Management styles with budgeting evaluation

Budget

• Defined as quantified plan relating to a given period (monetary and other variables)
• Should be precise and clear

 

Different management styles with different behaviour aspects

• Budget constrained style
• Profit conscious style
• Non-accounting style

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Management style	Performance evaluation	Behavioural aspects
Budget-constrained style	Managers evaluate on their ability to achieve budget in the short term	Job related pressures
	Managers will be criticised for poor outcomes. For example, expenditures exceeds the limit set	May result in short-term decision making at the expense of long term gain
		Can result in poor working relations with colleagues
		Can result in manipulation of data

 

 

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Management style	Performance evaluation	Behavioural aspects
Profit conscious style	Managers evaluate on their ability to reduce costs and increase profit in the long term	Less job related pressure
	For example, managers will be prepared to exceed the budgetary limit in the short term if this will result in an increase in long term profit	Better working relations with colleagues
		Less manipualtion of data

 

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Management style	Performance evaluation	Behavioural aspects
Non-accounting style	Managers mainly evaluate on non-accounting performance indicators such as quality and customer satiscation	Focus on their ability to increase and enhance the quality of business proceses and activities
		Less concern for accounting information
	For example, budget required by airline company to meet health and safety requirements, otherwise, the consequences will be terrible	Budgetary information does not play a big part in evaluation
		Still require significant and strict monitoring of performance against budget