Drawbacks of Budgeting
I boldly agree that budgeting is an unnecessary burden for managers. Budgeting is a systematic process by which an individual or an outfit devices and manages a financial blueprint (Wiseman 2010). In most organizations the process is undertaken by managers who are furnished by projected expenditures about their businesses. Wiseman (2010) argues that budgeting process ends up becoming a drawback to managers and the business as huge chunks of employee’s time is devoted to creating budgets. This comes with real opportunity cost. Most employees’ ends up being cooped up in the budget making process becoming unavailable to complete other productive responsibilities. Also budgeting is an inroad to conflict and causes adversarial relationships among employees. Hard choices surface on where limited finances are spent. Some responsibility centres may feel constrained by amount of money allocated. Notably, budgeting process entails predictions about future. It is practically not possible to accurately predict the future hence error and inaccuracies show up.
A seasoned manager may try to bring in budgetary slack which entails lessening revenue predictions and augmenting expense estimates. Budgeting gives rise to wastage as managers embrace the view that’ we had better spend our finances or we lose’’. This may give rise to unnecessary spending and ultimately wastage. Also, budgeting gives rise to blame game for outcomes. Failure to realize budgeted results may end up making the manager of the department in question to blame colleague departments for not having adequately supported the department. Budgeting is primarily concerned with apportionment of finances and overlooks on other subjective issues such as quality of products and services being availed to clients.
It is therefore my conclusion the drawbacks of budgeting outshines any merits and therefore I find it unnecessary.
Wiseman, B. (2010). Budgeting. New York, NY: Weigl Publishers.