Participative budgeting

Participative budgeting is a strategy that involves the participation of a broader range of employees in a company in creating a workable budget for departments and the company as a whole. It involves participation from lower-level employees, making them feel part of the decision-making process of the company. Participative budgeting may benefit the company because lower-level managers are most likely to make the proper estimates because they know what is going on in the field. I believe it is wise to use participatory budgeting and involving multiple employees at multiple levels.

This is because participatory budgeting increases the motivation of employees because they are involved in the budgeting processes hence making them feel valued. Involving employees in the decision-making process makes them feel valued and their opinion considered in the company. Participatory budgeting makes employees feel appreciated by top management sharing their point of view, helping to make informed decisions. When employees feel valued, their motivation to do their work increases, which increases the company’s productivity. Another advantage of using participatory budgeting in a company is sharing information upwards. Top management can get information from the department managers helping the top management to make informed decisions.

This also helps a company identify problems they may face in formulating budgets, their mistakes, and ways to solve the obstacles they encounter. It also enables the top and department level management to share ideas because they have a different perspective on things helping to make informed budgeting decisions. Another advantage of using participatory budgeting is goal convergence of both employee and company goals. Participatory budgeting allows a company to create a budget by combining employee goals with the company’s plans to develop an achievable budget. This ensures that all the company employees and management are on the same page to achieve their goal to increase productivity.