Effects of Unstable Budget Difficulty on Performance Over Time

When unexpected circumstances arise that increase the difficulty of employees’ jobs, businesses must decide whether to adjust the current performance expectations or not. Now, new research out of the Dhaliwal-Reidy School of Accountancy in Eller College of Management at the University of Arizona confirms that when it comes to motivating employees, it’s best to not adjust expectations.  

This research, co-authored by Jeremy Douthit, associate professor of accounting and Eller Fellow in the Eller College, and Ashley Sauciuc ‘19 PhD, assistant accounting professor in the Kelly School of Business at Indiana University, contradicts long-held beliefs: Adjusting performance expectations to remove increases in difficulty from unexpected events is argued to increase fairness and retain motivations for appropriate levels of effort and ability from employees. 

“We found that committing to not adjust expectations for periods where unexpected circumstances increase employees’ job difficulty can motivate employees to improve their learning and performance,” said Douthit. 

Importantly, the study focused on temporary challenges versus long-lasting industry shifts. Results suggest that allowing employees to attempt to rise to the occasion during unexpectedly hard periods yields increased performance and employee skill. During these brief periods, researchers saw an increase in learning-by-doing practice by employees that improved both current performance and future ability. 

“Contrary to concerns that employees must be insulated from unexpected and external events that affect their performance, our results suggest that knowing they will need to be able to react to periods of challenge by increasing their performance significantly forges the employees to be more skilled,” added Douthit. 

The full research was accepted to be published in Science Direct: Accounting, Organizations & Society, Volume 116, June 2026, 101639 and is available now at ScienceDirect.com.