Spotlight on Ethics: Playing Budget Games

Managers who are evaluated and rewarded for meeting budgetary goals may engage in
game playing. For example, a sales manager who has reached his or her sales quota for
the week may try to defer sales to a future period by telling customers to come back
later to make their purchase. Managers may even be tempted to postdate orders so that
they appear to have been made in a different time period. Alternatively, a salesperson
who has not met his or her quota may cut prices at the end of the period to increase
sales volume and meet the sales goal. By engaging in these tactics, managers are putting
their own self-interest ahead of the organization’s objectives. Although the complete
elimination of such budget games is difficult to achieve, organizations must try to design
their budgets and control systems to minimize these dysfunctional behaviors

Different organizations must have different budgeting systems, as a budgeting system may
not fit all businesses or organizations. And the above situations are the reason why
organizations should consider taking different behavioral factors in designing and
implementing a budget system.