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Top-Down Planning

Top-down planning is a planning approach in which overall financial targets are set by senior management and then allocated down to business units, departments, or cost centres to plan against. Top-down planning ensures strong alignment between organisational strategy and financial targets, provides rapid target-setting, and avoids the budget-padding tendencies that can emerge when operational units set their own targets without external constraints. It is most effective when combined with bottom-up validation of operational feasibility.

Why This Matters

Top-down planning is the mechanism through which strategic priorities are translated into financial commitments at the operational level. When senior management sets clear financial targets and communicates them as firm constraints, operational units align their plans to organisational objectives rather than local priorities. This alignment between strategic intent and operational planning is the foundation of organisational coherence — ensuring that the actions of individual business units collectively produce the outcomes the organisation requires.

Where This Fits

This term sits within the Planning & Projections area of Performance & Control.

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