Human behavior and budgetary control, Managerial Accounting

Human behavior and budgetary control

An important feature of control in business is that control is exercised by managers over people. Their attitudes and response to budgetary planning and control will affect the way in which it operates.

In 1953 Chris Argyris identified the following four perspectives of budgetary control:

The budgets are seen as a pressure device used by management to force lazy employees to work harder. The purpose of such pressure is to enhance performance but the unfavorable reaction of sub-ordinates against it seems to be at the core of the budget problem.

Budget men desire to see failure. The accounting department is usually responsible for recording actual achievements and comparing this against a budget. Accountants are therefore budget men and their success is to find significant adverse variances and identify the managers responsible. The success of a budget man is the failure of another manager and this failure causes loss of interest and declining performance.

The accountant, on the other hand, fearful of having his budget criticized by management deliberately makes it hard to understand.

Target and goal congruence. The budget generally sets targets for each department. Achieving the departmental targets becomes of paramount importance regardless of the effect this may have on other departments and the overall company performance. This is the problem of goal congruence.

Management style. Budgets are used by managers to express their character and patterns of leadership on sub-ordinates. Sub-ordinates resentful of their leader’s styles blame the budget rather than the leader.

Posted Date: 12/7/2012 7:59:34 AM | Location : United States







Related Discussions:- Human behavior and budgetary control, Assignment Help, Ask Question on Human behavior and budgetary control, Get Answer, Expert's Help, Human behavior and budgetary control Discussions

Write discussion on Human behavior and budgetary control
Your posts are moderated
Related Questions
given a scenario when iddle capacity is less than the special order.in this case should we accept or reject the order

The Incredible game theorist Mr. Nash's work needed refining. First, it applies to games played only once, or in which players move simultaneously. But virtually all interestin

QUEUING THEORY When limited facilities fail/delays to satisfy demands made upon them, problems occur which generate queues or waiting lines. Illustrations are: •    Customers

Assumptions Underlying the CVP Analysis CVP analysis as discussed above is based on certain assumptions . if these assumptions are not recognized then serious error may result

Classification of ratio according to significance   The ratios have also been classified according to their significance. Some ratios are more important than other and the fir

Competition oriented pricing policy Most companies fix the price of their products after a careful consideration of the competitor's price structure. Deliberate policy may be f

I have two problems due in two hours can you do this for me?

So as to makes sure that the receivables are collected in occupied and on due date by the customers, prior information of their credit worthiness must be obtainable. This informati

Trinco Ltd (Trinidad & Tobago-T&T) has been negotiating a contract with a potential customer in Jamaica. Before the negotiations started the Jamaican company agreed to pay $10,000

Saddle Point The saddle point in a payoff matrix is one which is the smallest value in its row and the largest value in its column. It is also termed as equilibrium point in th