Budgeting and Human Behavior

Budgeting and Human Behavior - Budgeting and Human Behavior...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Budgeting and Human Behavior A budget can have a significant impact on human behavior. It may inspire a manager to higher levels of performance. Or, it may discourage additional effort and pull down the morale of a manager. Why do these diverse effects occur? The answer is found in how the budget is developed and administered. In developing the budget, each level of management should be invited to participate. This “bottom-to-top” approach is referred to as participative budgeting . The advantages of participative budgeting are, first, that lower-level managers have more detailed knowledge of their specific area and thus are able to provide more accurate budgetary estimates. Second, when lower-level managers participate in the budgeting process, they are more likely to perceive the resulting budget as fair. The overall goal is to reach agreement on a budget that the managers consider fair and achievable, but which also meets the corporate goals set by top management. When this goal is met, the budget will provide positive motivation for the managers. In contrast,
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.

Page1 / 2

Budgeting and Human Behavior - Budgeting and Human Behavior...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online