Question

Kurt Helfter graduated with a B.S. degree in Mechanical Engineering and joined Andrew Consulting, a firm specializing in HVAC (heating, ventilation, and air conditioning) for small to medium-size business structures. Kurt is knowledgeable in the use of CAD (computerassisted design) and was pleased during his initial employment to find Andrew Consulting a leader in the use of CAD software. During Kurt's third year at Andrew, he felt a sense of unease with the firm's slow pace in updating computer hardware and software. Although not directly involved in budgeting for the firm, Kurt has been satisfied with the resources that Andrew provided for his use. Kurt felt the need to detail his concerns in a memo to his superior, in which he requested significant investment in computer resources to "allow us to respond to clients' needs, both in quantity and quality." Kurt was surprised and hurt when he received his superior's response, which suggested that resource allocation in the firm is decided at a higher administrative level. "But all I wanted to do was help keep our firm competitive," Kurt responded to his boss when visiting him about the rejection memo. "Sorry, Kurt," his boss said, "That's how things get done in this firm." Kurt now feels lost, wondering if it's time to look for another job. Does this situation suggest what type of budgeting process the company is using? Is there a problem with individual and company goal congruence in Andrew Consulting? If so, how might Kurt's supervisor have prevented the problem?

Answer 1

There are two main approaches to budgeting , the top down approach and bottom up approach. Analysing the above given information it can be inferred that the company's budgeting process is " Top down approach" also calles as Imposed style approach where the senior management gives corporate plan which needs to be implemented by department managers through budget holding staff.

Yes, there is a problem in goal congruence in Andrew Consulting. Kurt wanted to help keep firm competitive and detailed his concerns in a memo to his superior where he requested significant investment in computer resources. Every company has its own budgeting standards and policies but any concerns or ideas from staff need to be encouraged and analysed whether it is feasible or not.

Supervisor would have analysed the request of Kurt and taken to the notice of high level administration instead of being inconsiderate to his request.