The Impact of the Emphasis on Budgets and Budget Difficulty on Budget Value and Job Stress: The Mediating Role of Organisational Fairness (2024)

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The Impact of the Emphasis on Budgets and Budget Difficulty on Budget Value and Job Stress: The Mediating Role of Organisational Fairness? ›

The results indicate that organisational fairness fully mediates the association between budget difficulty with both budget value and job stress. Organisational fairness was not found to mediate the association between the emphasis on budgets with budget value and job stress.

Organisations implementing effective budgetary control systems can better manage their finances, reduce costs, and increase efficiency. One of the primary benefits of budgetary control is improved financial performance.

A budget provides an opportunity for leaders to exercise their strategic-planning skills. In effect, it serves as a roadmap, allowing an organization to set goals, establish priorities, allocate resources, and monitor their progress as they go.

An important step in the initiation of the company's strategic plan is the creation of a budget. A good budgeting system will help a company reach its strategic goals by allowing management to plan and to control major categories of activity, such as revenue, expenses, and financing options.

Budgets have the potential to impact employee behaviour

Management uses budgets to evaluate the performance of employees and their department. They can also use budgets to evaluate and benchmark the performance of a business unit in a large business or of the entire performance of a small entity.

Bad budgeting can lead to negative long-term financial impacts and difficulties in reaching organizational goals and objectives. Without good budgeting practices, businesses may be unable to effectively allocate resources where they are most needed and not know the difference until it is too late.

It helps an organization to prioritize its activities and allocate resources efficiently and effectively. Budgeting helps an organization to plan for the future, manage its cash flow, and monitor its performance. Despite its challenges, budgeting is a crucial component of organizational success.

Budgeting allows managers to explore how costs and revenues will behave under specific sets of operating assumptions. The process often points out conflicts between top management's objectives and the realities of the company's capabilities.

Key factors to consider while preparing the budget include operational planning, performance evaluation, communication of goals, and strategy formation . These factors are influenced by organizational strategy and structure .

A budget allows a business to plan out expenses, reach business goals and anticipate operational changes. Without a budget, a business may experience overspending and underperformance, which could ultimately lead to the company's closure.

Why are strategies important in the budget process? ›

Strategic budgeting allows for better long-term financial planning by identifying future expenditures and revenue sources. This long-term planning helps to avoid short-term solutions that may not be sustainable over time.

Answer and Explanation: A budget provides the framework for a plan for a business. Thus, the strategy of the business can be aligned to the budget, as resources will be dedicated to the items listed in the budget. Thus, they work hand in hand.

The budget sets the direction for the business by creating goals and objectives and then assigning responsibility to achieve those goals. Employees know what is expected of them for their own particular job and department. The budget preparation encourages employees to become involved and contribute their input.

A budget helps create financial stability. By tracking expenses and following a plan, a budget makes it easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home. Overall, a budget puts a person on stronger financial footing for both the day-to-day and the long term.

By forecasting revenues and expenses, a company can identify potential shortfalls and surpluses, allowing it to take proactive measures to address these issues. This can lead to improved financial performance and, consequently, growth. Budgeting also has a significant impact on a company's investment decisions.

The objective of budgeting and budgetary control in a business organization includes; PLANNING - To produce detailed operational plan for the different sectors and facets of the organization. CO-ORDINATION-To bring together and reconcile into a common plan the actions of the different parts of the organization.

A performance budget is one that reflects both the input of resources and the output of services for each unit of an organization. The goal is to identify and score relative performance based on goal attainment for specified outcomes.