plant managers of XZ company desire to participate in the company's budget efforts, which for the...

plant managers of XZ company desire to participate in the company's budget efforts, which for the past 10 years, have been handled solely by top executives. plant managers feel that by becoming involved, they can make great strides in terms of improving operating performance of their aging facility. briefly discuss this situation, focusing on the benefits and problems of letting plant managers participate in the company's budgetary efforts.

Expert Solution

Letting plant managers participate in the budgeting can have significant benefits as well as some repercussions. This method of budgeting is also known as Participative Budgeting.

Benefits:

1) Accuracy: With the participation of plant managers, the accuracy of the estimated budget would be quite high as estimates provided by the person handling the job is expected to be much appropriate.

2) Inclusiveness: There will be a positive message across the organisation that points of interest of lower-level workforce are being considered by the top executives.

3) Congruency: Being involved personally, plant managers would have better clarity about the targets and accomplishments and the limits of resources to deploy and they will tend to work in line with goals of organisation.

Consequences:

1) Delayed decisions: More people means more number of opinions and approvals which may result in delayed actions and decisions

2) There can also be chances of manipulation of the budget by the plant managers by overestimating the cost or by underestimating the revenue for their personal advantages.

3) Privacy: The privacy about the company finances tend to be at risk when more people are disclosed about the facts and figures.

ekkarill92 answered 2 years ago

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