- Budgets are developed round existing organizational structures and departments which may be inappropriate for current conditions and may not reflect the underlying economic realities.
- They may introduce rigidity and hamper creativity in the organization
- The budgetary system, perhaps because of undue pressure or poor human relations, may cause antagonism and decrease motivation.
- There may be too much reliance on the technique as a substitute for good management.
- Problems of setting the levels of attainment to be included in budgets.
- There are inherent lags and delays in the system. Budgets and resulting variances may be of little value in guiding current operations if there are delays in getting feedback.
- Managers may base future plans on past results instead of looking at alternatives options of achieving the objectives.
- Managers may put in only just enough effort to achieve budget targets without trying to beat the targets.
(Visited 50 times, 2 visits today)
Share this:
