Participative budgeting, job satisfaction, and presenteeism: survey evidence from middle managers

Middle managers in large firms have demanding jobs and often experience high levels of stress. Our objective is to investigate whether and how participative budgeting can improve job-related wellbeing of middle managers. Specifically, we expect that participative budgeting has the potential to enhance perceptions of procedural justice and organizational identification, which in turn positively impact job satisfaction and diminish presenteeism, i.e., health-related productivity loss.

We use survey data (N = 256) from middle managers of a large multinational to examine how participative budgeting (i.e., the extent to which managers are involved in deciding how and where resources are allocated) enhances procedural justice and organizational identification, and how this subsequently impacts job satisfaction. We also investigate the impact of job satisfaction on presenteeism. We use Structural Equation Modeling to analyze the relations.

We find that participative budgeting is positively associated with perceptions of procedural justice and organizational identification of middle managers. In turn, these perceptions are associated with higher levels of job satisfaction and lower levels of presenteeism, and thus benefit both the employee and the organization.

We contribute to the literature by providing evidence that organizations can improve job-related wellbeing and diminish health-related productivity loss by giving middle managers a greater say in processes related to budget allocation. That is, participative budgeting enhances middle managers' perceived procedural justice and organizational identification, which subsequently positively impact job satisfaction and reduce presenteeism.