Budgeting Journal

Budgets in my work place are developed as a collaborative, participative, and a holistic action. The budget development process is a heated excise that often raises working temperatures. It has been a culture in my organization for each functional department to develop its own budget and forward it to the management for rationalization and consolidation to make an organizational budget. From start of the developing excise to implementation, there are ups and downs which are experienced in pursuit of excellence and organizational goals.

During the budget preparation process, departments often link their roles, projects and programs to expenditure or income. The exercise comes with emotions since project leaders want the best for their units and if the same is not translated in the budget, their morale obviously goes down, this has been mentioned by Chong et al., (2006). During the process, people will come together for purposes of prioritizing. Team work is very important at this level and as a consequence, the exercise brings about cohesiveness and team work, something that all managers want their teams to have. In times of misunderstanding, conflict resolution and crisis management kicks in and it is during these times that people learn how each other react to stress. The same is good since it helps employees to interact differently next time and it happens severally.

When the budget is passed, all affected parties react differently to the outcome depending to their expectations. If pleased, motivation is found but if the budget did not favor a particular department, the group feels demoralized, less considered and ultimately not important. To me, this is one of the biggest drawbacks of the budgeting process.

Far from reactions after budgeting, is the effect of the budgeting in operational activities of the organization. A budget often instils discipline into the organization’s spending and revenue generation habits. This is an important aspect of control and reinforcement of the emphasis on importance of planning. As confirmed by Rachman (2014), performance of the employees, consequently the organization, is greatly affected by budgeting. When aspects such as sales targets are set in the budget, such targets act like fuel for the concerned person or group. When people achieve their targets, they often have a sense of pride and this acts as a motivator. Budgets often offer a simple means to evaluate performance on whatever level.

In conclusion, the budgeting process is at times a bad experience especially when it elicits negative emotions, but the bad experience is often overridden by the need to inculcate sanity in the organization’s spending and goal setting. Finances are a limited resource and it is understandable when the same is shared and several pacts of the organization are left feeling like they did not get enough. The bad feeling is also compensated for when targets are achieved and the correct sense of pride and belonging is restored. Failure to hit set targets is often a polite way to point at inefficiency and call for reevaluation of existing methods and people. Reevaluation often acts as a means to instill checks and balances in my organization and the budget always keeps the organization on track in its bid to achieve goals and objectives.

References

Chong, V. K., Eggleton, I. R., & Leong, M. K. (2006). The multiple Roles of Participative Budgeting on Job Performance. Advances in accounting, 22, 67-95.

Rachman, A. A. (2014). The Effect of Organization Commitment and Procedural Fairness on Participative Budgeting and Its Implication to Performance Moderating by Management Accounting Information (A Survey on Province Local Government Unit Agencies of West Java). Review of Integrative Business and Economics Research, 3(1), 201.