The influence of voice and explanation on performance in a participative budgeting setting

This paper examines the relationship between the use of a fair budgeting process and subordinate performance. Organizational justice theory is used to define a fair budgeting process as having two components: the subordinate’s involvement in the budgeting process, voice; and the communication of a rationale for the subordinate’s lack of influence over the final budget target the superior sets, explanation. Results indicate significant performance improvements when voice and explanation are combined as compared to voice alone.     

Slack in participative budgeting: The joint effect of a truth-inducing pay scheme and risk preferences

An incentive problem in participative budgeting occurs when a worker has private information about factors that influence his or her performance and the pay scheme is budget- or standard-based. This information, if communicated accurately by the worker, may be valuable to a manager for planning and control purposes. However, the worker has an incentive to bias its communication such that a relatively easy standard is set, thereby creating slack. To alleviate this problem, analytical research has proposed truth-inducing pay schemes that provide incentives for accurately communicating private information and maximizing performance. A conventional assumption underlying these schemes is worker risk neutrality, despite the wide-spread belief that risk aversion is more typical in organizational settings. This paper reports an experiment demonstrating that, when a (conventional) truth-inducing scheme is introduced, slack decreases for risk-neutral subjects but not for risk-averse subjects.     

Appropriateness of accounting data in performance evaluation: An empirical examination of environmental uncertainty as an intervening variable

Rooted in contingency theory, this study puts forth propositions stating (1) that superiors of business units which face higher environmental uncertainty will use a more subjective performance appraisal approach whereas superiors of business units which face lower environmental uncertainty will use a more formula-based performance evaluation approach, and (2) that a stronger fit between environmental uncertainty and performance evaluation style would be associated with higher business unit performance. Findings from 58 business units in eight Fortune 500 firms provide strong support to both sets of these propositions.     

The effect of performance feedback on prior budgetary participative research using survey methodology: An empirical study

Prior research examining the relation between budgetary participation and job performance explicitly or implicitly posits budgetary participation and intervening variables such as role ambiguity, motivation, job satisfaction, and job-relevant information as independent variables; job performance as the dependent variable. However, these studies are often based on correlated data in which the direction of causation is unknown. This paper uses attribution theory to examine whether job performance affects perceptions of budgetary participation and/or intervening variables (e.g. role ambiguity). Using a laboratory experiment and multivariate analysis of variance (MANOVA), the findings of this study show that knowledge of performance, obtained through performance evaluations and/or external cues, affects individuals’ perceptions regarding budgetary participation, job satisfaction, role ambiguity, motivation, and job-relevant information. The results of the study may undermine correlations between self-reported data on individual characteristics (e.g. motivation) and performance data, as well as correlations between self-reported data on organizational variables (e.g. budgetary participation) and performance data. The study provides suggestions how researchers could overcome problems associated with causal directions in future budget participation studies that link self-reported individual and organizational characteristics to job performance.     

Improving patient flow, patient satisfaction, and productivity with performance budgeting: a case study

This issue of HCMA features a case study based on a quality improvement study conducted in 1996 in a primary care clinic owned and operated by a teaching hospital identified as ABC Hospital. The study was a team effort of the following participants: E. Jeff Ballow, Beatrice L. Bridglall, Javad Ghalamchi, Maria-Elena Hodgson, and Miriam Rodriguez.     

Financial and nonfinancial performance measures: How do they affect job satisfaction?

Recent interest on the use of nonfinancial measures (e.g. in the Balanced Scorecard) generally assumes that such measures are essential to overcome the inadequacies of financial measures. However, it remains unclear (1) if the behavioural effects of these nonfinancial measures are different from those of financial measures; and (2) whether these effects are influenced by the relative importance of nonfinancial measures vis-à-vis financial measures. This study hypothesises that the use of performance measures for performance evaluation will significantly affect managers' job satisfaction. However, these effects are indirect through the managers' perceptions of the fairness of these measures and the interpersonal trust these measures promote. Based on a sample of 70 managers, these expectations are supported by the results. More importantly, the results also suggest that (1) the process by which nonfinancial measures affect employee job satisfaction is not different from that of financial measures, and (2) the relative importance of nonfinancial measures vis-à-vis financial measures has no significant effect on employee job satisfaction. These results may have important theoretical and practical implications.     

The effect of non-financial performance measures,organisational politics and political skill on job performance: Evidence from China

We investigate the role of organisational politics (i.e., general political behaviour, going along to get ahead and pay and promotion policies) and political skill on the relationship between non-financial performance measures and job performance, relying on a sample of manufacturing firms in China. Results suggest that non-financial performance measures positively affect managers' job performance, and non-financial performance measures reduce general political behaviour and pay and promotion policies. Results further suggest that managers' political skill positively affects job performance, and political skill also moderates the relationships between (1) general political behaviour and (2) pay and promotion policies, and job performance.     

The effects of job-related tension on managerial performance in participative budgetary settings

The association between job-related tension and managerial performance has been the subject of speculation and some preliminary research, with little resolution. Four potential reasons for the lack of resolution on this issue are explored in this paper. These are (1) the use of single organizational samples in prior studies, (2) the measurement of managerial performance, (3) the prospect of a curvilinear relation between job-related tension and performance, and (4) the possibility that budgetary participation moderates the association, if any, between job-related tension and performance. By systematically varying both the measurement of managerial performance and the employment of random sampling, the findings of this research suggest that the association between job-related tension and performance is significant and negative. There is no evidence to support the proposition that participation moderates the relation between job-related tension and performance.     

Coping with ambiguity through the budget: the positive effects of budgetary targets on managers' budgeting behaviours

Much consideration has been given over the years to what may be described as the `negative' aspect of budgeting; that budgets may constrain innovation and learning, and that budgetary pressure may lead to unintended behavioural side effects. In contrast to this, the present study examines the extent to which budgets have a more positive, `comforting' role to play in the individual's work experiences. We argue that managers confronted with uncertainties associated with role ambiguity may respond by becoming positively committed to achieving budgetary targets as budgets offer a source of structure and certainty. We find that the use of budgets as an antidote to role ambiguity is a powerful influence on the manager's budgeting behaviour. We test the strength of this effect and we find that budgetary commitment brought on by the experience of role ambiguity may over-ride the potential for recognised explanatory variables such as leadership style, the expectations of the superior, and occupational socialisation, to inform managers' budgeting behaviours in these circumstances. Budgets, it seems, may be as useful to the individual as they are problematic.     

McClelland's trichotomy of needs theory and the job satisfaction and work performance of CPA firm professionals

This paper examines the ability of McClelland's trichotomy of needs theory (need for affiliation, need for power, need for achievement) to provide a conceptual explanation of the job satisfaction and work performance of CPA firm professionals. Seventy-seven of the 89 professionals at an office of a large international CPA firm participated in the study. For partners and managers, need for affiliation correlated negatively with job satisfaction. For partners and managers, junior-level audit/tax specialists and junior-level management consultants, need for power correlated positively with job satisfaction. Job satisfaction correlated positively with the intent to remain with their current firm for all three categories. Need for achievement correlated positively with hours devoted to work for junior-level audit/tax specialists, and with the firm's work performance ratings for partners and managers and junior-level audit/tax specialists. The results suggest that McClelland's theory, which has not been previously applied to examine job satisfaction, might provide a conceptual explanation of why some individuals experience relatively high job satisfaction in an environment where their contemporaries experience relatively low job satisfaction.     

The effect of job resourcefulness on role stress,emotional exhaustion and overall performance: A study of frontline bank employees

This article develops and tests a conceptual model that examines the effects of co-worker support and job resourcefulness on role stress, emotional exhaustion and job performance. The data obtained from frontline bank employees with a time lag of two weeks in Northern Cyprus were used to test these relationships. The results of structural equation modelling suggest that the partially mediated model seems to have a better fit than the fully mediated model. The results further suggest that job resourcefulness partially mediates the effect of co-worker support on role ambiguity and emotional exhaustion. However, there is no empirical support for job resourcefulness as a mediator of the impact of co-worker support on role conflict and job performance. The implications of the results are discussed and their future research directions are offered.     

The impact of flexible benefits plans on job satisfaction, organizational commitment and turnover intentions

This study assesses the dimensionality of employee attitudes toward flexible benefits plans and the impact of these plans on measures of job satisfaction, commitment and turnover intent. The study points to the need for more work on the measurement of employee attitudes toward flexible benefits and on the nomological framework of flexible benefits as a construct in compensation research.     

The effect of tax revenue budgeting errors on fiscal balance: evidence from the Swiss cantons

This study is an empirical analysis of the impact of direct tax revenue budgeting errors on fiscal deficits. Using panel data from 26 Swiss cantons between 1980 and 2002, we estimate a single equation model on the fiscal balance, as well as a simultaneous equation model on revenue and expenditure. We use new data on budgeted and actual tax revenue to show that underestimating tax revenue significantly reduces fiscal deficits. Furthermore, we show that this effect is channeled through decreased expenditure. The effects of over and underestimation turn out to be symmetric.     

Influences on departmental budgeting: an empirical examination of a contingency model

This paper reports the results of a study designed to test whether or not differences in approaches to budgeting at the departmental level are systematically related to differences in production technologies, market factors and organizational characteristics. The results suggest that budgeting is related to departmental size, functional differentiation and degree of automation of production processes, but not the products' stage in the product life cycle or the company's strength of market position.     

Flattening the organization: the effect of organizational reporting structure on budgeting effectiveness

This study investigates whether increasing a superior’s span of control improves the effectiveness of the budgeting process. We characterize the superior’s utility function as consisting of utilities for norm enforcement and wealth, leading the superior to reject profitable projects believed to contain excessive slack. We develop theory to predict that superiors become more willing to reject projects as their span of control increases. Further, subordinates anticipate superiors’ behavior and reduce slack as span of control increases. Experimental results are consistent with these predictions. As span of control increases, superiors show a greater willingness to reject projects that they believe contain excessive slack, and subordinates submit budgets with less slack. The net result is that superiors earn more profit per subordinate under an expanded span of control. Our study suggests that increasing span of control can improve the effectiveness of the budgeting process, an important component of most firms’ control environments.     

The effects of tolerance for ambiguity and uncertainty on the appropriateness of accounting performance measures

This article examines how task uncertainty, environmental uncertainty and tolerance for ambiguity (TFA) affect managerial opinions about the appropriateness of accounting performance measures (APM). Based on accounting and psychology literature, this study argues that task uncertainty and environmental uncertainty differ in their direct effects on the appropriateness of APM, and furthermore that the relationship between uncertainty and the appropriateness of APM is moderated by managers' TFA. Hypotheses are developed, and tested with data from a survey study among 250 managers in eleven organizations, using partial least squares (PLS). Overall, the results show that the two types of uncertainty have opposite effects on managers' opinions about the appropriateness of APM, and that these effects are moderated by TFA, which confirms expectations. No direct effect of TFA on the appropriateness of APM was found. Overall, these findings provide an explanation of the inconsistencies in the extant behavioural management accounting literature that has addressed the appropriateness of APM under uncertainty.     

Accounting and budgeting systems: The issue of congruency

The importance of designing an accounting system that is congruent with an organization's budgeting system has been noted in the literature. Unfortunately, in many government organization it is common to find incompatible budgeting and accounting systems. The purpose of this study is to investigate whether gearing the accounting information system to a zero-base budgeting system increases the perceived usefulness of the budgeting process. This issue is examined under conditions of both scare and abundant resources. Based on an empirical study, it is shown that the usefulness of a budgeting system to budget recipients may indeed be dependent on the accounting information system, conditioned on the availability of resources. Given the relationship between budgeting and public policy, implications of the study for the public policy making process are discussed.     

The role of inclusive work environment practices in promoting LGBT employee job satisfaction and commitment

ABSTRACT

One of the most enduring issues facing public administration and public policy is discrimination against and exclusion of lesbian, gay, bisexual, and transgender (LGBT) employees in the public workplace. Research on how inclusion management influences LGBT public servants’ work outcomes is limited. The US Office of Personnel Management (OPM) synthesized a construct of integrated inclusive work environment consisting of five practices thought to be important for public employee work outcomes. Social exchange theory is used in this paper to theorize about the effects of these different inclusive work environment practices on LGBT employee job satisfaction and organizational (affective) commitment. An inclusive work environment approach was found to have a positive effect on LGBT employee job satisfaction and affective commitment in federal government staff in the USA. However, individual inclusive work environment practices varied in their effects on LGBT employee job satisfaction and affective commitment.     

The Role of the Business Press as an Information Intermediary

This paper investigates whether the business press serves as an information intermediary. The press potentially shapes firms' information environments by packaging and disseminating information, as well as by creating new information through journalism activities. We find that greater press coverage reduces information asymmetry (i.e., lower spreads and greater depth) around earnings announcements, with broad dissemination of information having a bigger impact than the quantity or quality of press-generated information. These results are robust to controlling for firm-initiated disclosures, market reactions to the announcement, and other information intermediaries. Our findings suggest that the press helps reduce information problems around earnings announcements.     

The effect of ownership structure on firm performance: Additional evidence

This article examines the effect of ownership structure on corporate performance, using stock returns as a measure of performance. Based on the 1988–1992 sample period, we find that the level of insider ownership is positively related to stock returns. This result suggests that as managers' equity ownership increases, their interests coincide more with those of outside shareholders. But we also find that the square of the level of insider ownership is inversely related to stock returns, indicating that excessive insider ownership rather hurts corporate performance probably due to the problem associated with managers' entrenchment. Finally, we find that stock returns are positively related to institutional ownership, indicating that institutional owners are active in monitoring management.