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Chapter 13

Behavioural aspects of budgeting

It is often accepted that participation in the budget setting process will
improve motivation, which in turn will improve the quality of budget
decisions and the efforts of individuals to achieve their budget targets.

3.1 Motivation

Motivation is the drive or urge to achieve an end result. An individual is motivated if
they are moving forward to achieving goals or objectives.

There is evidence which suggests that management accounting planning and control
systems can have a significant effect on manager and employee motivation.

These include:

 the level at which budgets and performance targets are set

 manager and employee reward systems

 the extent to which employees participate in the budget setting process

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