Poor Communication

Where a Theory X style of management exists, negative attitudes may be generated against organizational goals which may lead to faked budget results and the unwillingness to transmit information. Managers will feel that their own survival justifies these tactics.

The prevalence of negative behaviour in an organization which practices management by domination may be aggravated by the response of top management, when it is realized that information which is needed for decision making is not transmitted. Their immediate reaction may be to impose even tighter controls, which will reinforce the negative attitudes held by subordinate managers leading to the transmission of even less accurate and useful information. The progressive tightening of the managerial reins may well result, therefore, in a progressive deterioration of the information flow.

The communication of information is of central importance to the processes of planning and control, as it provides the link between various levels of management and the various decision points. Any reluctance on the part of subordinate managers to communicate information is a serious impediment to the efficiency with which planning and control decisions are made. It is not a sufficient condition for success that an organization should have accounting control systems and that it should have stipulated standards of performance. These control methods will not operate successfully and standards of performance will not be attained if the style of management adopted fails to secure a high degree of motivation and goal congruence within the organization.

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Read on: The Effects of Budgets On People

The effects of budgets on people

Research suggests that there is a great deal of mistrust of the entire budgetary process at the supervisory level (Argyris, 2015). There is a tendency for traditional budgets to provide the following responses.

Reactions to pressure

The evaluation of a manager's performance in terms of his departmental budget is one of the few elements in performance appraisal which is based on concrete standards. There is little room for manipulation or escape if results are not going to turn out as expected in the budget. If budget pressure becomes... see: The Effects of Budgets On People