Following the initial plan is important, even if going over the established budget means more profit. A well-planned budget that is transparent, accurate, and complete leaves room for additional costs (van Aarde, Gous & Kleingeld, 2020). However, in case the costs exceed the planned amount of finances, the company should not engage in such activities. If the management is open about every aspect of the corporate budget to the employees, team members will have a deeper understanding of the restraints. Moreover, employees would benefit from knowing the real intents of the company, including how the spending are planned. This will encourage team members to have reasonable expectations towards organizational goals and investments in various projects that management deems unfavorable.
Creating a corporate budget may give the impression that greed and unwillingness to spend extra resources are leading forces that cause restrains. Approaching the subject in an objective manner increases the chance of those restraints being reasonable and rational. Management greed influences such decisions at some level, depending on the organization’s goal. The overall goal of every company is to increase revenue for shareholders, which is why resources are usually limited. An example of greed is Walmart, one of the biggest international suppliers worldwide. Walmart’s budget is based on paying minimum wage to part-time employees who do not receive insurance or other benefits that other companies provide (Kovacic-Fleischer, 2017). Corporate greed certainly is one of the aspects that led to such adverse outcomes for the employees. However, this trait is not exercised within every budget that companies agree upon. Limiting resources reasonably is a crucial concept that organizations use to plan their spending and minimize financial risks.
References
Kovacic-Fleischer, C. (2017). Food stamps, unjust enrichment, and minimum wage. Law & Ineq., 35, 1.
van Aarde, C., Gous, A., & Kleingeld, M. (2020). Improved energy budgeting process using measurement and verification principles.South African Journal of Industrial Engineering, 31(3). Web.