Role of Participatory Budgeting in Decision-Making Processes

Participatory budgeting plays a crucial role in shaping management decision-making by fostering financial transparency and active employee involvement. This research delves into how engaging employees in budgetary decisions leads to more informed and inclusive management strategies, which ultimately enhance organizational performance. By analyzing case studies from various sectors, such as healthcare and local government initiatives in cities like Leeds and Seoul, the assignment examines the tangible benefits of participatory practices. These include improved resource allocation, increased accountability, and enhanced public trust. The analysis draws on multiple sources, including works by Granlund & Lukka (2017) and Otley & Emmanuel (2013), to present a comprehensive view of how participatory budgeting serves as a tool for better decision-making in management accounting and organizational governance.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
University Name
Student Name
Authors’ Note

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Brief discussion of the situation
Essentially, Participative budgets can be considered as a process of budgeting under which
specific people influenced by a specific budget are actively engaged in the budget generation
procedure. Essentially, the bottom-up tactic to particularly budgeting has a propensity to
generate budgets that are more attainable that are top down budgets that are mainly imposed
on corporation by mainly senior management. This involves mainly less participation by
members of the staff of the corporation. This approach of budgeting is also apt for morale,
and essentially has the propensity to result in higher efforts by members of the staff to attain
what they forecasted in the budget. Nevertheless, a completely participative budget does not
consider high-level strategic concerns into account (Hashim et al., 2014). Therefore,
management have the need to deliver members of the staff with specific guidelines as regards
overall direction of the corporation, and the way the individual fits into the specific direction.
As per the given case study, James Corporation that is headquartered in particularly Chicago
necessarily has a manufacturing plant situated in Dallas. In this case, plant managers intend to
partake in diverse budgetary efforts of the company and that for the last 10 years have been
managed solely by top officials in Chicago. As such, the Dallas managers consider that by
becoming actively engaged, these managers can make enormous stride in terms of enhancing
operating performance of the aging facility (Almén, 2017).
Benefits and problems of letting Dallas managers participate in the budgetary efforts
Participative budgets can necessarily make the plant managers realise that their viewpoints
are appreciated by people in the top management. Essentially, the plant managers will also
have an improved attitude towards achievement of the budget. In addition to this, it is
probable in this particular case that essentially the participative tactic will lead to a more

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practical budget document. Again, personnel of Chicago might also be separated from daily
operations in Dallas in order to arrive at a true depiction of on-going functions (Im et al.,
2014). These participatory budgeting efforts can facilitate the plant managers to voluntarily
and at the same time regularly contribute towards the process of decision making by means of
a series of scheduled meetings with corresponding government bodies and top executives of
the firm.
The case study on “Mutual Gain” can also help in understanding the advantages of
participatory budgeting (PB Network, 2017). As per reports declared by the PB Network,
North Tyneside in association with MutualGain presented three different sessions formulated
to enable public to exert influence spending decisions on accessibility to urgent care services.
In essence, the procedure utilized was necessarily a new commissioning edition of mainly the
tried as well as tested mechanism of participatory budgeting (Nielsen et al., 2015). However,
as part of the operation, officials from the corporation deliver simplified breakdown of
comparative spend on offering present services, along with forecasting spend on probable
future services (PB Network, 2017). This case study stresses the fact this participatory
budgeting allows all the members of specifically public, together with representatives from
diverse providers as well as the programme board for mainly Urgent Care can formulate all to
provide their opinions on different variety of services and potential options for potential
commissioning in the specific area, concentrated around actual and real life ideas as regards
budget as well as future expenditure. Essentially, this procedure itself has need of a
corporation to fully participate with the democratic procedure, with the success of the
practice depending upon higher level of transparency as well as regional ownership
(Bromwich & Scapens, 2016).
As such, the case study on Edge Fund suggests that participatory budgeting that can be
utilized for making very small grants to diverse radical groups that would have struggled to

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discover sources of finances (PB Network, 2017). The case study presented in the official
website of Edge Fund mentioned that this around £60,000 was necessarily distributed to
approximately more than 40 groups with specific amounts that range in size between £500 to
approximately £3000 (PB Network, 2017). As per the case study, decisions of financing are
mainly collectively undertaken by all the members that cover a wide range of issues, societies
as well as levels of income. Essentially, the overall application along with process of decision
making is mainly underpinned by financing values. Essentially, Edge Fund through meetings
with different members discuss their subsequent steps along with issues that have stemmed
and decisions that need to be arrived and as a group need to decide the way the business
concern can move forward. In addition to this, decisions can be made by appropriate
consensus whenever possible or else by majority vote. However, there are certain discussions
that take place by mainly email or else over telephone or else over Skype. In addition to this,
the business concerns also have a facilitating group of approximately 5 members to 10
members who undertake the background work before meetings and to organize proposals for
members to talk about (Tappura et al., 2015).
Another case study on “Orchard Projects” in particularly Leeds shows that the projects are
mainly thriving by means of participatory budgeting. Essentially, Ala Thornton who is the
project worker for mainly Leeds Orchard Live and supported by mainly “Helping Britain
Blossom” illustrates the way participatory grant making was necessarily used (PB Network,
2017). Essentially, with exchange of funds new associations were also formed, at the same
time new skills were also exchanged and the local network of volunteers of the community
was augmented. Again, the report also presents the fact that Orchard Project is also operating
in Leeds in order to develop the orchard network of the entire city (Dekker, 2016). Therefore,
Alan is also of the view that participatory budgeting is simple and at the same time
empowering that in turn can help in distributing small amount of sums for different important

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causes. From the point of view of project worker it can be hereby said that individuals that
have the intention of making Britain blossom can be permitted to arrive at good decisions
regarding investments. Essentially, these investments have the aim of making orchards
flourish. Essentially, an open call for specific proposals was distributed in the existing
network of subsisting community orchards in the area of Leeds. Therefore, for this purpose of
participatory budgeting, everybody was provided a pack with a side of paper for each and
every proposal counting a brief description, budget as well as assertions stating the influence
of the finances. Particularly, the feedback received on this participative budgeting can be
regarded to be very positive. It can be hereby mentioned that involvement officials in the
process of adoption of specific budgets that they have to implement also might fail to ensure
their trust in the overall accuracy as well as fairness of the process (Van der Stede, 2016).
However, there remains a flipside to essentially everything and participative management
necessarily do not stand as exception. However, this specific style of particularly leadership
else wise decision making necessarily leads to better participation of different members of the
staff, nonetheless there exists undoubtedly certain disadvantages as well. The management of
the firm although can ensure increased participation by following participative budgeting,
several individuals get engaged in the process of decision making that in turn slows down the
entire process (Fullerton et al., 2013). Fundamentally, specific inputs as well as feedback start
pouring from different sides and this takes time to substantiate the overall accuracy of
enumerations that in turn reflects that the decision making procedure can slow down.
In addition to this, there are also different security issues that might be associated to the
participative process of budgeting. As such, this security issue involved in particularly
participative budgeting also stems from mainly the fact that there are too many people and
there are lots of information. In essence, this specific information might also transform into
vital information in diverse later stages. Therefore, there is higher apprehension of diverse

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information getting leaked out. Thus, in that case, non-participation might help the
management and running of operations in a better way (Granlund & Lukka, 2017).
Essentially, non-participatory budgeting can lead to limited participation with limited
objectives as well as limited scope. As rightly indicated by Otley & Emmanuel (2013) non –
participatory budgeting can help taking into consideration regional, local, national or else
global factors for the decision making processes. Nonetheless, usage of non-participatory
budgeting specially when applied in ideal firm can be regarded to be highly exclusive and
closed process, and the entire procedure cannot be effortlessly hijacked by other members of
corporation in order to serve own interests.
As correctly mentioned by Bodie (2013), there are numerous studies that also present the idea
that non--participatory budgeting do not exert influence on attitudes of members of the staff
of the corporation towards the process of budgeting along with budgets. This can lead to swift
and smooth designing and execution of budgets of the firm. Again, there are certain factors
that are involved in the process of attaining what is believed to be mainly .distributive justice
as well as procedural justice. Essentially, a participative input in the process of formulating
budget can necessarily range from no input to merely a voice or just an opinion, also to a vote
or else a decisional role. As such, bidirectional process of communication between superiors
as well as sub ordinates in the firm might become difficult to achieve. Again, it might also
become intricate to determine subordinates to take part, communicate as well as disclose
requisite information. In this case, non-participation can be observed as an increased
accountability and can be considered as a stress for different subordinates. Fullerton et al.,
(2014) mentions that implementation of non-participation can help in avoiding the huge cost
of participatory budgeting system and accelerating the process along with effort.
Again, on the negative part, it can be hereby be mentioned that a participative budget might
take longer period to organize and this might lead to certain regional in-fighting at the time

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when compared with a specific one that is necessarily imposed from diverse corporate
headquarters. In addition to this, participative budgets might also probably have certain
padding or else slack, since the Dallas managers encounter an aging facility. Essentially, this
facility might be unproductive and, together with their involvement, managers might bend the
overall numbers in order to enhance the entire appearance. Therefore, it can be hereby
mentioned that this process involves limited participation of various marginalised. As rightly
suggested by Bodie (2013), the non-participative budgeting can subsequently increase the
overall costs and deteriorate quality. The opinion necessarily comes from different
individuals and who are component of the procedures essentially at the lowest or else at the
implementation level. Again, in case of non-participative budgeting there is also a greater
requirement of supervision and greater stress on widening of competence as well as self
management. Moreover, non-participative budgeting however might lead to overall decline in
productivity that refers to the fact that there is lack of intense feeling of association.
Essentially, the members of the staff cannot accept responsibility and undertake charge.
Therefore, there becomes greater requirement, delegation along with supervision from
diverse managers (Otley & Emmanuel, 2013).
Conclusion
Budgets can be considered to be necessary management tools that can be utilized for
undertaking the activity. Fundamentally, the benefits of using budgets use can again be
maximized by utilizing a participatory budgeting procedure. However, this participatory
budgetary system is also said to certain disadvantages. As mentioned in the study above,
Participatory budgeting calls for the need of a methodical and comprehensive bi-directional
process of communication, commitment, mutual trust, effort as well as time and entails cost
for the business concern. Again, subordinates also need to be competent and possess pertinent

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information and need to presume more accountability. Moreover, superiors also need to give
in total control and permit members of the staff in order to get engaged and exert impact on
the procedure of decision making. Even though participatory budgeting is not uncomplicated
to execute and it can be observed that advantages of participative budgeting outweigh all
kinds of disadvantages. Additionally, adoption of participatory budgeting procedures by
Dallas managers can enhance the overall performance of diverse subordinate along with the
entire performance of the business entity. Nevertheless, this reflects that there exists no
reassurance that individuals need to plainly budgeting adopt it for the particular corporation.
Corporations are different and thus the culture that is the human resources. Essentially, a deep
understanding or comprehension of both is necessary in a bid to establish a specific style of
decision making and assume the same.

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