What is a disadvantage of rolling budgets?

Rolling budgets are budgets that are continuously updated, typically on a monthly or quarterly basis, to reflect new data and forecasts. While this approach has many advantages, one significant disadvantage is that it can demotivate staff due to the constant changes it introduces. Employees may feel overwhelmed or frustrated if their targets and goals shift frequently, making it difficult for them to focus on long-term objectives. This environment of change can lead to a lack of stability, which is important for maintaining morale and motivation in the workforce.

The other options highlight various aspects of rolling budgets but do not capture this particular disadvantage. For instance, while rolling budgets can improve clarity and performance comparisons and streamline the budgeting process, the frequent updates can disrupt staff confidence and consistency in performance. Similarly, while rolling budgets involve regular reviews to adapt to changing conditions, they do not eliminate the need for periodic assessments; instead, they create a cycle of continual assessment which may add pressure rather than alleviate it. Thus, the correct answer highlights a key risk associated with the practical implementation of rolling budgets in an organizational context.