Consultative Budget

A consultative budget ⇒ is a combination of authoritative and participative budget development methods. Senior management asks for input from lower-level managers but then develops the budget with no joint decision-making or negotiation involved.

Benefits of Consultative Budget Development

1. Since senior management makes the final decisions without any negotiation, management maintains control over the process. As a result, senior management’s strategic plans are integrated into the budget and budgetary slack is not a problem.
2. The amount of time required to develop a consultative budget is less than the time required for a participative budget.
3. If lower-level managers see the input they provided incorporated into the final budget, they may be nearly as accepting and committed to the budget as they would have been had it been developed participatively.

Limitations of Consultative Budget Development

1. The amount of time required to develop a consultative budget is greater than the time required for
   an authoritative budget.
2. If lower-level managers feel their input has been disregarded, they may be even more resentful than if they had never been asked to provide input in the first place. To ask for input and then not use it is dismissive. The lower-level managers whose input has been ignored could probably not be expected to provide much input into future budget development processes.