Improving Research On The Evaluation And Incentive Model Of Budget For Large Group Companies

The comprehensive budget management has played a more and more important role in the modern enterprises and become an important set of management system. However, in the decision-making and implementation process of budget management, the agents create relaxation for their own benefits using the information asymmetry that exists between different enterprise-levels, then the phenomenon of budgetary slack comes into being. Budgetary slack makes the estimates deviating from the reality of income or cost, which is harmful to the overall interest and the development of the entire corporation, so budgetary slack draws more and more attention of the management group.The research shows that the improving study of incentive model is the most effective and feasible solution. However, the large group companies have unique management features:the existence of different company levels such as headquarters, provincial and municipal companies; the constraints between various subsidiaries; the constraints of various budget indexes for one subsidiary. The existing incentive model only takes into account the vertical principal-agent constraints, without considering the horizontal constraints between multi-agents and the interaction of multi-index, which doesn’t take full advantage of the budget information. Therefore, there is important significance to study budgetary slack, determine an accurate budget base and establish a rational budget evaluation and incentive mechanism according to the management features of large group companies. In this paper, based on the comprehensive analysis of definition, causes and solutions of budgetary slack, I add the horizontal constraints between multi-agents and the interaction of multi-index to "the model on a joint base" according to the management needs of large groups, in order to make more accurate budget targets and more reasonable budget evaluation and incentive mechanism. This paper uses the empirical study of a telecom operation to verify the efficiency and feasibility of the improved model, and proposes recommendations for the reference of large group companies. The conclusions of our study show that:the horizontal constraints between multi-agents can solve the unfair problems caused by uncertainty of the external environment, the negative sabotage of agents and the carry-over problems between multi-years; the multi-index evaluation system can solve the mismatch problem of input and output, the irrational structure of amount and income and so on. With the combination of the multi-agent, multi-index and existing incentive model, this paper establishes an effective evaluation and incentive model of budget, so as to constraint the agents to report an accurate budget base at the beginning of the year, encourage them to make maximum efforts when implementing the budget during the year, establish fair and efficient incentives at the end of year, and restrain the problem of budgetary slack.