an operating problem. Gallup reports a steep drop in manager engagement since 2022 and a global engagement level stuck at one in five employees, with massive productivity costs (Gallup, 2025). The spread between average and best-practice organizations suggests design choices matter. Budget cycles that freeze assumptions, opaque goal setting, and status-heavy decision rights are exactly the conditions that self-management research warns can stifle problem solving in complex, cross-boundary work (Lee and Edmondson, 2017).
By contrast, the Handelsbanken model did three things at once. It clarified the score using relative performance. It put accountability where the information lived, at the branch. And it reframed corporate’s role from planner to comparator and coach, holding units to a fair game rather than a fixed forecast (Lindsay and Libby, 2007). The Statoil case shows the same move in a different industry, with the important caveat that removing budgets changed who depended on whom and how control was exercised, not whether it existed at all (Østergren and Stensaker, 2011). Practitioners in this tradition, including Bjarte Bogsnes, have long argued that the point is not anarchy but better steering with fewer distortions.
The practical read for leaders
If you want open numbers to energize rather than demoralize, redesign both control and culture.
- Share the power with the data. Make explicit which decisions move to the edge, and formalize that shift. The research definition of self-managing arrangements is clear that decentralization must be systematic to change behavior, not episodic or symbolic (Lee and Edmondson, 2017).
- Measure what units can influence. Favor relative performance and peer comparisons over fixed annual targets that lock in outdated assumptions. The branch-level accountability at Handelsbanken is a concrete template for this shift, within the limits of a single-firm case (Lindsay and Libby, 2007).
- Build psychological safety on purpose. Leaders should invite questions about variances, ask for what might go wrong, and respond to early warnings as learning opportunities. That is how teams turn transparency into the learning behaviors that connect to performance in the evidence (Edmondson, 1999).
- Expect new dependencies and redesign roles. When budgets go, coordination changes. Plan for new cross-unit ties and for a different corporate-to-division relationship, as observed in the Statoil field study (Østergren and Stensaker, 2011).
The promise of Beyond Budgeting is not freedom from control. It is freedom from the wrong kind of control. Open the books, then move the decisions. That is how transparency becomes a management system, not a slogan.
Sources
- Østergren and Stensaker (2011). Management control without budgets: a field study of Beyond Budgeting in practice. Removing budgets at a large oil and energy company led to new control mechanisms and changed HQ–division relationships, showing control is redesigned, not removed. https://www.tandfonline.com/doi/abs/10.1080/09638180903487842
- Lindsay and Libby (2007). Svenska Handelsbanken: Controlling a Radically Decentralized Organization without Budgets. A teaching case on how a major bank replaced budgets with decentralization, relative performance, and branch-level accountability, illustrating viable alternatives to annual budgets. https://www.researchgate.net/publication/247875136_Svenska_Handelsbanken_Controlling_a_Radically_Decentralized_Organization_without_Budgets
- Lee and Edmondson (2017). Self-managing organizations: Exploring the limits of less-hierarchical organizing. Defines self-managing organizations as those that systematically decentralize authority, grounding the argument that transparency must be paired with formal decision rights. https://www.sciencedirect.com/science/article/abs/pii/S0191308517300059
- Edmondson (1999). Psychological Safety and Learning Behavior in Work Teams. Shows that team psychological safety is linked to learning behaviors that mediate performance, supporting the need to pair transparency with a climate for speaking up. https://journals.sagepub.com/doi/10.2307/2666999
- Gallup (2025). State of the Global Workplace 2025. Reports global engagement at 20 percent and large productivity costs, framing why redesigning control and transparency is a 2020s imperative. https://www.gallup.com/workplace/659610/state-global-workplace.aspx