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

Vantor Ltd uses participative budgeting. Senior management is concerned that participation might be only 'pseudo-participation', where managers' input is invited but ignored. What is the most likely consequence?

The likely consequence is reduced motivation and cynicism. When managers' input is invited but ignored, they see no real influence over the budget, so the commitment and ownership benefits of genuine participation are lost.

  1. AGreater commitment because managers feel consulted
  2. BReduced motivation and cynicism, since managers see no real influence over the budgetCorrect
  3. CImproved information sharing between departments
  4. DElimination of budgetary slack

Explanation

Pseudo-participation creates the appearance of involvement without real influence. Managers then feel manipulated, so commitment falls and cynicism grows. The benefits of true participation, such as ownership and better information, are not achieved.

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