Budget as a Perfect Management Tool - Essay Example

Organizations can allocate a certain percentage of the budget to motivate employees when they are performing well in an organization. For instance, the company can arrange for a travel program for the sales support team that attains the target in a stipulated period. In such cases, the company will bear the complete expenses of the employees sent for travelling along with the family (University of Gothenburg. “Budget-A Perfect Management Tool”).

Such kind of budgets can assist in motivating the employee to a great extent and thus can assist the organization to attain its objectives within a short period. It is to be remembered that such budgets help to augment the performance of the employees and thus increase their productivity as well.

Budget is one of the significant sources of motivation for the employees. Hence, it is crucial for an organization to plan budgets in a way that can be utilized to motivate employees. It is to be remembered by the employers that the budgets will have no motivational effects unless they are accepted by the managers involved as their targets. In such circumstances, the employer needs to make the manager's involvement compulsory in such activities. It is a well-known fact that demanding budgets are seen as more applicable in comparison to less difficult targets. However, negative attitudes can result if they are viewed as too complex. Therefore, in such circumstances, the allocation of budget needs to be done properly so that it serves as a motivational tool. Acceptance of budgets is facilitated when good upward communication exists. The use of departmental meetings can be quite helpful in encouraging managers to accept budget targets. Therefore, departmental meetings can be arranged regularly as per the requirement of the organization. To motivate the best possible level of actual performance the budget needs to be set at a level, above which, an average be attained. Participation in budget-setting can assist in ensuring that the budget is accepted by the subordinate manager and thus act as a motivational target. If the managers are permitted to participate in the process of budget-setting then the likelihood of information distortion as well as manipulation will decrease. If the companies implement the above-mentioned recommendation properly then the employees will be motivated and their performance can be enhanced (Emmanuel, C. R. & Et. Al., “Accounting for Management Control”).