a)
i) Destructive behaviours
• Misunderstanding and worries about cost cutting: Budgeting is often considered by the managers affected to be excuse for cutting back on expenditure and finding ways to reduce costs. Individuals often resent having to reduce their spending. And so have a hostile attitude to the entire budgeting process. This fear and hostility can exist even if senior management do not have a cost-cutting strategy.

• Opposition to unfair targets set by senior management: When senior managers use the budgeting process to set unrealistic and unfair targets for the year, their subordinates may unite in opposition to what the senior managers are trying to achieve. This can result in the formation of pressure groups that collectively ignore the budget, ultimately rejecting it. This can have very harmful effects for the overall organisation.

• Blame cultures: Performance of operational managers may be measured by comparing actual performance with the budget. The manager might be rewarded for achieving budget targets but criticized for failing to meet the budget. This tendency to ‘blame’ managers for failing to meet the budget targets will have an adverse effect on the motivation and the attitude of the operational managers.

• Sub-optimisation: There may be a risk that the planning targets for individual managers are not in the best interests of the organisation as a whole. For example, a production manager might try to budget for production targets that fully utilize production capacity. However, working at full capacity is not in the best interests of the company as a whole if sales demand is lower.

• Budget slack (budget bias): Budget slack is the intentional overestimation of expenses and/or underestimation of revenue in the budgeting process. Managers who prepare budgets may try to overestimate costs so that it will be much easier to keep actual spending within the budget limit. Similarly, managers may try to underestimate revenue in their budget so that it will be easier for them to achieve their revenue targets. As a result of slack, budget targets are lower than they should be.

ii) Mitigation against negative behaviour
• Senior managers should communicate and consult with the individuals affected by target-setting and try to win their agreement to the targets they are trying to set.
• Continuous education of employees about budget procedures and preparation
• Challenging and reasonable targets need to be set by supervisors
• The budgeting process must be well coordinated in order to avoid sub-optimal planning
• Employee participation in the budgeting process will improve motivation and so will improve the quality of budget decisions and the efforts of individuals to achieve their budget targets

b) **Aspirational budgets are budgets based on performance levels and targets that senior managers would like to achieve. On the other hand, **expectational budgets are budgets based on performance levels and targets that senior managers would realistically expect to achieve.
Aspirational budgets might be considered unfair, especially if the individuals affected have not been consulted. This will be considered unrealistically high and would not only fail to motivate the employees but could actively demotivate that individual

Expectational budgets based on current performance levels do not provide for any improvements in performance. These could be too low to provide any motivation for the employee and would not encourage improvement.

c) A major difference between budgeting in commercial organisations and budgeting in the public sector is that the objective of commercial organisation is usually to make profit. In the public sector, the aim is to make the most effective use of limited resources. Governments can use the revenues they raise from taxation and other resources and may also borrow to add to their available resources, but there is a limit to what they can spend.

d) Business Process Reengineering (BPR) involves an evaluation and assessment of current business processes by adapting radical and extensive overhaul of current in place of an improved new system aimed at complete change rather than minimal improvements in the current system. It is a re-design of the series of steps that are followed to carry out some tasks in a business.

Benefits of BPR

• Simplification of tasks to be carried out.
• Improvements in the quality of products produced.
• Efficient cost reduction and waste management.
• Enhanced customer experience and satisfaction.