Budgetless Companies: The Case of Mainfreight

Joost Minnaar
Written by Joost Minnaar June 30, 2024

Mainfreight, a global logistics powerhouse headquartered in Auckland, New Zealand, has been redefining business success since its inception in 1978. Listed on the New Zealand Stock Exchange in 1996, it now operates 342 branches across 27 countries, employing over 10,000 "team members." What sets Mainfreight apart is its innovative management style—one that boldly rejects traditional budgeting. Here’s how this unconventional approach propels their success.

Discovering Mainfreight's Budget-Free Magic

When I began developing a course on budgetless companies, the Beyond Budgeting Institute directed me to Mainfreight. I dove into their story, guided by resources from the Beyond Budgeting Hub, Keith Davies' Ready Fire Aim: The Mainfreight Story, and O'Grady & Akroyd's paper on Mainfreight's non-budgeting management control systems. The insights I gained are worth sharing.

The Four Pillars of Mainfreight's Success

Mainfreight thrives without a traditional budget cycle by focusing on four core elements:

  1. The Mainfreight Way
  2. A highly decentralized structure
  3. A transparent accounting system
  4. A collective reward scheme

Let's break these down.

Mainfreight’s budgetless management model proves that success comes from decentralized action and adaptability, not rigid budgeting.
Click to tweet

1. The Mainfreight Way

Mainfreight’s guiding ethos, ‘The Mainfreight Way,’ encapsulates their strategic and cultural DNA.

1.1 A Hundred-Year Vision

Mainfreight is committed to becoming a century-old institution. This long-term vision influences every strategic decision, from land acquisitions to service standards.

1.2 Three Pillars of Mainfreight

The company's culture is built on three pillars: Culture, Family, and Philosophy. These core values drive both their internal dynamics and external performance.

Mainfreight promotes from within, encourages non-hierarchical thinking, and demands personal accountability. Every branch reports weekly results, ensuring transparency and performance-driven operations.

1.3 High Performance Elements

Rooted in founder Bruce Plested’s philosophy, Mainfreight's success hinges on:

  • Teamwork: Autonomy and trust are key. Centralized control, like budgeting, is seen as inefficient and distracting.
  • Ready, Fire, Aim: This mentality encourages proactive decision-making. Mistakes are tolerated as long as they lead to learning and improvement.
  • Shared Rewards: Profits are shared among all team members, aligning personal success with company performance.

1.4 Nurturing Elements

Mainfreight balances its high-performance culture with nurturing practices:

  • Open-plan offices and shared lunch facilities foster a family-like atmosphere.
  • Team members are encouraged to discuss problems and solutions over meals.
  • Meeting rooms have round tables to promote equality.

2. A Highly Decentralized Structure

Mainfreight's 10,000 team members operate within a decentralized network of 342 branches. This structure keeps decision-making close to the customer, ensuring agility and responsiveness.

2.1 Branches

Each branch operates as a standalone business, led by a branch manager who acts as an entrepreneur. Branch performance is measured by profit margins, and team members share in the profits they generate.

2.2 Regional/Country Offices

Branches are grouped by region and country, each with its own manager. These managers, promoted from within, focus on coaching branch managers and maintaining the company culture.

2.3 Global Headquarters

The headquarters in New Zealand provides lean central support and sets high-level goals. Decisions are made at the branch level, except for inter-branch revenue allocations, ensuring fair profit distribution.

3. A Transparent Accounting System

Mainfreight's accounting system is fast, digital, and transparent, emphasizing performance and flexibility.

3.1 Setting Expectations

Instead of annual targets, Mainfreight sets expectations based on past performance, aiming for at least 15% pre-tax profit growth annually. Branch managers set realistic, attainable goals, formalized in a "profit pledge" signed by all team members.

3.2 Performance Reporting & Benchmarking

Weekly performance reports, or "weeklies," compare branch performance to past periods and peers. This transparency drives accountability and rapid corrective action.

3.3 Flexible Allocation of Resources

Resources are allocated dynamically. Branches request additional funds through informal conversations, ensuring flexibility and responsiveness.

4. A Collective Reward Scheme

Mainfreight's reward system is designed to recognize both branch performance.

4.1 Awards

Annual awards celebrate exceptional branch performance, with plaques displayed in branch offices.

4.2 Branch Bonus Scheme

A base bonus pool equal to 10% of branch net profit is shared among all team members. Exceptional performance can increase this to 15%.

Conclusion: The Power of Experience and Flexibility

Mainfreight’s budgetless management model proves that success comes from decentralized action and adaptability, not rigid budgeting.

By empowering team members, fostering a unique culture, and maintaining transparency, Mainfreight achieves extraordinary results.

Mainfreight's story is a testament to the power of progressive thinking in driving business success.

Written by Joost Minnaar
Joost Minnaar
Co-founder Corporate Rebels. My daily focus is on research, writing, and anything else related to making work more fun.
Read more
May 26, 2024
Lessons from the Mondragón Cooperative Movement
Marc Peeters and Roel Schouteten Written by Marc Peeters and Roel Schouteten
The Mondragón cooperative movement in the Basque Country has long captivated workplace innovators. Amidst the backdrop of contested global…
Read more about Lessons from the Mondragón Cooperative Movement
Feb 04, 2024
The Fascinating Story of America's Largest Employee-Owned Company
Joost Minnaar Written by Joost Minnaar
February 3, 1969, was a cold winter’s day in La Jolla, a village on the rugged California coast just north of San Diego. It was also a…
Read more about The Fascinating Story of America's Largest Employee-Owned Company
Jan 07, 2024
The Power of Simplicity: A Simple Management Formula To Wild Success
Joost Minnaar Written by Joost Minnaar
Earlier last year, I was invited to the Kelso Workshop at Rutgers University in New Jersey by Prof. Joseph Blasi, the world's most renowned…
Read more about The Power of Simplicity: A Simple Management Formula To Wild Success
Nov 26, 2023
How This Vietnamese Company Burned Down The Traditional Management Playbook
Pim de Morree Written by Pim de Morree
Nestled amidst Hanoi's vibrant lanes, Amber Online Education, a company providing online learning experiences for titans like Samsung and…
Read more about How This Vietnamese Company Burned Down The Traditional Management Playbook
Aug 06, 2023
TiER1: A Customer-Centric and Empowered Organization with Dynamically Distributed Authority (DDA)
Joost Minnaar Written by Joost Minnaar
In July, we had the opportunity to interview Greg Harmeyer for an Academy live event. Greg, the co-founder and CEO of TiER1, a US-based…
Read more about TiER1: A Customer-Centric and Empowered Organization with Dynamically Distributed Authority (DDA)
Jul 23, 2023
iYell: A Startup's Thorough Pursuit of Organizational Development
Yuji Yamada Written by Yuji Yamada
Today, I would like to introduce you to another progressive firm from Japan: iYell Inc., an IT company from Tokyo with about 350 employees…
Read more about iYell: A Startup's Thorough Pursuit of Organizational Development
Read all articles

Download: Free Guide

Unlock our in-depth guide on trends, tools, and best practices from over 150 pioneering organizations.

Subscribe below and receive it directly in your inbox.

    We respect your privacy. Unsubscribe at any time.