Budget Season Stress in Finance: Why Planning Wears You Down

Abstract

This article is about budget season stress in finance and what research says about the strain of planning. Three pieces of research bear on it. A longitudinal study of 1,886 US managers (Cavanaugh and colleagues, 2000) found that stress from challenges and stress from hindrances went with different work outcomes. A series of studies on the planning fallacy (Buehler, Griffin and Ross, 1994) found that people predicted finishing tasks much sooner than they did, and that the bias disappeared when they linked predictions to past experience. A review (Ordóñez and colleagues, 2009) argues that goal setting has systematic side effects. None of these studied finance staff. The three steps at the end are practical readings, not tested methods, and this article is not medical advice.

The template that changed on Friday

It is the second week of the budget round. The template was changed on Friday, two business units have not sent their numbers, and the target for headcount has moved again.

You were sure in August that three weeks was enough. You now see that budget season stress is partly a matter of arithmetic you did too early and too kindly.

Budget season stress: what is the evidence?

The research cited here does not describe budget rounds. It covers a study of stress and work outcomes in managers, a set of experiments on how people estimate time, and a review of the side effects of targets. These studies used managers and students in many settings, and none was limited to finance. The next three sections cover what each one found. None of them tested the three steps at the end.

What a study of managers' stress found

Cavanaugh, Boswell, Roehling and Boudreau (2000) used longitudinal data from 1,886 US managers. They proposed that work stress is related to outcomes in different directions depending on the stressors being evaluated, and they analysed the data by regression.

Challenge-related stress was positively related to job satisfaction and negatively related to job search. Hindrance-related stress was negatively related to job satisfaction and positively related to job search and turnover. The abstract gives no coefficients. This is summarised from the published abstract.

Read the strain of the round through this. Some of it may be demanding but worthwhile, and some may only get in the way. This is an inference. The abstract does not classify budget deadlines, and what counts as a challenge or a hindrance depends on the person.

What studies of the planning fallacy found

Buehler, Griffin and Ross (1994) tested why people underestimate how long tasks will take. In the first study, 37 participants predicted how many days they would need for an academic task. The average prediction was 33.9 days. The average actual time was 55.5 days, and 29.7% finished within their prediction.

In a later study, people who were told to connect their predictions to relevant past experiences no longer showed the optimistic bias, and 60.0% finished on time against 29.3% in the control group. Observers, who judged other people's tasks, overestimated the time needed. This is summarised from the published abstract and the article text.

Read the August estimate of three weeks through this. People tend to plan from the way things will go and not from how similar jobs went before. This is an inference. The tasks were academic, not budget rounds, and the studies did not test a planning method for a finance team.

What a review of goal setting found

Ordóñez, Schweitzer, Galinsky and Bazerman (2009) review problems with goal setting. They describe side effects such as a narrow focus, distorted risk preferences, more unethical behaviour, inhibited learning, a weaker organisational culture and reduced intrinsic motivation.

The authors advise treating goal setting like a prescription medication, with a warning label. They do not argue that goals should never be used. This is summarised from the published abstract.

Read the headcount target through this. A number set to drive behaviour can also change the behaviour you did not ask for. This is an inference. The paper is a review and argument about goals in general, and it does not look at budget targets.

Budget season stress: three steps

None of these is a tested method, and none was studied in finance teams. They combine what the research points to with ordinary practice. Where a step goes beyond the research, it says so.

1. Estimate the round from last year's actual timeline, not from the plan. In the planning fallacy studies, linking predictions to relevant past experience removed the optimism. Use what happened last time. This is a judgement, and no study cited here tested this step. For instance: "Last year the first submission took 14 working days against a plan of 8. I plan for 14 and ask what would have to change to make it 10."

2. Sort the strain into what stretches you and what only blocks you. Hindrance-related stress went with lower satisfaction and more job search. Ask for the hindrances to be removed, and accept the demands that stretch. This is a judgement, and no study cited here tested this step. For instance: "Freeze the template on the first of the month, and carry late inputs at last year's level."

3. Put a warning label on each target before you set it. The review's advice is to treat goals like a medication with side effects. Write down what the number might make people do that you do not want. This is a judgement, and no study cited here tested this step. For instance: "Headcount target. Side effect: may push needed hires into next year. Watch: attrition and overtime."

If the round runs into the evenings, Finance Director Stress: Where the Pressure Comes From goes into that. For the weeks before a close, there is Quarter-End Pressure: How to Get Through the Last Two Weeks. When the year-end follows, see Year-End Close Stress in Finance: What Wears You Down. If the timeline is the problem, How to Push Back on an Unrealistic Deadline in Finance is about that. And How to Tell Your Team Bad News: Why the How Matters helps when the targets land on others.

Questions People Ask

Is budget season stress the same as burnout?

No. Budget season stress comes and goes with the calendar, and burnout is a longer pattern of exhaustion. The studies cited here did not measure burnout, and this article cannot tell you which you have.

Why do budget timelines keep slipping?

In the planning fallacy studies, people predicted finishing sooner than they did. Applying that to budget rounds is an inference. The studies did not test finance teams, and your own history of past rounds is the better evidence.

Are all budget targets harmful?

No. The review argues that goals have side effects and need a warning label. It does not say goals should be dropped. Which side effects matter for your targets is a judgement for you and your team.

Can coaching help me through the round?

Coaching is educational support for work patterns. It can help you plan the round and sort what is stretching from what is blocking. It is not treatment. No study cited here tested coaching.

When it is more than a busy round

A busy round is one thing. It is more when it does not ease after the deadline, when you cannot sleep, when you feel numb, persistently low or anxious, or when you notice physical symptoms. In those cases talk to your doctor, your occupational health service or a qualified mental health professional. This article is not medical advice. Coaching is educational support for work patterns. It is not treatment and not a substitute for it.

Sources

• Cavanaugh, M. A., Boswell, W. R., Roehling, M. V., & Boudreau, J. W. (2000). An empirical examination of self-reported work stress among U.S. managers. Journal of Applied Psychology, 85(1), 65–74. DOI: 10.1037/0021-9010.85.1.65 (Summarised from the published abstract.)

• Buehler, R., Griffin, D., & Ross, M. (1994). Exploring the "planning fallacy": Why people underestimate their task completion times. Journal of Personality and Social Psychology, 67(3), 366–381. DOI: 10.1037/0022-3514.67.3.366 (Summarised from the published abstract and the article text.)

• Ordóñez, L. D., Schweitzer, M. E., Galinsky, A. D., & Bazerman, M. H. (2009). Goals gone wild: The systematic side effects of overprescribing goal setting. Academy of Management Perspectives, 23(1), 6–16. DOI: 10.5465/AMP.2009.37007999 (Summarised from the published abstract.)