Budget Fairness, Budget Participation, and Organisational Performance : Impact and Relational Analyses

It has been observed overtime that the dysfunctional effects of budgeting often arise from non-inclusion of inputs from operating managers and other employees in budget setting process. This is mostly noticed when budget preparers do not consider the interests and inputs from operators who are directly concerned with budget implementation. The situation results in such budgets being non participatory and lacking fairness with adverse effect on organisational performance in terms of achieving its targets. Hence, the growing emphasis on the need to incorporate the interests of all managers in budgeting setting for improved organisational performance. This study examines the relationships between both budget fairness and budget participation on organisational performance and the impact of participatory budgeting on organisational performance. Descriptive and inferential statistics were used to analysed data collected through copies of self administered questionnaire. The study revealed a strong relationship between budget participation and organisational performance (r=79%), and budget fairness and organisational performance (r=90%). It was also revealed that budget participation accounted for 64% of systematic variation in organisational performance. Consequently, it was recommended that all levels of management be involved or co-opted into budget setting process, especially the low level managers that are to implement these budgets, and take due cognizance of reality and fairness during budget setting. Finally, all those involved in budget implementation should be enlightened on the rationale of budgetary control to avoid dysfunctional behaviour