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Behavioural aspects of budgeting (Budgets & people (Pursuit of…
Behavioural aspects of budgeting
Budgets & people
Pursuit of objectives/ targets
Links between accounting, decision, HR
Teachers & doctors do not paid over time
Rewards of achievement
Padding or slush funds
How effectively manages worked
Require corrective action
Motivating manages
Behavioural approaches
Concerning trust, risk, openness & relationships
Mutual understanding
Increased commitment
Inter-personal & negotiation skills
Management by objectives MBO = self-control rather imposed control
MBO involves
Reviewing both long & short-term
Revising structure
Establishing a clear picture
Process of setting standards
Help managers achieve goals
Measurement process
Regular periodic reviews
Internal openness about information
Reality of budgeting
Communication channel for managers
Incremental
Fairly widespread,but drying out
Inflation & or % on reductions
Budget games
Play safe
10% add
The hockey stick effect on spending
Inefficiency, poor control, unprofessional conduct
Board introduce cuts
Underlying issues
Deception, conflict & manoeuvring
= Dishonest, unprofessional & lacking commitment, ineffectiveness
Zero-base budgeting
Relationships to targets, inputs, outputs & activities
Rolling budgets = day to day management
May have high & lows
Know as Budget phasing or profiling
Budgeting in transition
On-going debate & changes
Top-down
Get targets instead what best for the business
Link budgeting
Activity based budgeting
Variance analysis
Balance financial
Inform employees
Multi-dimensional measures