Aswath (2002) defines a budget as the listing of all planned expenses and revenues. This is the blueprint of the savings and spending that a particular organization shall be operating within the confines of it. The stated limits should not be extended and strictness is what calls for success in the implementation of the budgetary limits. A budget line is used to illustrate the organizational tradeoffs between the products that may be two or more (Aswath, 2002).
Budgets are organizational plans that are stated in the money terms to ensure that they are implemented with the sole target of making it reasonable in the operational concerns. It is done more so for the provision of revenues and expenditure forecasts which involves a creation of how the organization shall be doing financially in regard to the implementations of particular strategies and plans as well as events. Secondary the budget should be able to facilitate the real financial operation of the organization to be counter-checked against the predictions but this does not give it the strength needed to control the organization alone. This is because the control perspective should be outlined in the whole issue as it is the sole goal of ensuring all that has been targeted is achievable.
Lionel. et al. (2003) found that planning on the other hand refers to the entity process that does involves the creation and maintaining of a particular plan as well as the psychological process of cracking the head regarding the activities that are desirable to attain a goal. This process is paramount for the integration of the process with the others for a smooth flow of operations. Planning control is essential in that it does assist the organizational heads to avoid mistakes that are rampart in a management setting and it also assists the recognition of opportunities of growth that are hidden. Future forecasting is also enabled by the planning bit of the organizational aims but it is not solely dependable on the entity controls.
Despite having the budgetary and planning control perspective the two are not efficient methods that can be used in the running of the organization. This is due to the limitations that are attached to the budgeting and planning targets as compared to the overall organization goals. (Benninga, 2008).
For instance the budgeting assists in planning but the kind that the organization’s team cannot rely on it at the expense of other control measures. Despite being able to plan on when and how to produce goods and services, it also requires one to use other control measures that facilitates positioning and making sure that all is available when it is actually needed. It can be seen that the budgeting does assist in setting up the production process but it is not fully relative to the overall organizational control.
According to Jerrond (2003), a budget does communicate as well as coordinate all the management concerns and heads. This is only possible where the managers and other workers are brought together to work as one and eyeing the same goals and objectives. When being formulated the budget requires all the likely problems be given a viable solution and any confusions clarified. This enables all the departments to be aware of all the aims and objectives, the likely hindrances and the opportunities that are open at ensuring that targets are achievable. Despite the communication bit and coordination that is brought about by the budgeting role in an organization, there are other roles that do play very vital duties too. Thus it is not possible for the organization to be controlled through budgeting and planning aspects only.
From Tere (2003) the budgeting advantages should be more than the costs that are associated with it. This means that, the management of the organization does not only need the budget to be able to run smoothly but it also needs to a decision making part where the resources needed are counter checked against the likely merits and a decision made in regard to the viability of getting involved. In whatever circumstances, the budget should ensure that the mutual benefits that are linked to it are reasonable and ready at offering other roles the chance to complete good management of the organizations.
A budget may lead to the de-motivation of the workforce that is on board (Tere, 2003).This is because the employee perception is not agreeing with the set budget and they do feel like they are left out of it. More so, the employees do eye the budget as an encouragement to achieve more or as a punishment in cases where the targets are not attained. In such an instance, it requires technical as well as psychological skills to clarify to the workers that all they need to do it to do their best hence realization of more in returns. Evidently if one just had to outlay the budget and then let the workers get to work the likeliness of people working on different platforms is very high.
Thus for an organization to run efficiently, it needs more than proper planning of the defined goals and objectives. Stella (2010) says this is because to achieve the goals that the organization needs after planning is not possible if it is not well coordinated and organized. Due to this, it is well outlined that the planning bit and budgeting only are not efficient enough to control the organization. It requires more than that to control an organization no matter what the size could be.
Planning for instance is leverage time and it is perceived at least twenty minutes of planning per day is sufficient enough to lead to improved sales after a higher production. It involves perusing through the outcomes because it is believed that such a thing would hike the likeliness of achieving these goals. Nevertheless, does it take only planning and budgeting for an organization to able to expand its businesses and realize an increase in returns? No, it needs to have good work force that is efficient and able to team up for the betterment of the organizational targets achieving efforts too. This means that for better control, training and development of the workers should also be brought in.
Though planning is a base for proper making of decisions by the establishment of a framework on the to do list, these objectives need to be well financed and coordinated for the realization of the aims. An effective control of an organization requires all other roles span from the junior staff to the supervisors and Heads of department s be brought together for the sole purpose of ensuring opinions and contributions do augur well with the overall goals and objectives.
Roy (2009) says that Crisis management is also part of a better organization control and a failure to consider it well and effectively does lead to undesirable results and outcomes. Despite having a better budget of the things to do and achieve within a certain period of time and proper planning, other skills such as supervision and implementation also needs to be part and parcel of it all. It requires so much of management roles for one to be able to run a business and control it in an effective way as opposed to defending budgeting and planning as sole methods of efficiency in organization control.
Control of the organization needs the leadership skills as well as the figurehead part of it and liaison. If any one does exclude any of the above from the overall organizational controls, the chances of failure and not making it through are very high. A good leader does offer time and resources impartially to all the parties with the aim of making each of the workers to belong to the entity’s objectives. To plan and budget are some of the roles that are within the wider scope of roles that are under a leaders docket and unless all these roles which spans from decision making to delegated responsibilities are well balanced and worked on, then the control bit in an organization shall be crooked.
As a figurehead the top manager should ensure that he does facilitate the running of the roles and duties and not only concentrating on budgeting and planning part at the expense of other control responsibilities effectively. Failure to reach a balance when implementing the aims set out through planning and good utilization of the resources that are available through the budget does not result to desirable results hence making budgeting and planning inefficient for being used as a control measure in an organization without the support of the other variables such as cost accounting.
Decisional roles that are necessary in an organization do revolve around the entrepreneurial roles and the negotiations skills as well as resource allocations and handling of any disturbances. Seeking opportunities and being there for negotiations when the organization needs you in addition to being responsible for corrective actions during times of troubles are the most major roles that are necessary for the proper controlling of an organization. Control does not need budgeting and planning more than reflection and action where the manager has to engage him or herself with thoughtful thinking and action. Instead budgeting and planning needs thoughtful thinking before they are drawn and implemented (Moore, 2010).This means that the control of an entity requires more than the two variables.
Planning and budgeting do assist in the elimination of bad habits and the fear of having to fail because if one strictly adheres to the plans that are outlined, bad habits such as surfing social sites while at work are eliminated slowly and fear of failure is too diminished. Yes, priorities too will be set through planning and budgeting so that the most important tasks can be dealt with before the least impacting ones, but the two variables are not bold enough to be able to rule the organization.
According to Erica (2006),facilitation of objectives achievement and the assessment of how and what progress is made, loss and risk mitigation, making of upright decisions, division of jobs, opportunities and threats determination are also variables that count to better organizational manning and control. The exclusion of any other control variables and the support of budgeting and planning as the sole variables that are the rulers of business control is flawed and unrealistic. An incorporation of them all makes it easy to run and manage an establishment with much ease.
David (1999) argues that, an organization that is able to keep everything under its control uses budget as a guide in the financial matters, relays on it to be able to meet the demands in investments and more so seeks its contribution in handling of unexpected emergencies that needs financing. It too has the opportunity of enjoying a free debt life only if well planned, organized, and coordinated with proper recruitment of the members of staff. This matrix does enable smooth running of a venture and not a subsection of planning and budgeting. No matter how realistic the budgets and plans are, if the other variables are not brought into book there will be no realization of proper control.
In summary budgeting and planning are very vital aspects of the organization running and management but they are not strong enough for any firm to control the organization’s operations. Control needs a combination of various variables that are paramount to the business world and better management of an organization.
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