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ACCA Strategic Professional · Advanced Performance Management · Budgetary planning and control

Brandt Plc is considering how difficult to make budget targets. Research on motivation suggests which targets are most likely to maximise performance?

Challenging but achievable targets that managers accept tend to maximise performance. Easy targets give no stimulus, while targets viewed as impossible demotivate managers and encourage gaming or disengagement.

  1. AEasily attainable targets that guarantee managers meet budget
  2. BTargets that are challenging but accepted by managers as achievableCorrect
  3. CHighly stretching targets that managers regard as almost impossible
  4. DNo targets, with managers judged only on prior-year results

Explanation

Evidence from goal-setting and expectancy approaches shows performance is highest when targets are demanding yet seen as attainable. Easy targets give no incentive to improve. Targets seen as impossible cause demotivation and may encourage gaming or withdrawal.

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