Sometimes uncontrollable items may be placed within a particular manager's responsibility. Uncontrollable items may make management change their behaviour. Participative Budgeting Budgets are set after input from subordinate managers, instead of merely being imposed. 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. Sub-units attempt to spend all allocations so that they can justify increases in budget allocations for the following period. Benefits of this approach may include a better allocation of resources.