Improving the quality of decision making

Oct 13, 2025 by vinooalluri.com 61 views

The Effect of Budget Participation and Commitment to Budget Objectives on the Managerial Performance of PT PLN (Persero) North Sumatra Region

Introduction

In today's fast-paced business environment, organizations are constantly seeking ways to improve their performance and achieve their goals. One key aspect of this is effective budgeting and management. PT PLN (Persero) North Sumatra Region, a leading energy company in Indonesia, is no exception. This study aims to examine the effect of budget participation and commitment to budget objectives on managerial performance at PT PLN (Persero) North Sumatra Region.

Background

Budget participation and commitment to budget objectives are crucial components of effective budgeting and management. Budget participation refers to the involvement of employees in the budget planning process, while commitment to budget objectives refers to the level of dedication and focus on achieving the targets set. Research has shown that employee involvement in the budget planning process can lead to increased motivation, accuracy, and revenue (Deliana, 2015). Similarly, commitment to budget objectives can provide a clear direction and focus, increase efficiency, and improve the quality of decision making.

Methodology

This study used a questionnaire survey method to collect data from employees at PT PLN (Persero) North Sumatra Region. The survey consisted of questions related to budget participation, commitment to budget objectives, and managerial performance. The data was then analyzed using regression analysis using the SPSS program.

Results

The results of this study show that budget participation and commitment to budget objectives have a positive influence on managerial performance at PT PLN (Persero) North Sumatra Region. The findings are in line with previous research by Deliana (2015), which showed that commitment to budget goals and budget participation have a positive effect on managerial performance in the Medan SKPD unit.

Deeper Analysis: Why Budget Participation and Important Budget Objectives Commitment?

Budget Participation

Increasing motivation: Employee involvement in the budget planning process provides a sense of ownership and increases their motivation to achieve the targets that have been mutually agreed upon.
Increased budget accuracy: Employees involved in the budget planning process better understand the conditions and needs in the field, so as to provide more accurate and realistic input.
Increasing revenue: Employees tend to receive and commit to the budget they participate in formulating it.

Commitment to Budget Objectives

Focus and direction: Commitment to the budget objectives provides a clear direction and focus on employees in carrying out their duties and achieving targets.
Increased efficiency: Employees who are committed to budget goals tend to be more efficient in using resources and minimizing waste.
Improving the quality of decision making: Commitment to the budget objectives encourages employees to make decisions that focus on achieving the targets and success of the organization.

Practical Implications for PT PLN (Persero) North Sumatra Region

Increasing employee participation: PT PLN (Persero) North Sumatra Region can encourage employee participation in the budget planning process through discussion forums, surveys, and involving them in the budget preparation team.
Building a strong commitment: PT PLN (Persero) North Sumatra Region can build a commitment to the budget objectives by involving employees in setting targets and rewarding the achievements achieved.
Increasing transparency and accountability: PT PLN (Persero) North Sumatra Region needs to increase transparency and accountability in the budgeting and use of the budget.

Conclusion

In conclusion, this study shows that budget participation and commitment to budget objectives have a positive influence on managerial performance at PT PLN (Persero) North Sumatra Region. By implementing strategies to increase employee participation, build a strong commitment, and increase transparency and accountability, PT PLN (Persero) North Sumatra Region can maximize the positive effects of budget participation and commitment to budget goals, thereby improving managerial performance and achieving the targets set.

Recommendations

Based on the findings of this study, the following recommendations are made:

PT PLN (Persero) North Sumatra Region should encourage employee participation in the budget planning process through discussion forums, surveys, and involving them in the budget preparation team.
PT PLN (Persero) North Sumatra Region should build a commitment to the budget objectives by involving employees in setting targets and rewarding the achievements achieved.
PT PLN (Persero) North Sumatra Region should increase transparency and accountability in the budgeting and use of the budget.

Limitations

This study has several limitations. Firstly, the study was conducted at a single organization, PT PLN (Persero) North Sumatra Region, and may not be generalizable to other organizations. Secondly, the study relied on self-reported data from employees, which may be subject to biases and errors. Finally, the study did not control for other factors that may influence managerial performance, such as leadership style and organizational culture.

Future Research Directions

Future research should aim to replicate this study in other organizations and industries to generalize the findings. Additionally, future research should explore other factors that may influence managerial performance, such as leadership style and organizational culture. Finally, future research should investigate the long-term effects of budget participation and commitment to budget objectives on managerial performance.

References

Deliana, (2015). The Effect of Budget Participation and Commitment to Budget Objectives on Managerial Performance in the Medan SKPD Unit. Journal of Management and Organization, 21(3), 345-358.
Frequently Asked Questions (FAQs) about the Effect of Budget Participation and Commitment to Budget Objectives on Managerial Performance

Q: What is budget participation, and how does it affect managerial performance?

A: Budget participation refers to the involvement of employees in the budget planning process. Research has shown that employee involvement in the budget planning process can lead to increased motivation, accuracy, and revenue. By participating in the budget planning process, employees feel a sense of ownership and are more likely to achieve the targets that have been mutually agreed upon.

Q: What is commitment to budget objectives, and how does it affect managerial performance?

A: Commitment to budget objectives refers to the level of dedication and focus on achieving the targets set. Research has shown that commitment to budget objectives can provide a clear direction and focus, increase efficiency, and improve the quality of decision making. By committing to budget objectives, employees are more likely to make decisions that focus on achieving the targets and success of the organization.

Q: How can organizations encourage employee participation in the budget planning process?

A: Organizations can encourage employee participation in the budget planning process by:

Holding discussion forums and surveys to gather input from employees
Involving employees in the budget preparation team
Providing training and development opportunities to help employees understand the budget planning process
Recognizing and rewarding employees who participate in the budget planning process

Q: How can organizations build a commitment to budget objectives?

A: Organizations can build a commitment to budget objectives by:

Involving employees in setting targets and rewarding the achievements achieved
Providing clear and concise communication about the budget objectives and expectations
Recognizing and rewarding employees who demonstrate a commitment to budget objectives
Providing training and development opportunities to help employees understand the importance of budget objectives

Q: What are some common challenges that organizations face when implementing budget participation and commitment to budget objectives?

A: Some common challenges that organizations face when implementing budget participation and commitment to budget objectives include:

Resistance to change from employees who are not used to participating in the budget planning process
Difficulty in communicating the importance of budget objectives to employees
Limited resources and budget to implement budget participation and commitment to budget objectives
Difficulty in measuring the effectiveness of budget participation and commitment to budget objectives

Q: How can organizations overcome these challenges?

A: Organizations can overcome these challenges by:

Providing training and development opportunities to help employees understand the importance of budget participation and commitment to budget objectives
Communicating clearly and concisely about the benefits of budget participation and commitment to budget objectives
Providing resources and budget to implement budget participation and commitment to budget objectives
Measuring the effectiveness of budget participation and commitment to budget objectives and making adjustments as needed

Q: What are some best practices for implementing budget participation and commitment to budget objectives?

A: Some best practices for implementing budget participation and commitment to budget objectives include:

Involving employees in the budget planning process from the beginning
Providing clear and concise communication about the budget objectives and expectations
Recognizing and rewarding employees who participate in the budget planning process and demonstrate a commitment to budget objectives
Providing training and development opportunities to help employees understand the importance of budget participation and commitment to budget objectives

Q: How can organizations measure the effectiveness of budget participation and commitment to budget objectives?

A: Organizations can measure the effectiveness of budget participation and commitment to budget objectives by:

Tracking employee participation in the budget planning process
Measuring the accuracy and completeness of the budget
Evaluating the effectiveness of budget objectives in achieving organizational goals
Conducting regular surveys and feedback sessions to gather input from employees

Q: What are some common mistakes that organizations make when implementing budget participation and commitment to budget objectives?

A: Some common mistakes that organizations make when implementing budget participation and commitment to budget objectives include:

Not involving employees in the budget planning process from the beginning
Not providing clear and concise communication about the budget objectives and expectations
Not recognizing and rewarding employees who participate in the budget planning process and demonstrate a commitment to budget objectives
Not providing training and development opportunities to help employees understand the importance of budget participation and commitment to budget objectives

Q: How can organizations avoid these mistakes?

A: Organizations can avoid these mistakes by:

Involving employees in the budget planning process from the beginning
Providing clear and concise communication about the budget objectives and expectations
Recognizing and rewarding employees who participate in the budget planning process and demonstrate a commitment to budget objectives
Providing training and development opportunities to help employees understand the importance of budget participation and commitment to budget objectives