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Zero-based Budgeting (ZBB) is an effective budgeting technique that necessitates headcount and associated costs such as salary and benefits to be justified for each new period. The principle is to start afresh or from a zero base each time. The process of ZBB starts from a "zero base," and every business/function within an organization is analyzed for its needs and costs. The focal idea is to consider a fresh start and not go by incremental budgeting over last year. It follows a bottom-up approach involving business leaders and managers at all levels as opposed to a top-down traditional budgeting approach. ZBB allows for revisiting age-old rationale and questioning existing assumptions. “Why” is the keyword when it comes to effective zero-based budgeting. ZBB instils an ownership mindset across the organization. ZBB works like a miracle to devise a correct cost structure for the organization.

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ZBB for Human Capital

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