One of the behavioral considerations in implementing a budgeting system has to do with the issue of budgetary slack.What are the positive and negative aspects of building slack into budgets from: (1)top management's point of view,and (2)the employee's point of view (i.e. ,the individual responsible for building slack into the budget)?

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Feedback: Employee's Perspective:
From the employee's perspective,there are probably two benefits from building slack into the budget.First,the employee may be able to obtain excess resources to achieve desired goals.Consequently,this may reduce pressure on the employee and reduce job anxiety.Second,senior management may lower their work expectations of the employee.This may also lead to lower pressure on the employee to perform.Either way,the end result is a reduction in job-related stress for the employee.However,if incentives are graduated in such a way that achieving higher and higher goals provides the employee with more and more compensation in the form of bonuses,then the employee may lose income by selecting lower goals.
Top Management's Point of View:
From top management's point of view,employees who build in slack are either using unnecessary resources to achieve a goal that should have been achievable with fewer resources,or they are understating their performance capabilities (e.g. ,intentionally underestimating sales demand or overstating the cost of planned production).Thus,the organization is either not running as efficiently as it can,or is losing potential productivity from employees who are not working as hard as they can.In some cases,senior management may believe that employees build in slack to relieve job pressure.If burnout of employees has been occurring in the organization then perhaps senior management may be more forgiving and view some slack building as necessary to keep their employees from quitting.

One of the Behavioral Considerations in Implementing a Budgeting System