Final answer:
Participative budgeting issues include setting unrealistic standards, budget padding, and pseudoparticipation, which can lead to inefficiencies, reduced morale, and a lack of genuine involvement.
Step-by-step explanation:
The potential problems with participative budgeting include: a) setting standards that are too high, b) building slack into the budget ('padding'), and c) pseudoparticipation.
Each of these issues can undermine the effectiveness of the budgeting process. Setting unrealistically high standards may lead to frustration and reduced morale, while padding the budget can lead to inefficiencies as managers include unnecessary expenditures to ensure they have a cushion for unexpected costs or to make it easier to achieve their budget targets.
Pseudoparticipation occurs when employees feel that their input is not genuinely considered, which can lead to disenchantment with the process and a decrease in the value derived from participative approaches.