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This paper discusses issues in budgetary oversight from the perspective of business managers. First, the paper notes flaws in the budgetary process. Then it addresses the role of leadership in developing, following and being flexible with a budget. The paper also warns against the sense of insecurity and lowered morale that can be devastating when already in the face of financial crisis, operational disruption or leadership transition. Finally, the paper explores the importance of budgetary clarity, which is among the most important features to creating and implementing an effective plan of operation in any context. The paper concludes by stating that a budget should be considered subject to frequent review and oversight to ensure that its projections remain useful and accurate or, where necessary, to re-evaluate projects and recast them with new or evolving information.
From the Paper:"Additionally, the association of this budget with such issues as employee or personnel performance can have the danger of instigating unwanted associated between individual fulfillment of responsibility and budgetary outcomes. Where budgetary failures appear, such an association may represent a threat to the personnel who view their security as a function of this budget. Indeed, research denotes that measuring "performance against budget become a kind of league table the winners are promoted and the losers are relegated." (Hope, 150) The establishment of a clear correlation between budgetary outcomes and individual outcomes can have a danger of increasing the sense of insecurity and lowered morale that can be devastating when already in the face of financial crisis, operational disruption or leadership transition. Therefore, an organization must be conscientious of the ways in which it constructs, presents and implements the various features of its budget."
Sample of Sources Used:
- Hope, T. (1997). Competing in the Third Wave. Harvard Business Press.
- Huang, C. & Chen, M. (2008). Relationships among budgetary leadership behavior, managerial budgeting games, and budgetary attitudes: Evidence from Taiwanese corporations. ScienceDirect. Online at http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W58-4VDSJS0-2&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&_docanchor=&view=c&_searchStrId=987186959&_rerunOrigin=google&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=570424efa71791707f3c9fc21199de67
- Walker, K. B. & Johnson, E.N. (1999). The effects of a budget-based incentive compensation scheme on the budgeting behavior of managers and subordinates. Journal of Management Accounting Research 11, 1-28.
Cite this Analytical Essay:
The Drawbacks of Budgeting (2012, January 17) Retrieved July 04, 2020, from https://www.academon.com/analytical-essay/the-drawbacks-of-budgeting-150002/
"The Drawbacks of Budgeting" 17 January 2012. Web. 04 July. 2020. <https://www.academon.com/analytical-essay/the-drawbacks-of-budgeting-150002/>