Answer to Question #66901 in Financial Math for Allan Mwashumbe

Question

a) In his study of: “the impact of budgets on people” C Argyris reported the following comment by a financial controller on the practice of participation in setting budgets in his company:
“We bring in the supervisors of budget areas, we tell them that we want their frank opinion, but most of them just sit there and nod their heads. We know they are not coming out with exactly what they feel. I guess budget scares them”.
Explain why managers may be reluctant to participate fully in setting budgets, indicating the negative side effects, which may arise from the imposition of budgets by senior management

Answer 1

Managers may be reluctant to participate fully in setting budgets because of the high responsibility of doing this.
The negative side effects which may arise from the imposition of budgets by senior management are their tries not to do something new and unusual, which may be counted as inappropriate in such cases.