Behavioral Aspects of Profit Planning and Budgeting I
Behavioral Aspects of Profit Planning and Budgeting -- I Chapter 8 Dian Indri, SE. , M. Si
n n n The behavioral aspects of budgeting refer to the human behavior that is brought out in the process of preparing the budget and the human behavior that is induced when people try to live with the budget Budgets have a direct impact on human behavior Budgets are often viewed as bureaucratic impediments or threats to careen advancement why are they used? Dian Indri, SE. , M. Si
The Multiple Functions of Profit Planning and Budgeting n n Budgets are managerial plans for action expressed in financial terms managerial tools Budgets detailed, financial blueprint of how the firm expects to operate Dian Indri, SE. , M. Si
Budgets have several functions: The final result of a firm’s planning process n The firm’s blueprint for action n An internal communication n Evaluation n Controlling n Influence and motivate managers and employess n Dian Indri, SE. , M. Si
A Behavioral Overview of The Budget -Making Process n 3 major stages in the budget-making process: 1. Goal setting - 2. Objectives Strategies Implementation Goals have to be set and resources allocated 3. Control and performance evaluation A comprehensive budget or profit plan has to be prepared, then approved by top management and used to control the organization Dian Indri, SE. , M. Si
Goal-Setting Stage n n Translation broad organizational objectives into specific activity goals The major behavioral concepts that impact the goal-setting phase of the planning process are: Participation n Congruence n Commitment’ n Dian Indri, SE. , M. Si
Implementation Stage n n Communicate to positively motivate people The major behavioral science concepts that impact the implementation phase are: Communication n Coperation n Coordination n Dian Indri, SE. , M. Si
Control and Performance Evaluation Stage n Some possible behavioral consequences include: Pressure n Motivation n Aspiration n Anxiety n Dian Indri, SE. , M. Si
Disfunctional Consequences of The Budget-Making Process n Distrust n n Resistance n n Status quo Internal conflict n n Mistrust, hostility, lead to declining performance A competitive and hostile work environment Other unwanted side effects n n n Against the objectives of the budgets Their purpose is to reducetension Pressure, frustration, short tempers, physical deseases Dian Indri, SE. , M. Si
Relevant Behavioral Science Concepts in The Planning Environment n The impact of the planning environment Organizational size and structure n Leadership styles n Stability of organizational environments n Dian Indri, SE. , M. Si
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