CHAPTER ONE
INTRODUCTION
- BACKGROUND TO THE STUDY
In every organization, establishment of goals is an essential pre-requisite of the planning process. All the three components of the economy (public sector, private sector and individuals) need to plan for their future. They need an instrument like budget that will assist them to effectively and efficiently achieve their set goals. Finance, time, materials, men and other resources need to be budgeted for in view of the fact that they are scarce in every sector of the economy.
The Institute of Cost and Management Accountants (ICMA) defined budget as “a plan quantified in monetary terms, prepared and approved prior to a defined period of time, usually showing planned incomes to be generated/or expenditures to be incurred during that period, and the capital to be employed to attain a given objective”. Budget could also be defined as an exercise in communication by which the expectations of management about levels of performances of subordinates are communicated to the subordinates. For the future plan(s) to be effectively achieved there is need for managers and subordinates as well as other employees to participate in the preparation of budgets especially when it is discovered that the desired outcome is not being achieved.
In many organizations, it has been observed that goals are not attained due to lack of participation of superiors and subordinates managers, and other key personnel in the budgeting process. Budget can be used by management to motivate managers and other employees. If managers participate in the planning process, they are likely to be more committed towards achieving the set objectives and goals. In other words, participation in budgeting can be a useful device for influencing managerial behaviour and motivating managers to perform in line with the overall goals of the organization. As the result of this, the research work on the topic “The impact of participation in budgeting on work motivation: study of Nigerian Breweries Plc, Guinness Plc, and UNN” is determine to see the effects of involving budgetees in the preparation of budget on work motivation towards achieving organizational objectives.
Generally, organizational goals and objectives are achieved by getting things done through people. Therefore, organizations can attain the set standards by encouraging both superior and subordinates’ participation in the formulation and implementation of the budgetary system. Since budget estimates represent the summation of the various views gathered from each responsible operating manager, their participation in the formulation of budget system must be total. There should be no pseudo participation to counter production.
The purpose of budgeting is to motivate employees and to co-ordinate efforts. When employees are motivated, they exert more effort towards achieving the task or goals set. Hence, participation in budgeting leads to motivation, and to better attitudes and improved performance.
1.2 STATEMENT OF THE PROBLEM
In as much as participation in budgeting has been advocated by many writers as a means of motivation, making task or job more challenging and giving individuals a greater sense of belonging and responsibility, it is still a problem in today’s competitive business environment.
Participatory budgeting system can be very effective in an organization if properly applied, failure to motivate workforce can create some problems such as:
- Budget padding
- When people involved in the budgeting process disagree in significant and irreconcilable ways, the process of participation can accentuate those differences thereby leading to de-motivation of workers.
- Lack of confidence: Managers that lack confidence are likely to find that participation in budgeting can only serve to increase their feeling of stress and tension due to uncertainty.
- In congruence between the level of participation and job difficulty, performance will not be high when the amount of participation is disproportionate to the level of job difficulty.
- Lack of active cooperation among workforce: Budgetees may also use the opportunity to affect their budgets in ways that may not always be in the best interest of the organization, they may also distort information by claiming that they are not as efficient or effective at what they do as they appear, thereby attempting to lower management expectations of their performances.
Therefore, this research seeks to address the problems of participatory budgeting method highlighted above as regard having a strong influence on workers moral with respect to employees’ motivation to enhance high performance thereby ensuring that organizational objectives are achieved.
1.3 OBJECTIVES OF THE STUDY
The main objective of this research work is to examine the effect of participation in budgeting on work motivation, hence other objectives include:
i. To find out whether employees are more challenged with participatory budget when goals are not achieved than when imposed budget system is practiced.
ii. To find out whether performance increases when employees are motivated.
iii. To establish whether participatory budgeting system helps organizations to achieve their set goals.
