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IMPACT OF BUDGETING AND BUDGETS ON MOTIVATION AND PRODUCTIVITY OF BANK EMPLOYEES A STUDY OF SELECTED BANKS IN AKWA IBOM STATE
1.1 Background to the Study
No conscious firm exists without a mission and consequent goals and objectives. But without a budget, a business (for example, a bank) may wander aimlessly. It may not know where it is going or where it should go. This implies that the purpose of every budget is to facilitate the accomplishment of enterprise objectives. Thus, a budget is defined as a plan quantified in monetary items, prepared and approved prior to a defined period of time, usually showing planned income to be generated and/or expenditure to be incurred during the period and the capital to be employed to attain a given objective (Lucey, 2012).
The act of preparing a budget is called budgeting (Garrison, 2011). Well organized and thought out budgetary system can bring positive and significant benefits which include planning, co-ordinating activities, implementing plans, communicating, authorizing actions, motivating, controlling and evaluating performance (Horngren and Foster, 2013). But these benefits do not automatically arise from the budgeting process and budgets; they have to be worked for (Lucey, 2008).
Two value systems are identified with the motivating function of budgeting. These are presented in two sets of organizational behaviour namely:
(a) Traditional views of organisational behaviour founded on traditional behavioural assumptions and
(b) Modern views of organisational behaviour based on modern behavioural assumptions. Invariably, traditional views are based on traditional theories whereas modern views are associated with the modern theories of human motivation (Louderback and Hirsch, 2007).
A close look at all the theories of human motivation reveals a common driving principle. Thus, motivation is the desire for a selected goal combined with the resulting drive or pursuit toward that goal (Horngren and Foster, 2013). People do what they are rewarded for doing (Cascio, 2003). McGregor has argued that the traditional theories of management focus almost exclusively on lower-level needs. People are expected to satisfy their higher-level needs away from work. It is a little wonder, he comments, that managers complain that they pay their workers well and provide good job security, but suffer poor productivity (Louderback and Hirsch, 2007).
Generally, modern motivational theories are in support of the fact that participatory management improves productivity (Cascio, 2002). Such theories that speak to the budgeting question are “Need Hierarchy Theory” and “Expectancy Theory” (Louderback and Hirsch, 2007). Indeed there is a widespread belief and belief is the appropriate term that the participation of subordinates in setting their budgets is a panacea: a cure for all the many ills which have been associated with traditional system (Hopwood, 1996). Participatory budgeting has been found to be a motivating factor (Lucey, 2012). Thus, the true success of budgeting process and budgets depend on their acceptance by all company (bank) members affected by the budget.
Based on the above facts, two distinctive budgets are identified:
(a) Autocratic budgets founded on the traditional assumptions (or theories).
(b) Participatory budgets based on modern behavioural assumptions (or theories) (Horngren and Foster, 2013).
Whichever approach is used, budgeting and budgets influence the morale, motivation and productivity of all employees regardless of the position. This is because budgeting is a much wider term than mere technique and procedure (Hopwood, 1996).
The economic depression and inflation trend in our country; the falling standard of employees’ morale, motivation and productivity and the corruption trend in the society have raised concern.
In consideration of the above background and most specifically, the menace of failed banks in the late 20th and early 21st century, the falling standard of employees’ morale, motivation and productivity in Nigerian banks, the rate of corruption in the society and the inflation trend in the country, the researcher reached a decision to study the impact of Budgeting and Budgets on Motivation and Productivity of Bank Employees. Some banks in Akwa Ibom State were selected for the study.
1.2 Statement of the Problem
Poor system of budgeting and resulting budgets cause reduced morale, demotivation and low productivity. Authoritative (unilaterally prepared) budget raises anxiety. It is closed and secret and thus, will encourage employee dissatisfaction on the job because the goals and aspirations of employees are not considered in the budget. In a firm with poor budgeting system, individual goals are not in line with those of the organisation.
Repressive nature of autocratic (authoritative) budget causes the employees to believe that the budget maker is thinking very low of him. Morale is dampened and the pressure from budget creates conditions negative to motivation and organizational goal achievement.
Nigerian banks in the twenty first (21st) century are characterized by organizational conflicts, departmental strifes, frequent quarrels among employees, fraud, resentment, mistrust and other dysfunctional attitudes which are detrimental to productivity and overall goal achievement.
1.3 Purpose of the Study
The main purpose of this study is to examine the influence of budgeting and budgets on motivation and productivity of bank employees. The specific objectives include:
(a) To find out if the selected banks in Akwa Ibom State operate budgetary system.
(b) To examine the extent of employees participation in budget preparation.
(c) To find out if budgeting and budget influence morale and enhance motivation and productivity of employees in banks.
(d) To make recommendations on how budgeting and budget can be used to boost motivation and productivity in banks.
1.4 Research Hypotheses
With regards to the objectives of this study, the following hypotheses are formulated:
Ho1: Participatory budgetary system does not boost employees’ morale.
Ho2: Participatory budgeting and budgets do not motivate employees.
Ho3: Participatory budgets, relative to morale and motivation, do not improve productivity.
1.5 Significance of the Study
This research will assist banks in the manner which their budgets may be prepared to raise employees’ morale, motivation and productivity. It will reduce anxiety and promote budget acceptance. It will help to minimize alienation of the workers within the banks and assist in ultimate goal achievement. The research findings and recommendations will be useful to the banking industry in Akwa Ibom State and Nigeria in general. This study will serve as an important source of information or reference material to other category of students who may wish to conduct research in related fields.