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Budgeting Question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Budgeting Question

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.
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  • October 14, 2015 at 1:00 pm #276305
    vapiano91
    Member
    • Topics: 26
    • Replies: 55
    • ☆☆

    In the BPP textbook there is a question:

    Setting low standards as targets for achievement should motivate employees because they should usually achieve or exceed the target. True/False?

    The answer is false.
    But i think the answer should either be insufficient information or True. Because if the incentives/ compensation plan is based on achieving that particular target and if the employees are relatively new, they will most certainly find it motivating to achieve a simple target- both to show their performance better and to earn a linear compensation. And if they are seasoned they will still take an easy target as a motive for earning easy bonus.
    Either ways it can motivate them to create slack resources where they purposely undermine the target to show better results or ‘take the bath’ to start afresh in the next budgeting cycle.

    Please help 🙂

    Regards

    October 14, 2015 at 6:31 pm #276333
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54733
    • ☆☆☆☆☆

    If employees are measured on whether they meet or exceed targets, then the idea is to motivate them to improve. If the target is too low and they can achieve the target easily, then they will not be motivated to work harder (which is what the business wants).

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