The Research On Incentive Mechanism Of Budget Management

Budget management is a strategic management system that combines the functions of planning, organizing, controlling and motivating together. It helps the companies to cope with the changeable environment outside and increases their working efficiency and competitiveness. Budget management has been introduced to China from the western countries since 1980s, and it has been gradually popularized and implemented in some big companies in China under the encouragement and guidance of the government.Controlling and motivating are the most important two elements in management. Therefore, as one of the most important parts of the enterprise management, the motivating function of budget management can not be ignored. In fact, budget slack, lacking of control and other problems existing in the implementation of the budget management are the result of the inefficient incentive mechanism of budget management. Therefore, it is necessary to build an effective incentive mechanism in order to help budget management work properly.The analysis and construction of the incentive mechanism of budget management are the main content of this thesis. And this thesis consists of four parts: Chapter one: Foreword. Chapter one includes the overview, objective, scope and methods of the study and the innovation of this thesis. Author introduces the main difference between the situation of foreign and domestic research about the incentive mechanism of budget management and states the necessity of this research.Chapter two: The theoretical analysis of the budget management incentive mechanism. The Principal-agency theory and the incentive theory, as the basic theory of this thesis, are introduced in this chapter. Under the view of the Principal-agency theory, the whole process of budget management can be considered as the signing, fulfilling and terminating of the principal-agency contracts. Therefore, the construction of the budget incentive mechanism should focus on how to solve the principal-agency problems. The incentive theory helps to discover the real need of the staff and choose the appropriate motivating patterns.Chapter three: Chapter three is composed of two parts. The first part describes the present situation of the budget management and its incentive mechanism. The second part analyses the cause of the present situation in three aspects: the making of the budget, the performance evaluation of the budget, the informational communication in the budget management.Chapter four: Chapter four mainly discusses the building of the budget management incentive mechanism. Author constructs the framework of the incentive mechanism based on the principal-agency theory. The incentive mechanism is established through the redesign of the following three aspects: the making of the budget, the performance evaluation of the budget, the informational communication in the budget management.The innovation of this thesis is as follows:1. This thesis focuses on the incentive mechanism of the budget management. The incentive mechanism of the budget management is still a quite new field in the research of budget management. Therefore, author hopes that this thesis would be practically useful for enterprises and at the same time, enriches the study of budget management.2. The research methodology of this essay is normative study. Based on the principal-agency theory, the incentive mechanism of budget management is analyzed and constructed in three aspects: the making of the budget, the performance evaluation of the budget, the informational communication in the budget management. So the study of incentive mechanism isn't limited only in the performance evaluation of the budget, but provide a more systematic and completed pattern of studying the incentive mechanism of budget management.