Budgeting and employee stress in times of crisis: Evidence from the Covid-19 pandemic

Abstract

Prior research has shown that that management control practices change in response to global crises, yet we have little understanding of the behavioral consequences of these changes. The purpose of this study is to explore the behavioral effects that stem from crisis-induced changes to management control practices and the factors that intensify or diminish these effects. Using survey data from business unit managers in the Netherlands, our results show that firms tighten their budget controls in response to a negative impact of Covid-19. In turn, the tightening of budget controls is positively associated with employees’ emotional exhaustion because of increased perceptions of role ambiguity and role conflict. We furthermore find that the effect of tighter budget controls on role ambiguity is mitigated when managers perceive that the budget controls are used in an enabling way prior to the crisis but heightened with increased trust in senior management. These results suggest that if firms use their budgets to help managers acquire a deeper understanding of their tasks and responsibilities, they are better able to respond to a negative shock and the accompanying tightening of budget controls, which helps mitigate the undesired behavioral response of increased role ambiguity and emotional exhaustion. Our findings also suggest that trust, which usually is beneficial to organizations, has a ‘dark’ side in that managers will push themselves harder to reciprocate the trust they have in their senior managers, which exacerbates the effect of tighter budget controls on role ambiguity and, in turn, emotional exhaustion.

Time Budget Pressure dan Profesionalisme: Berdasarkan Data Pandemi COvid 2019

“…Pada akhir 2019, desas-desus yang berawal dari China bahwa virus baru mulai menyebar, menghasilkan apa yang digambarkan sebagai gejala 'pneumonia parah' yang menyebabkan tingkat kematian yang luar biasa di antara orang tua yang paling rentan di masyarakat. Pada 2020, COVID-19 (dinamai "Penyakit VIrus Corona, 2019") telah meningkat dari pasar kecil di Wuhan, Cina, menyebabkan jarak sosial internasional dan isolasi rumah lebih dari 1 miliar orang di seluruh dunia, dengan dampak sosial, politik, dan ekonomi yang sangat besar yang akan mengikuti (Bedford et al, 2021).…”

Moderating Role of Cost Accounting Information Quality on the Relationship Between the COVID‐19 Pandemic and Budgeting in Public Hospitals

“…At the firm and organisational level, Bedford et al. (2022) use survey data from 83 Dutch firms and found that a more negative effect of the COVID‐19 pandemic is positively associated with a shrinking in budget controls. This tightening of budget controls is positively related to employees' emotional exhaustion because of their increased perceptions of role ambiguity and conflict.…”

“…Bedford et al. (2022) report that there is limited quantitative empirical research on the impact of a crisis on budgets. In addition, there are mixed results on this relationship in the literature (e.g., Pavlatos and Kostakis 2015; Becker et al.…”

Working from home and management controls

“…To evaluate the validity of the latent constructs, we follow Kennedy and Widener ( 2019 ) and Bedford et al ( 2022 ), among others, and use the measurement model of a Partial Least Squares Structural Equation Modeling (PLS-SEM) estimation. More specifically, to assess construct validity, we follow Sarstedt et al ( 2019 ) and apply a disjoint two-stage PLS-SEM approach.…”