CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
In majority of organization in Nigeria, budgeting
is the most important management tool for performance and productivity and for
organizations to perform well, resources must be well utilized and customers
well served. To achieve such ends, all of an organization’s human and materials resources
must be well utilized in the right way and the right time to create high
quality products at minimal cost (Nash, 2008). Formally defined, productivity
is a summary measure of the quantity and quality of work performance, with
resources utilization taken into account. It can be measured at the individual,
group, or organizations level. Productivity may be expressed as success into
dimensions of staff performance, effectiveness and efficiency. Organization has
been collective in order to achieve group or individual objectives. They serve
as the means by which goods and services are provided beyond the boundaries of
an individual or small group’s capacity of self-sufficiency. Such provision,
also acknowledged, may be made for profit through some other more controlled
framework of commercial or social provision (Dawson 1996). However, Budgeting
on the other hand, is regarded as the most basic of all the management
functions. It involves the selecting from among alternative future course of
action for the organization as a whole and every department or section within
it. Furthermore, it requires selecting organizational objectives and
departmental goals, determines and provides a rational approach to pre-selected
objectives. It strongly implies managerial innovation and the ability to create
something (koontz 1980).
A
budget is a quantitative
expression of a plan for a defined period of time. It may include planned sales
volumes and revenues, resource quantities, costs and expenses, assets,
liabilities and cash flows. It expresses strategic plans of business units,
organizations, activities or events in measurable terms.
Budget helps to aid
the planning of actual operations by forcing managers to consider how the
conditions might change and what steps should be taken now and by encouraging
managers to consider problems before they arise. It also helps co-ordinate the
activities of the organization by compelling managers to examine relationships
between their own operation and those of other departments (Wikipedia, 2015).
The budget of a
company is often compiled annually, but may not be a finished budget, usually
requiring considerable effort, is a plan for the short-term future, typically
allows hundreds or even thousands of people in various departments (operations,
human resources, IT, etc.) to list their expected revenues and expenses in the
final budget.
If the actual figures
delivered through the budget period come close to the budget, this suggests
that the managers understand their business and have been successfully driving
it in the intended direction. On the other hand, if the figures diverge wildly
from the budget, this sends an 'out of control' signal, and the share price
could suffer.
The problem which underscores the need to undertake
this study is aptly described by Koontz et al (1980) with all the interest in budgeting
and all the sense of urgency brought about by modern super competition, is the
danger that budgeting can become merely a costly fad, not very useful and even
disillusioning. The implication of the above assertion is that not all
organization that have a good budget eventually reaps the desired benefits.
Schermerhorn (1986) adds that most budgeting
failures arise from their inability of managers to truly understand the budget
and to implement it well. Problems have been identified in the budgeting
process. For instance, insetting objectives, organizations find it difficult to
involve employees, shareholders, customers etc. closely related to this is the
issue associated with the likely environment different variables and events.
1.2 STATEMENT OF THE PROBLEM
Budgeting
underlines predicting and quantifying the future in financial terms and
predicting the future needs for finance including the staff’s financial
remuneration. Therefore, budgeting is situated between the disciplines of
finance and planning. Budgeting data are the most tangible decision causes
considered by decision makers. It has been used in the short-term for the
operational planning in standard costing. It has also been developed to support
strategic planning with firm planning and to develop the long term plan.
However, the researcher is examining the effect of budgeting on staff
productivity.
1.3 OBJECTIVES OF THE STUDY
The
following are the objectives of this study:
1. To
examine the effect of budgeting on staff
productivity.
2. To identify the different types of
budgeting.
3. To identify factors that can enhance
staff productivity.
1.4 RESEARCH QUESTIONS
1. What
is the effect of budgeting on staff
productivity?
2. What are the different types of
budgeting?
3. What are the factors that can enhance
staff productivity?
1.5 HYPOTHESIS
HO:
There is no significant relationship between budget and staff productivity.
HA:
There is significant relationship between budget and staff productivity.
1.6 SIGNIFICANCE OF THE STUDY
The
following are the significance of t6his study:
1. Outcome
of this study will educate corporate organizations in Nigeria on the benefits
of budgeting and how it can be used to boost employee productivity.
2. This
research will also serve as a resource base to other scholars and researchers
interested in carrying out further research in this field subsequently, if
applied will go to an extent to provide new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This
study on the impact of budget on staff productivity will cover all types of
budget process that can improve employee performance leading to improved
productivity.
LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the
researcher in sourcing for the relevant materials, literature or information
and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will
simultaneously engage in this study with other academic work. This consequently
will cut down on the time devoted for the research work.