PROJECT TOPIC- IMPACT OF PARTICIPATION IN BUDGETING ON WORK MOTIVATION
- 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.
PROJECT TOPIC- IMPACT OF PARTICIPATION IN BUDGETING ON WORK MOTIVATION
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:
- To find out whether employees are more challenged with participatory budget when goals are not achieved than when imposed budget system is practiced.
- To find out whether performance increases when employees are motivated.
iii. To establish whether participatory budgeting system helps organizations to achieve their set goals.
1.4 RESEARCH QUESTIONS
The purpose of this work has necessitated for certain questions to be asked which serves as a yardstick towards successfully proffering solutions to the problems highlighted above. The following questions are hereby posed;
- Does participatory budgeting method have a strong positive influence on workers moral?
- Does employees’ motivation enhance high performance?
iii. Does participatory budgeting method by organizations has a significant and positive effect on market power and profitability?
1.5 RESEARCH HYPOTHESES
Ho: Participatory budgeting method has no strong positive influence on workers morale.
H1: Participatory Budgeting method by organizations has a strong positive influence on workers morale.
Ho: Employees motivation has no positive effect on organisation’s operating performance.
H1: Employees motivation has positive effect on organisation’s operating performance.
Ho: Participatory budgeting method by organization does not have a significant and positive effect on market power and profitability.
H1: Participatory Budgeting method by organization have a significant and positive effect on market power and profitability.
1.6 SIGNIFICANCE OF THE STUDY
The research into participation in budgeting can be appreciated in the following ways:
- To help management appreciate the impact of participation in budgeting on work motivation.
- The various views of workers will help the top management to adjust the budget on important areas that enhance profit maximization.
- To the workers, the study will help them to understand the process of budgeting and see participatory budgeting method as a form of motivation to them. With this, the problem of budget padding will no longer be experienced in the organisations.
- It will contribute to the enrichment of the literature on participatory budgeting and work motivation.
- It will throw more light on the relationship between participatory budgeting method and work motivation.
1.7 SCOPE AND LIMITATION OF STUDY
This research work centered on the impact of participation in budgeting on work motivation in organization. The researcher’s aim is to find out the impact of participation in budgeting on work motivation in organizations. Owing to the fact that there are several organizations around the world, it will be burdensome to study many organizations; therefore Nigerian Breweries Plc, Ama; Guinness Plc, Benin City; and University of Nigeria Nsukka are selected as sample to cover all the sectors of the economy.
The range of data to be used for this study is limited from 2006 to 2010. This is to enable the researcher access the most current information on the issue under consideration.
1.8 DEFINITION OF TERMS
Budget: A budget is defined as a plan quantified in monetary terms, prepared and approved prior to a defined period of time, usually showing planned incomes to be generated and/or expenditures to be incurred during the period, and the capital to be employed to attain a given objective.
Participation: The act of taking part in an event or activity.
Budgeting: Motivation is a set of forces that initiate behaviour and determine its form, direction, intensity and duration. In other words, motivation is a set of activities that induce or encourage the workers to put in their best efforts towards the attainment of the goals of the organization.
Work: This is also refers to as job or task, it is to do something that involves physical or mental efforts especially as part of job.
Budgettess: These are individuals who contribute in the formulation and implementation of budget.
Budgeting padding: This means overestimating cost and underestimating revenue.
Subordinate: A person who has a position with less authority and power than somebody else in an organization.
Superior: A person of higher rank, status or position in an organization.
Profit: The advantage that you get from doing something.