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
Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?

The Search for Alternative Courses of Action The second stage of the decision-making model is a search for a range of possible courses of action (or strategies) that might enab

Explain Indirect expanses: These are expanses which can't be directly conveniently and wholly allocated to a specific cost centres or cost units examples of such expanses are h

I don''t know how to do a variable income statement. Here is my assignment: The Used Books Company is a small online retailer operating out of a garage apartment. The owner buys

Sales of Cool-Man air conditioners have increase steadily during the past five years: Year    Sales 1        450 2        495 3        518 4        563 5        584 6          ?

Explain Out of pocket cost A cost which will have to be paid to outsides as against cross such as depreciation, which do not require any cash payment this cost is relevant in t

Prisoner's Dilemma To understand the prisoner’s dilemma, let’s consider a story as follows: Two peoples are arrested for a crime. The police lack enough evidence to convict ei

Analysis Various business decisions have recurrent themes: whether to the outsource production or to the support functions, what level of production and pricing to establish, w

What are the duties of the Public Company Accounting Oversight Board?

Pike Corporation paid $100,000 for a 10% interest in Salmon Corp. on January 1, 2010, when Salmon''s stockholders'' equity consisted of $800,000 of $10 par value common stock and