Erin, what is a benchmark?
Behavioral principles are the human factors critical in evaluating performance. Managers should have direct input into the process of establishing budget goals for their area of responsibility. Without this input, managers may view goals as unrealistic or arbitrary.
Evaluations affects a mangers motivation to meet targets. The evaluation should be based entirely on matters that are controllable by the manager. Criticism of non-controllable matters reduces effectiveness of evaluation, and it may lead to negative reactions by manager and doubts about fairness of evaluation.
Can a budget be an effective benchmark to measure performance?
Advantages of Budgeting
Organizations realize many benefits from budgeting, including:
- Budgets communicate management’s plans throughout the organization.
- Budgets force managers to think about and plan for the future. In the absence of the necessity to prepare a budget, many managers would spend all of their time dealing with day-to-day emergencies.
- The budgeting process provides a means of allocating resources to those parts of the organization where they can be used most effectively.
- The budgeting process can uncover potential bottlenecks before they occur.
- Budgets coordinate the activities of the entire organization by integrating the plans of its various parts. Budgeting helps to ensure that everyone in the organization is pulling in the same direction.
- Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance
In today’s world I feel budgeting is necessary for any business to be sufficient. Budgeting is also great for our day to day lives such as household budgets and to monitor weekly expenses. In many industries budget determines how much and when to spend on material for product, Budget also help for when it time to a company to give out raises.
has been added to your cart!
have been added to your cart!
You must log in and be a buyer of this download to submit a review.