1. Budgeting procedure:
(a) Current budgeting procedure:
Puzzles is currently using incremental budgeting, a budgeting method whereby this year’s budget is produced by taking last year’s budget as a starting point and adjusting for changes in product mix, volumes and prices that might occur in the new period:
The company might have been using incremental budgeting up to now because:
- it has been having stable clientele
- it has been working with a fixed supplier
- it has only been using two materials: wood and leather
It seems that the company might not have experienced many changing circumstances and therefore, a budgeting method that produces a stable, simple, and easily understandable budget might have been appropriate.
However, this procedure might not be appropriate anymore for Puzzles for the following reasons:
- incremental budgeting relies on a base that is rooted in the past and possible inefficiencies may be perpetuated
- the budget base might become outdated and might not be related to the current activities being carried out by Puzzles, e.g. the industry might have changed from 1990 to 2003
- since it assumes that business practices will stay the same, there is no incentive to increase efficiency by reducing costs and increasing quality
(b) Implications for long-term contract with US chain:
Because it is the first time that Puzzles will be working with the US chain, past budget allowances will be not representative of the forthcoming period. Thus, the following budgeting implications should be considered:
Contract size: providing furniture for 20-50 pubs will have an impact on the expenditure target and production capacity.
Resources needed: the materials required by the US chain might be other than wood ...
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...efits are not achieved overnight as it requires a change of company culture.
5. Motivational issues:
All employees at Puzzles should receive a reward when they achieve monthly targets, not only sales representatives. Budgets other than the sales budget are important and therefore all employees should be motivated to achieve those. There should be equity and perceived equity.
Furthermore, Puzzles should allow employees to participate in the setting of their own targets. The benefits of doing so are:
- increased employee motivation as they feel more committed to targets
- specialist knowledge contribution as only employees have the special knowledge needed to set targets
- increased employee knowledge about company’s needs and objectives
Finally, bonuses should not be the only type of reward as we are all different individuals with different needs and drives.
The overall objective of the budget is to create a “leaner, meaner and more efficient” economy, and...
For government budgeting to be effective, the process that guides it must be an evolving one. As the government gets bigger, it will most likely destabilize the existing method. Therefore, it must change to keep pace with the demands and growth of the country. The process must be capable of handling the complexity of our nation and its multifaceted needs so it will always need revisions and restructuring to face these new challenges. Its ultimate goal must be to reinforce the government and strengthen the country.
Having incentives for meeting goals can encourage and motivate staff to meet necessary
A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.
In addition to feedback, goals have been found to be more effective when they are tied to employee evaluations. The results of employee evaluations typically carry great weight when it comes to raises, bonuses, and potential advancement. Tying these types of rewards to successful goal completion also improves performance and increases goal commitment among employees (House, 1971). Incorporating deadlines to specific goals is also attributed to elevated performance levels. The motivation levels of the employee increase to meet goals within set deadlines and receive positive feedback (Lunenburg, 2011). As organizations focus on employee satisfaction and motivation, goal setting will remain an important aspect of management practices. In today’s economy, organizations are competing for top talent and ensuring employee satisfaction among job tasks is an important piece of talent retention.
"A simple thing such as giving a employee a little reward for outstanding performance for a month or a year could help motivate other employees to want to do better so that they could have the chance to be recognized for their outstanding work.
Participative budgeting has the advantage of transferring information from the subordinate to their superior This knowledge is likely to be more reliable and accurate as the subordinate has direct contact with the activity and therefore is in the best position to make budget estimates. Participative Budgeting also gives subordinates the opportunity to discuss organisational issues with superiors, in which an exchange of information and ideas can help to solve problems and agree future actions (Nouri & Parker 1998). This transferral of information is important particularly when dealing with a matter of high task difficulty as, the more difficult a task, the greater the need for consultation with subordinates. Participative budgeting has a higher performance rate when dealing with more difficult and more volatile tasks than non consultative budgeting (Lau & Tan 1998)
Quantitative plans are called budgets. Budgets are prepared to impose cost controls on the activities of an organization (Chenhall, 1986).Budgets are then used to evaluate the performance of the management and budget itself is considered as a standard to evaluate the performance Solomon, 1956). The purpose of the budget is also to implement the strategy of the organization and communicate it to the employees of the organization Rickards (2006). The change in the external environment has led to the change in the budgeting approaches from the initial cash based budgets to the zerio based budgets (Bovaird, 2007).
Incentive reward engagement offers a win-win situation for the employees and the company. Kelleher believes that incentive is a form of recognition and builds engagement through company’s and employee’s obligations towards a common goal (2014). The company has a “Growth Incentive Scheme” for the production workers. Special monetary incentives are provided should the workers achieve the monthly output target. Through the rewards, employees feel motivated towards their work and thus, contribute towards the company’s
Line item budgeting categorizes various expenses and places them in list format on a document for budgetary purposes. This type of budgeting is considered the heartbeat of budgeting due to the systematic method by which it controls revenue and expenses, this is made evident when Tyer and Willand (1992), pointed out “Statutory or administrative controls could be imposed on the transfer of funds from one-line item to another, or between broad categories of expenditure.” According to Schick (1971), “line item budgets were attractive to legislative officials because they did not focus explicit attention on substantive policy issues or choices.”
...nk in the world, there have not get any fantastic motivation and reward system. Each system has advantages and drawbacks, how to develop the advantages and avoid the drawbacks is the important situation to every company.
Effective reward management, as a system, is the most powerful tool available to reinforce organizational values and translate them into employee actions (read behavior). Here, the ‘organization’ does not only refer to a business structure, but any institution (or activity) that involves people working together, and requires their voluntary contributions in order to operate successfully. Whether it is a school, a hospital, an NGO, a government agency, a political party, or a religious foundation, all require a matrix through which the performance of its individual members can be measured, and rewarded. Although, each organization may have its own manner, and means, of achieving this objective; their practices may differ but the general principles largely remain the same.
Being rewarded and recognised for their work or contribution is what keeps an employee motivated to work towards achieving the organisational as well as personal goals. When the employees is motivated by rewards, they will have job satisfaction consequently increasing the productivity of the organisation. It necessitates the need of managers to pay more attention in understanding their employees and come up with suitable types of reward systems for the organisation so that the employees are intrinsically and extrinsically motivated all the time. The hypotheses that I put forward here is to support this statement that effective reward management is critical to organisational performance as it helps in enhancing operational efficacy and in turn production output.
The reward must be chosen in such a way that it suits your budget and is given keeping in mind the needs and interests of your employees.
Therefore, attractive total rewards make happy employees and ultimately works towards the success of the company.