TyroCity

Discussion on: Ways in which organization can motivate employees

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Angel Paudel

Budgeting refers to the allocation of capital often by managers for the sole purpose of controlling and planning the limited resources available effectively. It is used for planning and coordinating organizational activity, allocating resources, and motivating employees to achieve company vision/objective (Schick, 2007). A budget is a right step in ensuring that the capital is spent properly to achieve the financial goals set while meeting the objective in a bigger picture. There are multiple ways in which an organization can motivate employees by using the budget and the budgeting of which three ways are as described below:

Increase the ownership and commitment level of employees. By making them involved in the process, a company can increase that feeling of ownership among its staff. They’ll feel like it’s mine and work with more commitment to meet the requirements. They also feel valued as the company is listening to them while formulating the budget. Both success and failure of the process are owned by everyone and keep them motivated to give their best to make it a success rather than a failure.

Reward performance. Awarding staff for meeting the targets set in the budget and considering that as the factor for performance evaluation can motivate the employee to perform even better. Budgeting helps in anticipating demand and expectations from an employee and thus provides a clear set of guidelines for the targets that need to be achieved/worked toward. As the employees will be aware of the target they need to meet and work towards it with lesser anxiety of what is to be done.

One of the other important aspect of motivating employees with the inclusion of participative budgeting . In this process, all the people who might be impacted by the budget are involved in the process of formation of the budget. Also called s bottom-up approach as the employees at even the lower level may be involved if they’re to be impacted by its implementation and is thus more achievable (Walker & Johnson, 1999). It increases the morale of the employees and calls for an effort of higher amplitude among them towards the result.

References

Schick, A. (2007). Performance Budgeting and Accrual Budgeting. OECD Journal On Budgeting , 7 (2), 109-118.

Walker, K. B., & Johnson, E. N. (1999). The effects of a budget-based incentive compensation scheme on the budgeting behavior of managers and subordinates. Journal of Management Accounting Research , 11 , 1-28.