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

Kestrel Logistics invites its depot managers to budget meetings, but senior management has already fixed the figures and uses the meetings only to explain them. Managers realise their comments are never reflected in the final budget. Which statement best describes the likely outcome?

This is pseudo-participation. Managers attend meetings but cannot influence fixed figures, so they become cynical and less committed, possibly worse than with an openly imposed budget. Slack needs real influence over targets, which is absent, and attending meetings alone is not genuine participation.

  1. APseudo-participation, which is likely to breed cynicism and reduce commitment to the budgetCorrect
  2. BGenuine participation, which will raise commitment because meetings were held
  3. CBudgetary slack, because managers will have set easy targets
  4. DIncremental budgeting, because prior-year figures are used

Explanation

Involvement in form but not in substance is pseudo-participation. Managers who see their input ignored feel manipulated, so motivation can fall below that of an openly imposed budget. Slack requires managers to influence targets, which they cannot do here.

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