Cash Cows

Budgeting: Behavioural Aspects

Learning Objectives

1. Clearly define the term budgeting.

2. Briefly explain the three main approaches to budgeting:

 Imposed budgeting

 Participative budgeting

 Negotiation budgeting

3. Determine the effectiveness of each approach on the employees.

4. Identify the various behavioral implications of budgeting:

 Dysfunctional behavior

 Excessive pressure created by budgets

 Budgetary slack

 Top management support

 Interdepartmental conflict

5. Discuss the impact of the behavioral implications on the organization.

6. Identify and describe the human rule to a successful budget:

 Participation

 frequent feedback on performance

 flexible budgeting capabilities

 monetary and non-monetary incentives

 realistic standards

7. Explore whether budget padding is unethical.

8. describe the three styles used to evaluate the budget:

 budget constraint style

 profit conscious style

 non accounting style

9. Briefly discuss the term beyond budgeting.