ABSTRACT
In this chapter, the effect of the input : the level of the standards that are set on the output : budget motivation is investigated. First, the findings of the research projects of Stedry and Stedry & Kay on the same subject are described. Then follow my results, which largely confirm those of the other researchers. The level of standards appears to play a role in achievement motivation, apart from any other rewards or punishments connected to it.
The findings prove that:
loose budgets are poor motivators.
the motivating effect of budgets becomes stronger when they become tighter.
over a certain limit of budget tightness, motivation is poor again.
this limit, and more in general the extent to and the way in which people internalize standards, depends on factors in the situation, in management and in the personalities of the budgetees.
Interesting results have been obtained by comparing budgetees’ evaluations of their departments’ performance to the official performance data in the budget variance reports. In some plants the standards appear to be well ‘internalized’ into personal aspiration levels and to agree with people’s personal evaluation standards; in others they are not at all internalized. Group management and the forces the budgetees have been exposed to collectively appear to influence 145 this internalizing process. This is illustrated in two case studies, the dynamo and the Combitex case study.
