Motivational, Behavioral and Ethical Issue of Budgeting
af Wanah Nurul
1. Participative Budgeting
1.1. Process in allowing employees throughout the organization have role in developing the budget
2. Issues
2.1. Problem with budget objective and target argued to be:
2.1.1. Focus in financial targets while ignoring non-financial target
2.1.2. Short term outlook ignore & long term perspective
2.2. Why budget holders respond to budget in negative way?
2.3. Ways to encourage positive behavior toward budget
3. Motivation
3.1. Goal Congruence
3.1.1. Barriers
3.1.2. Selfish attitude
3.1.3. Sometimes improving one area lead to poor result elsewhere
3.1.4. only natural to people to focus on own performance
3.2. Target of individual are consistent (GoalCongruence)
4. Style of Budgeting
4.1. Top Down
4.1.1. Imposed Budgeting
4.1.2. Budget allowance which set without permitting the budget holder to have opportunity to participate in budgeting process
4.2. Bottom Up
4.2.1. Participative Budgeting
4.2.2. All budget holder are given the opportunity to participate in setting their budget
5. Dysfunctional Behavior
5.1. Negative behavior of employees towards budget that result from them feeling unhappy
5.2. Organisation must keep it minimum
5.2.1. Providing them comfortable surrounding for work
6. Budgetary Slack
6.1. Padding the budget
6.1.1. The practice of underestimate revenue or overestimate cost so the budget target easy to achieve