Benefits And Problems Of Participative Budgeting For Dallas Managers And Corporations

What is Participative Budgeting?

Question:

Briefly discuss this situation, focusing on the benefits and problems of letting Dallas Managers participate in the Company's Budgetary efforts.

Essentially, Participative budgets can be considered as a process of budgeting under which specific people influenced by a specific budget are actively engaged in the budget generation procedure. Essentially, the bottom-up tactic to particularly budgeting has a propensity to generate budgets that are more attainable that are top down budgets that are mainly imposed on corporation by mainly senior management. This involves mainly less participation by members of the staff of the corporation. This approach of budgeting is also apt for morale, and essentially has the propensity to result in higher efforts by members of the staff to attain what they forecasted in the budget. Nevertheless, a completely participative budget does not consider high-level strategic concerns into account (Hashim et al., 2014). Therefore, management have the need to deliver members of the staff with specific guidelines as regards overall direction of the corporation, and the way the individual fits into the specific direction.

As per the given case study, James Corporation that is headquartered in particularly Chicago necessarily has a manufacturing plant situated in Dallas. In this case, plant managers intend to partake in diverse budgetary efforts of the company and that for the last 10 years have been managed solely by top officials in Chicago. As such, the Dallas managers consider that by becoming actively engaged, these managers can make enormous stride in terms of enhancing operating performance of the aging facility (Almén, 2017).

Participative budgets can necessarily make the plant managers realise that their viewpoints are appreciated by people in the top management. Essentially, the plant managers will also have an improved attitude towards achievement of the budget. In addition to this, it is probable in this particular case that essentially the participative tactic will lead to a more practical budget document. Again, personnel of Chicago might also be separated from daily operations in Dallas in order to arrive at a true depiction of on-going functions (Im et al., 2014). These participatory budgeting efforts can facilitate the plant managers to voluntarily and at the same time regularly contribute towards the process of decision making by means of a series of scheduled meetings with corresponding government bodies and top executives of the firm.

The case study on “Mutual Gain” can also help in understanding the advantages of participatory budgeting (PB Network, 2017). As per reports declared by the PB Network, North Tyneside in association with MutualGain presented three different sessions formulated to enable public to exert influence spending decisions on accessibility to urgent care services. In essence, the procedure utilized was necessarily a new commissioning edition of mainly the tried as well as tested mechanism of participatory budgeting (Nielsen et al., 2015). However, as part of the operation, officials from the corporation deliver simplified breakdown of comparative spend on offering present services, along with forecasting spend on probable future services (PB Network, 2017). This case study stresses the fact this participatory budgeting allows all the members of specifically public, together with representatives from diverse providers as well as the programme board for mainly Urgent Care can formulate all to provide their opinions on different variety of services and potential options for potential commissioning in the specific area, concentrated around actual and real life ideas as regards budget as well as future expenditure. Essentially, this procedure itself has need of a corporation to fully participate with the democratic procedure, with the success of the practice depending upon higher level of transparency as well as regional ownership (Bromwich  & Scapens, 2016).

Advantages of Participative Budgeting

As such, the case study on Edge Fund suggests that participatory budgeting that can be utilized for making very small grants to diverse radical groups that would have struggled to discover sources of finances (PB Network, 2017). The case study presented in the official website of Edge Fund mentioned that this around £60,000 was necessarily distributed to approximately more than 40 groups with specific amounts that range in size between £500 to approximately £3000 (PB Network, 2017). As per the case study, decisions of financing are mainly collectively undertaken by all the members that cover a wide range of issues, societies as well as levels of income. Essentially, the overall application along with process of decision making is mainly underpinned by financing values. Essentially, Edge Fund through meetings with different members discuss their subsequent steps along with issues that have stemmed and decisions that need to be arrived  and as a group need to decide the way the business concern can move forward.  In addition to this, decisions can be made by appropriate consensus whenever possible or else by majority vote. However, there are certain discussions that take place by mainly email or else over telephone or else over Skype. In addition to this, the business concerns also have a facilitating group of approximately 5 members to 10 members who undertake the background work before meetings and to organize proposals for members to talk about (Tappura et al., 2015).

Another case study on “Orchard Projects” in particularly Leeds shows that the projects are mainly thriving by means of participatory budgeting. Essentially, Ala Thornton who is the project worker for mainly Leeds Orchard Live and supported by mainly “Helping Britain Blossom” illustrates the way participatory grant making was necessarily used (PB Network, 2017). Essentially, with exchange of funds new associations were also formed, at the same time new skills were also exchanged and the local network of volunteers of the community was augmented. Again, the report also presents the fact that Orchard Project is also operating in Leeds in order to develop the orchard network of the entire city (Dekker, 2016). Therefore, Alan is also of the view that participatory budgeting is simple and at the same time empowering that in turn can help in distributing small amount of sums for different important causes. From the point of view of project worker it can be hereby said that individuals that have the intention of making Britain blossom can be permitted to arrive at good decisions regarding investments. Essentially, these investments have the aim of making orchards flourish. Essentially, an open call for specific proposals was distributed in the existing network of subsisting community orchards in the area of Leeds. Therefore, for this purpose of participatory budgeting, everybody was provided a pack with a side of paper for each and every proposal counting a brief description, budget as well as assertions stating the influence of the finances. Particularly, the feedback received on this participative budgeting can be regarded to be very positive. It can be hereby mentioned that involvement officials in the process of adoption of specific budgets that they have to implement also might fail to ensure their trust in the overall accuracy as well as fairness of the process (Van der Stede, 2016).

Dallas Managers and Participative Budgeting

However, there remains a flipside to essentially everything and participative management necessarily do not stand as exception. However, this specific style of particularly leadership else wise decision making necessarily leads to better participation of different members of the staff, nonetheless there exists undoubtedly certain disadvantages as well.  The management of the firm although can ensure increased participation by following participative budgeting, several individuals get engaged in the process of decision making that in turn slows down the entire process (Fullerton et al., 2013). Fundamentally, specific inputs as well as feedback start pouring from different sides and this takes time to substantiate the overall accuracy of enumerations that in turn reflects that the decision making procedure can slow down.

In addition to this, there are also different security issues that might be associated to the participative process of budgeting. As such, this security issue involved in particularly participative budgeting also stems from mainly the fact that there are too many people and there are lots of information. In essence, this specific information might also transform into vital information in diverse later stages. Therefore, there is higher apprehension of diverse information getting leaked out. Thus, in that case, non-participation might help the management and running of operations in a better way (Granlund & Lukka, 2017). Essentially, non-participatory budgeting can lead to limited participation with limited objectives as well as limited scope.  As rightly indicated by Otley & Emmanuel (2013) non –participatory budgeting can help taking into consideration regional, local, national or else global factors for the decision making processes. Nonetheless, usage of non-participatory budgeting specially when applied in ideal firm can be regarded to be highly exclusive and closed process, and the entire procedure cannot be effortlessly hijacked by other members of corporation in order to serve own interests.

As correctly mentioned by Bodie (2013), there are numerous studies that also present the idea that non--participatory budgeting do not exert influence on attitudes of members of the staff of the corporation towards the process of budgeting along with budgets. This can lead to swift and smooth designing and execution of budgets of the firm. Again, there are certain factors that are involved in the process of attaining what is believed to be mainly .distributive justice as well as procedural justice. Essentially, a participative input in the process of formulating budget can necessarily range from no input to merely a voice or just an opinion, also to a vote or else a decisional role. As such, bidirectional process of communication between superiors as well as sub ordinates in the firm might become difficult to achieve. Again, it might also become intricate to determine subordinates to take part, communicate as well as disclose requisite information. In this case, non-participation can be observed as an increased accountability and can be considered as a stress for different subordinates. Fullerton et al., (2014) mentions that implementation of non-participation can help in avoiding the huge cost of participatory budgeting system and accelerating the process along with effort.

Case Studies on Participative Budgeting

Again, on the negative part, it can be hereby be mentioned that a participative budget might take longer period to organize and this might lead to certain regional in-fighting at the time when compared with a specific one that is necessarily imposed from diverse corporate headquarters. In addition to this, participative budgets might also probably have certain padding or else slack, since the Dallas managers encounter an aging facility. Essentially, this facility might be unproductive and, together with their involvement, managers might bend the overall numbers in order to enhance the entire appearance. Therefore, it can be hereby mentioned that this process involves limited participation of various marginalised. As rightly suggested by Bodie (2013), the non-participative budgeting can subsequently increase the overall costs and deteriorate quality. The opinion necessarily comes from different individuals and who are component of the procedures essentially at the lowest or else at the implementation level. Again, in case of non-participative budgeting there is also a greater requirement of supervision and greater stress on widening of competence as well as self management. Moreover, non-participative budgeting however might lead to overall decline in productivity that refers to the fact that there is lack of intense feeling of association. Essentially, the members of the staff cannot accept responsibility and undertake charge. Therefore, there becomes greater requirement, delegation along with supervision from diverse managers (Otley & Emmanuel, 2013).

Conclusion

Budgets can be considered to be necessary management tools that can be utilized for undertaking the activity. Fundamentally, the benefits of using budgets use can again be maximized by utilizing a participatory budgeting procedure. However, this participatory budgetary system is also said to certain disadvantages. As mentioned in the study above, Participatory budgeting calls for the need of a methodical and comprehensive bi-directional process of communication, commitment, mutual trust, effort as well as time and entails cost for the business concern. Again, subordinates also need to be competent and possess pertinent information and need to presume more accountability. Moreover, superiors also need to give in total control and permit members of the staff in order to get engaged and exert impact on the procedure of decision making. Even though participatory budgeting is not uncomplicated to execute and it can be observed that advantages of participative budgeting outweigh all kinds of disadvantages. Additionally, adoption of participatory budgeting procedures by Dallas managers can enhance the overall performance of diverse subordinate along with the entire performance of the business entity. Nevertheless, this reflects that there exists no reassurance that individuals need to plainly budgeting adopt it for the particular corporation. Corporations are different and thus the culture that is the human resources. Essentially, a deep understanding or comprehension of both is necessary in a bid to establish a specific style of decision making and assume the same.

References

Almén, O. (2017). Participatory Innovations Under Authoritarianism: Accountability and Responsiveness in Hangzhou’s Social Assessment of Government Performance. Journal of Contemporary China, 1-15.

Bodie, Z. (2013). Investments. McGraw-Hill.

Bromwich, M., & Scapens, R. W. (2016). Management accounting research: 25 years on. Management Accounting Research, 31, 1-9.

Dekker, H. C. (2016). On the boundaries between intrafirm and interfirm management accounting research. Management Accounting Research, 31, 86-99.

Fullerton, R. R., Kennedy, F. A., & Widener, S. K. (2013). Management accounting and control practices in a lean manufacturing environment. Accounting, Organizations and Society, 38(1), 50-71.

Fullerton, R. R., Kennedy, F. A., & Widener, S. K. (2014). Lean manufacturing and firm performance: The incremental contribution of lean management accounting practices. Journal of Operations Management, 32(7), 414-428.

Granlund, M., & Lukka, K. (2017). Investigating highly established research paradigms: Reviving contextuality in contingency theory based management accounting research. Critical Perspectives on Accounting, 45, 63-80.

Hashim, A. W., Hanafi, I., Fitrianto, A., & Darwish, H. (2014). Roles of Budgetary Participation on Leader’s Performance: A Study Case in Ternate. Asian Social Science, 10(12), 35.

Im, T., Lee, H., Cho, W., & Campbell, J. W. (2014). Citizen Preference and Resource Allocation: The Case for Participatory Budgeting in Seoul. Local Government Studies, 40(1), 102-120.

Nielsen, L. B., Mitchell, F., & Nørreklit, H. (2015, March). Management accounting and decision making: Two case studies of outsourcing. In Accounting Forum (Vol. 39, No. 1, pp. 64-82). Elsevier.

Otley, D., & Emmanuel, K. M. C. (2013). Readings in accounting for management control. Springer.

PB Network. (2017). Orchard projects in Leeds are thriving through Participatory Budgeting. [online] Available at: https://pbnetwork.org.uk/orchards-projects-in-leeds-are-thriving-through-participatory-budgeting/ [Accessed 15 Nov. 2017].

PB Network. (2017). Participatory Budgeting in Urgent Care: A case study from MutualGain. [online] Available at: https://pbnetwork.org.uk/participatory-budgeting-in-urgent-care-a-case-study-from-mutualgain/ [Accessed 15 Nov. 2017].

PB Network. (2017). Participatory funding radical grassroots groups through the Edge Fund. [online] Available at: https://pbnetwork.org.uk/participatory-funding-radical-grassroots-groups-through-the-edge-fund/ [Accessed 15 Nov. 2017].

Tappura, S., Sievänen, M., Heikkilä, J., Jussila, A., & Nenonen, N. (2015). A management accounting perspective on safety. Safety science, 71, 151-159.

Van der Stede, W. A. (2016). Management accounting in context: Industry, regulation and informatics. Management Accounting Research, 31, 100-102.