Uncontrollable items may make management change their behaviour. Benefits from doing so include the likely improvement of long term profitability, or performance. Participative Budgeting Occurs where budgets are set after input from subordinate managers, instead of merely being imposed. This method communicates responsibility to subordinate managers and places some form of personal ownership of the final budget. The tightness of standards affects motivation and performance.
Loose goals are too easy to achieve.
Tight goals may be unachievable and frustrating. Results in reduced risk of non-achievement and therefore lower performance. Behavioural benefits of participation are lost under such circumstances. Units attempt to spend all allocations so that they can justify increases in budget allocations for the following period. ZBB does not take for granted the prior year s budget figure.