PERFORMANCE MANAGEMENT
TOPIC: AN ORGANIZATION’S BUDGETARY CONTROL SYSTEM AS THE BASIS FOR PERFORMANCE MANAGEMENT.

INTRODUCTION

Performance management is a forward-looking process for setting goals and regularly checking progress towards achieving those goals. It is a cyclic feedback loop whereby the observed outputs of a system are continually measured and compared with the desired goals or outputs. Any discrepancy or gap is then fed back by changing the inputs of the process, so as to achieve the desired goals. Any such management control system involves communicating the required change and promptly taking action to effect the desired change. This helps the system or organization being managed to achieve the required goal or the strategic plan. Performance management has a wide variety of applications, including but not limited to employee performance, software performance and business or corporate performance.

A key aspect of performance management is performance measurement. Whatever the process being driven with performance management, clear and concise measures are required in order to properly define the desired goals. Most performance management systems fail to achieve the desired goals of the process owner or project sponsor because goal measurement is ambiguous, not specific enough, poorly communicated or because results cannot be measured effectively.

It has been a normal phenomenon for both profit oriented and non profit oriented organizations to rely on budgets set as a pivotal point to assessing the performance of organizations. In most cases, the management often starts by identifying the budgetary constraint(s) and uses it as the basis for setting up the budget. All departments draw up their respective budgets which are then used to draw up the master budget.

Budgets therefore require much attention given its essence to management of organization. Budgets which are negligently or wrongly set will therefore go a long way as to question the survival of the organization. It is therefore very important that time and resources be devoted to the setting of budgets, taking into consideration all the vital aspects of the budget and ensuring that they are correctly done to achieve the purpose for which they we intended.

PURPOSE OF STUDY

The purpose of this study will therefore seek to examine how effective performance measures are and a further step to identify some valuable areas that need to be of much consideration when setting budgets.

Performance management has been regarded by most organizations as a routine requirement to the functioning of organizations. Most organizations set budgets not because they actually understand the usefulness of the budgetary control system but just because other organizations do set budget control systems. It has been a normal process for organizations to set budgetary control systems to enable them manage their performance but most often reports will show a favorable organizational performance but on the contrary the organization position deteriorates or better still succeeds but not to the same degree as reported by performance management reports.

With this, one ca be encouraged to find out why organizations resort to budgetary control systems as a basis for performance management but then do not produce the results expected of such activity. To another extend some will execute the system but the rewards will not match the resources employed in the functioning of the system.

OBJECTIVES

The objectives of this study therefore will be:
- To examine how budgets are drawn by organizations
- To analyze the usefulness of budgets drawn by organizations
- To examine corrective aspects of budgetary control systems
At the end of the research, one should be able to bring out some valuable aspects of a budgetary control system that are often omitted or neglected in setting budgets and how such omissions impact on performance management.

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