From quality to quantity and vice versa: How to evaluate performance in the budgetary control process

Abstract

According to modern management theory, the performance evaluation based entirely on objective indicators within an organization is not considered to be an effective tool. The research objective of this paper is to suggest a contemporary model for evaluation in the budgetary control process of the organization. The model is based on a modern evaluation approach and a complex toolkit of management science and mathematical theories of fuzzy sets and fuzzy logic. In this model, subjective evaluations of the responsibility centres' achievement and performance in budgetary control are generated by fuzzy techniques based on a combination of quantitative and qualitative indicators. The model also allows for an immediate transformation of quantitative into qualitative evaluations and vice versa both in fuzzy and crisp types. The proposed model is an appropriate tool for the subjective performance evaluation of objective results from the organization's budgetary control process under uncertainty. This model was tested in a Bulgarian enterprise for unique wood furniture manufacturing in July 2018 and was applied to five cost centres, with the results demonstrating its applicability. According to our study, the model provides a modern solution to a management problem that is unresolved in the scientific literature and is important to the budgetary management practice of organizations. We believe that the further improvement and implementation of the model will contribute to more effective management and thus to the enhancing competitiveness of the organization.