The organisation should be concerned with other management performance criteria such as concern with quality, good industrial relations, cooperation with colleagues etc.
There are significant benefits for organisations which engage in budgeting:
Budgeting forces management to focus on the future, to consider the dynamics of the external environment and identify the potential opportunities and threats.
In the process of preparing the budgets managers are compelled to co-ordinate the various activities of the organisation and to be less ‘departmental minded’ and to be more ‘company minded’.
It tends to encourage communication throughout the organisation. Staff are aware of what they are expected to achieve and regular budget reports and budget meetings keep them informed.
By assigning managerial responsibility for the attainment of the budgets and the regular comparison of actual results and expected outcomes individual managerial performance can be ascertained.
Research has indicated the role budgets have in motivating managers to achieve the company’s objectives. Good performance can lead to career advancement so the managers desire to be successful is linked to the success of the company.
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