Behavioural Aspect of Budgeting
Behavioural Aspect of Budgeting
Behavioural Aspect of Budgeting
Compiled by:
Significance of budget
Conclusion
Learning Objectives
• Although Budgets are often stated in terms of money, they need not be,
and can also relate to quantities made and sold, numbers of employees to
be recruited, or weights of material to be consumed.
• Planning:
Necessitates setting of goals and establishing actions needed to
attain goals.
• Organising:
involves the allocation of resources.
• Leading:
Two main aspects are communicating & motivating.
• Controlling:
Process of setting standards, measuring current performance and
taking remedial action if needed.
The Budgeting Process
Step 1: Planning the Process
• Identify who will coordinate the budgeting process and which staff, board
members and committees need to be involved;
SUPPLIERS
• The suppliers in this case may or may not agree to reduce cost which will
create issues regarding the budget.
CUSTOMERS
• Because of this conflict separate budgets should be used for planning and
for motivational purposes.
• It is unlikely that one set of budgets can, at the same time, meet both the
planning and the motivational requirements.
Managerial Use budgets In Performance Evaluation
• When budgets fail to meet expectations of such units, it may result to reduced
motivation and even firm rebellion particularly against the finance division.
Example
• Applying performance budgeting to these instances can mitigate the destructive
speculation of excessive/ meager budget allocations.
• Allocation of the budget and selecting the appropriate model should be inferred in
firm specific aspects in order to identify motivational points.
REWARDING EMPLOYEES ON A BUDGET
• Everyone likes to get a pat on the back for a job well done—especially if that pat
includes some type of bonus or other financial compensation or recognition before
colleagues.
• Opportunities
• Exposure
• Experience
• Praise
• Allow flexibility in an employee's schedule
BIAS IN THE BUDGET PROCESS
REASON:
THE REWARD SYSTEM OF THE COMPANY
THE INFLUENCE OF THE COMPANY PRACTICES
THE INSECURITY OF CERTAIN MANAGERS
Conclusion
Partial fulfillment of the set objectives.
There is a significant relationship between
budget level ,aspiration level and performance
Manipulations happen due to unimaginary
and unattainable targets.
An organisation cannot serve both
motivational and planning aspects
simultaneously.
Thank you!!!!