Question：Participation by staff in the budgeting process is often seen as an aid to the creation of a realistic budget and to the motivation of staff. There are, however, limitations to the effectiveness of such participation.

Which of the following illustrates one of these limitations?

A. Staff suggestions may be based on local knowledge

B. Staff suggestions may be ignored leading to de-motivation

C. Budgetary slack can be built in by senior manager as well as staff

D. Participation allows staff to buy into the budget

The correct answer is: Staff suggestions may be ignored leading to de-motivation

Staff suggestions may be ignored leading to de-motivation. Psuedo-participation occurs when managers pretend to involve staff but actually ignore their input. This may lead to a less realistic budget and will certainly be de-motivating if the staff involved find out what is going on.

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