“Strategy, plans, and budgets are unrelated to one another.” Do you agree? Explain. Explain how the manager’s choice of the type of responsibility center (cost, revenue, profit, or investment) affects the behavior of other employees.
Business plans, strategies, and budgets are essential elements of organizational success. The three elements are used concurrently and effectively to serve the purpose of the organization. Therefore, the statement that strategies, plans, and budgets are unrelated is disagreeable. This paper intends to explain the reason for disagreeing with the statement. The paper further explains how the manager’s choice of the type of responsibility center affects the behavior of employees.
Lee (2016) noted that a strategy is a plan of action taken by the managers of a company in order to attain a definite goal while a plan is a detailed proposal of what the organization managers are going to do in order to achieve the desired goals. A budget is an estimation of incomes and expenditures of a given period. Thus, organizational goals are achieved by proposing to do an activity inform of a business plan. Then actions to initiate the activity (strategizing) follow taking into consideration the costs and benefits of the plan (budgeting). Thus, the three elements are systematically linked to each other.
Weygandt et al. (2015) identified a responsibility center as an identifiable division within the organization for which managers have authority and accountability. Employee behavior refers to how employees respond to situations in the workplace (Wilderom 2015). If a manager chooses a center dedicated to the organizational goals with accountability, the employees feel motivated.
Also, choosing a technologically equipped center impacts employees positively. Employees respond positively to situations that are stress-free such as technology that enhances accuracy, time saving and speed. Additionally, a center that engages and motivates employees also impacts them positively. Usually, employees positively respond to a center that considers performance appraisals, salary increments, and provide a safe working environment.
Conclusively, business plans, strategies, and budgets are linked to each other and omission of one is detrimental to organizational success. Also, employees should be involved in the formulation of tactical goals as they significantly impact success. Employees implement business plans and play significant roles in strategy as well as budget formulation. Thus, management’s failure to position them in the appropriate responsibility centers affects their behavior.
Lee, W. (2016). Budget and financial management. In Understanding Korean Public Administration (pp. 118-137). Routledge.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & managerial accounting. John Wiley & Sons.
Wilderom, C. P., Hur, Y., Wiersma, U. J., den Berg, P. T. V., & Lee, J. (2015). From the manager's emotional intelligence to objective store performance: Through store cohesiveness and sales‐directed employee behavior. Journal of organizational behavior, 36(6), 825-844.
by EssayRoyal, Nov. 10, 2019, 1:09 p.m.