Companies without a budget.

1. What is the primary purpose of a forecast in a budget-free environment?

• To track individual performance for bonuses

• To provide detailed financial plans for the year

• To warn employees about upcoming changes

• To finalize capital expenditures

2. How long should a forecast cover?

• One full fiscal year

• As long as it's useful for making decisions

• Always six months minimum

• Indefinitely, to cover all possible scenarios

3. Why should a forecast not be linked to performance plans?

• It becomes too complicated

• It takes too much time to update

• It encourages manipulation of numbers

• It doesn't help with decision-making

4. When should a new forecast be created?

• On a weekly basis

• Only during quarterly planning sessions

• Monthly, regardless of change

• When there are changes worth forecasting

5. What is the recommended approach to capital budgeting without a traditional budget?

• Review all proposals at the end of the year

• Eliminate the review process entirely

• Review proposals as needed and prioritize expensive items

• Only approve proposals over a certain threshold

6. How should goals be set without using a fixed budget?

• By setting targets based on last year’s performance

• By assigning strict deadlines and quotas

• By aiming to improve over current performance

• By letting each employee set their own goals

7. What tool helps reinforce the new goal-setting approach?

• Strict weekly check-ins

• A comprehensive reporting system

• Daily performance reviews

• Traditional budget comparisons

8. In the new system, who is responsible for most tactical decisions?

• Senior management

• External consultants

• Department heads only

• Lower-level employees

9. What is a key characteristic of the new performance compensation system?

• Fixed individual bonuses

• Performance-based contracts

• A company-wide bonus pool based on profit

• Bonuses paid quarterly regardless of results

10. Why might all employees act like internal auditors in the new system?

• They’re forced to by policy

• Bonuses depend on personal evaluations

• Everyone’s bonus depends on overall performance

• Audits are more frequent and formal