1] To what extent will delegating control over budgets lead to the increased success of The Pie Shop plc? [15]
Model answer: Thanks Ntebeka
Delegation is the process of handing over authority of a specific task or operation to a subordinate.
As we know, budgets are plans which involve financial predictions for the future. In this case the business plans to delegate the authority of making these budgets to each individual pie shop.
This could be a good idea
as it may act as a motivator for the employees that are allowed to take on this
extra responsibility. The fact that Phil is willing to spend £850,000 on
training his staff would show them how much they mean to the company, and make
them want to do their job well. In
addition to that the training provided could make the work force more skilled,
and therefore make them more equipped to handle other business matters. All round it could prove beneficial to the
business, as it is a way of motivating works with the use of monetary rewards,
which is especially good for ‘The Pie Shop’ as they have already experienced
cash flow problems in the past.
To add to this the fact
that it could help provide more accurate budgets is an advantage. ‘The Pie Shop plc’ has experienced cash flow
problems and this could have been a result of inaccurate budgeting. Allowing employees of individual shops to
make the budgets could be good as they have a better idea of the costs and
incomes of that particular shop. They
have a first-hand idea of what happens in the particular store, and this could
mean, with the right training, they could provide more concise reliable
budgets.
However the managers in
the case study who are opposed to this idea may have good reason as it seems
like a costly endeavour. As seen in the case study £850,000 would have to be
spent on a programme to train these employees.
Due to the fact that the business focuses heavily on providing quality
pies we are told it has pretty high overhead costs. Even if they would like to
train these employees, they may be putting themselves at risk of suffering more
cash flow problems by funding this programme it may prove not to be worthwhile.
Not to mention the fact
that delegating such an important task to these employees could backfire. Many businesses, even those as large and
successful as ‘The Pie Shop plc’ can find problems due to poor budgets. If the employees of the individual stores do
not manage the business budgets well enough then it could have a negative
impact on the business as a whole. The
staff may receive the necessary training from the programme, but nothing will
be able to replace the experience and business ‘know how’ needed to manage the
budgets of such a large business adequately.
So to conclude I believe,
even though it seems risky and may have some short-term financial costs, that
delegating control of budgets could lead to success. It must be considered that the inexperience
of the staff, with this task, could mean less accurate budgets. And we must
also acknowledge that fact that the costs may be too high for the business
right now. However, despite these
drawbacks, the fact that it would motivate and empower the staff, give other
managers more time to deal with other pressing issues, and could end up
providing better budgets leads me to believe that this could prove a beneficial idea to ‘The Pie
Shop plc’ in the long term.
