Goal Congruence
Goal congruence is a term that refers to the degree of consistency between the goals of the
firm, its subunits, and its employees. In general, a firm’s goals should be as consistent as possible
with the goals of its employees. A budget devoid of considerations for goal congruence
is not likely to achieve the most desirable results. A budget that aligns the firm’s goals with
those of its employees has a much better chance to realize successful operations and attain
desirable results. As discussed below, there are at least three major factors that affect the level
of goal congruence achieved: (1) the extent to which employees participate in the budgeting
process; (2) the level of difficulty embedded in the budget; and (3) whether and how compensation
is linked to budgeted performance.