A critique of current corporate revenue budget systems and their effects on behavior and professional performance

Abstract

This article presents a critique of the way in which corporate revenues budgets are constructed based on the model used and its results. An established revenues budgeting method used by a Brazilian financial institution was analyzed. Such method is based on (i) performance history (sales), collective and individual; (ii) market studies; (iii) customer potential and (iv) installed production capacity. Next, the objective conditions surrounding these factors are discussed. The analysis was based on the results of interviews with managers of three business branches for high-income individuals. Three relevant findings were found: (i) sales budgets induce the most diverse types of behavior, both desirable and undesirable; (ii) there is a mismatch between what the top man-agement specifies in terms of sales expectations and what the agents actually do, which could lead to losses in the evaluation of these agents; and (iii) the participation stage is neglected and even non-existent exactly at the level of the people who really drive the goals. The aim of this study is to promote the discussion about the current condition of sales-oriented budget parts, providing useful guidelines for the implementation of new budget models in which participation, the democratization of information, the experience of superiors and con-sistent feedback can be used in the interest of the institution itself, with gains in flexibility and legitimacy.