Reconsidering PMSs : perspectives from managers and lower-level employees

(1)

Faculty of Economics and Business, University of Amsterdam

Reconsidering PMSs: Perspectives from

managers and lower-level employees

Program: MSc Accountancy and Control, variant Control

Student: Claudiu-Dumitru Fulger

Student number: 10377948

First supervisor: dr. R.J. (Rui) Oliveira Vieira

Date: 17

th

of August, 2015

(2)

Abstract

Purpose

The purpose of this paper is to provide empirical evidence about the design and use of performance management systems as perceived by the managers and lower-level employees working in the petroleum industry, using elements of organizational justice.

Design/methodology/approach

The research uses a case study approach, collecting data from interviews with management and line-employees, as well as documentary analysis and observation. The theoretical framework comprises 3 models: Ferreira and Otley’s (2009) Performance Management Systems framework complemented by Broadbent and Laughlin’s (2009) models of rationality, and Greenberg’s (1990) model of organizational justice. A manual coding scheme was at the basis of the research, making use of pattern matching and explanation building.

Findings

Results suggest that if employees consider PMSs as not being according to what is expected, what is practically feasible or if they are perceived as being unfair, conflict might arise within the organization and this could lead to different use of PMSs. Organizational commitment and loyalty are low when procedures are perceived unfair and demotivation is unavoidable. Moreover, concrete examples show that communication/interactive controls between managers and employees were seen vital for the use of PMSs as designed, as well as for the perceived fairness. This study also suggest that too much attention has been paid to different elements of justice (e.g. distributive, procedural, interactional), while overall fairness of the organization has been left aside.

Research limitations

First, the short period of time during which the analysis has been carried. Second, limited documents were provided by the company, hence data was based on notes taken and information collected during the interviews. Furthermore, confidentiality reasons did not allow a complete understanding. Third, a limited number of interviews. Lastly, the close involvement of the researcher might result in subjectivity in data interpretation.

Statement of originality

This document is written by Claudiu-Dumitru Fulger who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

(3)

Key words

Performance Management Systems, use, design, fairness, distributive justice, procedural justice, transactional and relational performance management systems.

(4)

Abbreviations

BSc – Balanced Scorecard CFO – Chief Financial Officer COCO – Company owned, company operated CODO – Company owned, dealer operated ERP – Enterprise Resource Planning HR – Human Resources KPI – Key Success Indicators (used interchangeable with KPM). KPM – Key Performance Measures KSF – Key Success Factors MCS – Management Control Systems PPMD – Planning and Performance Management Director

List of tables and figures

Figure 1 - Performance Management Systems Framework ... 13

Figure 2 - Models of rationality, a conceptual model ... 14

Figure 3 - Models of rationality considering the contextual factors ... 16

Figure 4 - Proposed model of organizational justice ... 20

Table 1 – Interviewee sample ... 26

(6)

1. Introduction

There is a widespread acceptance in the literature that Management Control Systems (MCS) is too restrictive and a broader perspective should be adopted. In this regard, the name of performance management systems (PMS) was coined, which integrates dimensions of managerial activity, processes, systems, networks and control systems (Ferreira and Otley, 2009).

Otley (1999) created a framework with 5 issues that need to be addressed in order to create a more comprehensive framework of performance management systems. This framework was used by many scholars to structure and present their findings, and was further extended and refined by Ferreira and Otley (2009) to a number of 10 ‘what’ question and 2 ‘how’ questions that need to be tackled, thus having a more holistic view than previous literature.

Recent research has analyzed the design and use of performance management systems, with stronger accent on the design component and generally using a top down approach. For example, Ukko et al. (2007) analyzes the impact of performance measurement on management and leadership and concludes that performance measurement works as support for management, without the ability to replace the leadership abilities. Moreover, Otley (1999), and Ferreira and Otley (2009) can also be regarded as adopting a top down approach. Berry et al. (2009) reviews the literature and points out from Malmi and Grannlund (2005) that there is little advice regarding interconnections between those 12 questions and also complements with Collier’s (2005) view according to which the benefit of belief and boundary system is not incorporated.

Different use of PMSs is provided by Ittner et al. (2003), who concluded that the Balanced Scorecard was used differently than intended by its users allowing management to have discretion not only in the weighting of the performance measures, but also in the choice of such measures. This resulted in high levels of subjectivity and introduced favoritism and uncertainty in the reward system.

Ferreira and Otley (2009) recognize the importance of ‘use’, making a distinction in their framework between the design and use of PMSs. This research will try to focus on the use of PMSs as well, not only on design.

(7)

Chenhall (2003) argues that the success of MCS is arriving from few elements such as commitment, organizational justice, and organizational trust. By considering Chenhall’s (2003) suggestion, elements from organizational justice will be used for the analysis of employees’ perceptions on PMSs. Many scholars have used the concept of fairness in quantitative studies (e.g. Lau et al. 2008, 2012; Folger and Konovsky 1989; Sholihin and Pike 2009), but did not grasp details from in-depth interviews and were mostly focused on performance measurement, rather than considering a wider picture such as PMSs. Moreover Leung (2005) calls for research considering that procedural justice should be examined cross-culturally and notices that a universal concern of justice does not mean that justice effects can be generalized. Also, he considers that too much attention has been given to the Western contexts.

The research question of the present study is concerned with how the design and use of performance management systems is perceived by both managers and employees working in the petroleum industry?

The study will grasp views from lower-level employees (line-workers) and also from managers for later comparison, with focus on employees’ perspective. How lower-level employees and management perceive the use of Performance Management Systems, as they can be used differently than designed. Also, are the PMSs perceived as being appropriate/fair? If there are discrepancies in opinions (management vs. lower-level employees), how should the PMSs be designed/used from an employee point of view in order to be perceived as more appropriate/fair? Considerable research has focused on how to design and what are the effects/results of PMSs from the perspective of higher levels of management, but less on the perspective of lower-level employees and the way they perceive these systems, their use, efficiency and fairness. This can prove to be interesting, as the number of lower-level employees is greater and their view should be taken into consideration as well when designing such PMS. Moreover, sometimes PMSs can be designed in a certain way but used in a different way, thus having other effects than intended as we can also notice in Chenhall (2003). Insights from employees dealing with PMSs more directly can bring to light some aspects otherwise hard to consider a priori. Moreover, Stringer (2007) proves that only 1 out of 10 studies adopt an integrated approach for the study of performance management, the major works being fragmentary - focusing on certain aspects. Although many studies have considered coercive or organic control systems, they have not taken

(8)

into consideration a complex framework such as the one created by Ferreira and Otley (2009) to grasp views from both managers and lower-level employees.

There are several reasons for undertaking this study. A new perspective is adopted, providing evidence in the same time on how well employees understand the PMSs in use, taking the case of a Romanian subsidiary which activates in the petroleum industry (retail). This can be an interesting area for research because Romania is an ex-communist country and few studies are conducted in Eastern Europe where performance management systems are recently introduced and employees have little experience with such systems. Also, as they are recently introduced, there is a probability that employees do not understand the PMSs.

Although in the past decade a number of case studies have been published in the area of performance management, theorizing about the results and the degree of understanding lag behind (Otley, 2003). A way to add knowledge in this field can be achieved by focusing on particular cases (Otley, 2003; Malmi and Granlund, 2009). Moreover, Malmi and Grandlund (2009) argue the importance of future research for why some combinations work, while other do not, considering various circumstances. Being recently introduced, the level of experience with such systems in an ex-communist country can contribute to the knowledge in the field of management accounting for early implementation of PMSs.

To my knowledge there is no research focusing on understanding the perception of managers and employees – with perception comparisons – over the design and use of performance management systems using in-depth interviews and considering elements of fairness.

The rest of the paper is structured as follows:

After the introduction part, the relevant literature will be presented in the second part together with the theoretical frameworks. Section 3 will give details on the methods used to collect data as well as analyzing it. A general overview of the selected company will be provided in the 4th_{section for a better understanding of the context, followed by the main findings which are}

organized around Ferreira and Otley’s (2009) framework. Lastly, in the 5th_{section, a brief}

(9)

2. Literature review

2.1. Performance management systems

Otley (1999, p. 363-364) defines performance management systems as “a perspective more focused on the operation of overall control systems (…) by looking beyond the measurement of performance”. We can say that performance management precedes performance measurement and gives a context for the latter. It is well known in the literature that what is measured gets more attention from employees (Ridgway, 1956). A more recent example is provided by Henri (2006) which notices that the use of performance measurement in an interactive fashion (diagnostic) contributes positively (negatively) to the degree of organizational entrepreneurship, innovation and organizational learning. Brudan (2010, p. 111) also makes a clear distinction between the two: “Performance measurement deals with the evaluation of results, while performance management deals with taking action based on the results of the evaluation and ensuring the target results are achieved”.

Otley’s (1999) framework draws from an extent body of research and it revolves around five questions that an organization needs to address in order to grasp a more complex view of its PMSs. The questions are presented below (pp. 365-366):

1. “What are the key objectives that are central to the organization’s overall future success, and how does it go about evaluating its achievement for each of these objectives?”

2. “What strategies and plans has the organization adopted and what are the processes and activities that it has decided will be required for it to successfully implement these? How does it assess and measure the performance of these activities?”

3. “What level of performance does the organization need to achieve in each of the areas defined in the above two questions) and how does it go about setting appropriate performance targets for them?”

4. “What rewards will managers (and other employees) gain by achieving these performance targets (or, conversely, what penalties will they suffer by failing to achieve them)?”

(10)

5. “What are the information flows (feedback and feed-forward loops) that are necessary to enable the organization to learn from its experience) and to adapt its current behavior in the light of that experience?”

The presented framework draws knowledge from Simons (1995), which proposed 4 levers of control that a company needs to make use of in order to successfully achieve its business strategies. The four elements of his framework are: diagnostic control systems which control critical performance variables, belief systems which controls the core values, boundary systems which control the risks to be avoided, and interactive control systems which handle strategic uncertainties.

Diagnostic control systems can set certain performance targets and afterwards let at the latitude of the employee how to achieve these targets. This type of controls can put pressure on employees through highly demanding targets and agency conflicts might arise. Belief systems can control certain factors that are usually uncontrollable with diagnostic control systems and start from the vision of the organization, having the aim to help employees in difficult moments (e.g. Ethical dilemmas). Boundary systems set certain limits of action for the employees, telling them what they shouldn’t do. Lastly, interactive control systems bring management “at the table” with lower-levels employees, using different innovative ways to communicate. This is a way for supervisors to obtain information and input from lower-level employees.

Collier (2005) and Ferreira and Otley (2009) argue that Simons (1995) failed by not incorporating informal controls (e.g. group norms, culture), which are considered to be important in the design of management control systems, basing his research on only 4 types of formal control systems and trying to grasp the whole. Moreover, Ferreira and Otley (2009) consider that the framework is too focused on top level managers and misfits in the case of small organizations.

Having its own weaknesses (e.g. not taking into consideration elements such as vision and mission), Otley’s (1999) framework is further refined in Ferreira and Otley’s (2009) paper into twelve questions, eight of which relate to the PMSs design and four to the culture and context. This framework will be discussed more extensively in the theoretical framework. On these four questions Broadbent and Laughlin (2009) develop two rationalities, transactional and relational PMSs, thus extending Ferreira and Otley’s (2009) framework which will also be discussed in the theoretical framework.

(11)

Ferreira and Otley (2009) will be used for a more comprehensive and integrated approach of collecting data and provide evidence how to analyze such data. The paper introduces 12 questions that need to be addressed in order to create a more comprehensive framework of performance management systems. These questions are related to vision and mission, key success factors, organization structure, strategies and plans, key performance measures, target setting, performance evaluation, reward system, information flows, PMSs use, PMSs change and finally, strength and coherence. By using this framework, the aim is to provide a broader view of the key aspects of MCSs through employees’ perspective in order to obtain a holistic overview of PMSs design and use at Oil Company LTD1.

This 12 questions/issues will be used for the purpose of this paper and are presented below: 1. What is the vision and mission of the organization and how is this brought to the attention of managers and employees? What mechanisms, processes, and networks are used to convey the organization’s overarching purposes and objectives to its members?

2. What are the key factors that are believed to be central to the organization’s overall future success and how are they brought to the attention of managers and employees?

3. What is the organization structure and what impact does it have on the design and use of performance management systems (PMSs)? How does it influence and how is it influenced by the strategic management process?

4. What strategies and plans has the organization adopted and what are the processes and activities that it has decided will be required for it to ensure its success? How are strategies and plans adapted, generated and communicated to managers and employees?

5. What are the organization’s key performance measures deriving from its objectives, key success factors, and strategies and plans? How are these specified and communicated and what role do they play in performance evaluation? Are there significant omissions?

(12)

6. What level of performance does the organization need to achieve for each of its key performance measures (identified in the above question), how does it go about setting appropriate performance targets for them, and how challenging are those performance targets?

7. What processes, if any, does the organization follow for evaluating individual, group, and organizational performance? Are performance evaluations primarily objective, subjective or mixed and how important are formal and informal information and controls in these processes? 8. What rewards — financial and/or non-financial — will managers and other employees gain by achieving performance targets or other assessed aspects of performance (or, conversely, what penalties will they suffer by failing to achieve them)?

9. What specific information flows — feedback and feed forward —, systems and networks has the organization in place to support the operation of its PMSs?

10. What type of use is made of information and of the various control mechanisms in place? Can these uses be characterized in terms of various typologies in the literature? How do controls and their uses differ at different hierarchical levels?

11. How have the PMSs altered in the light of the change dynamics of the organization and its environment? Have the changes in PMSs design or use been made in a proactive or reactive manner?

12. How strong and coherent are the links between the components of PMSs and the ways in which they are used (as denoted by the above 11 questions)?

(13)

Figure 1 - Performance Management Systems Framework

One key strength of this framework is the fact that recognizes the importance of use of PMSs, so it is not limited to the design characteristics. This is achieved by incorporating Simon’s (1995) framework and making a distinction between diagnostic and interactive controls systems. By using this model we can punctually see the discrepancies in the design and use of PMSs.

As we can see in figure 1, performance management is more than performance measurement. We derive from the overall strategy of the organization, starting with mission and vision rather than choosing some random performance measure that promise a good fit.

The framework has laggings as well, that is, not taking into consideration wider contextual

factors that could affect the operations of the organization. However, Ferreira and Otley (2009) consider that the incorporation of this factors is highly complex and outside the control of the organization.

Adler (2011) makes use of Ferreira and Otley’s (2009) framework in his exploratory study and examines how PMSs are designed in a way to support the implementation of a confrontation

Source: Ferreira and Otley (2009), figure 1, p. 268

(14)

strategy. Adler (2011) notices the contextual factors as a weakness as well and proposes a revised framework, where organizational culture and employee selection, training and development are considered as well. What is to notice, however, is the fact that Adler (2011) fails to mention Broadbent and Laughlin’s work which has already pointed out this shortcoming. Apart from that, Adler (2011) provides us with a well-structured table, pointing out 3 different strategies – cost leader, differentiator, and confrontation – and the PMSs that go along with such strategies.

In order to create a more complete picture, Broadbent and Laughlin’s (2009) framework will be incorporated in this study. The paper revolves around two types of “rationalities”, transactional and relational use of PMSs, and they construct these rationalities starting from Ferreira and Otley (2009) model, focusing on question 9 and 10.

Broadbent and Laughlin (2009) argue that “A PMS, in a generic sense, is a control framework which attempts to ensure that certain ends are achieved and particular means are used to attain these ends” (p. 293). The paper aims to extend Ferreira and Otley’s (2009) insights concerning the contextual factors, thus dealing with the last four questions/issues.

Figure 2 - Models of rationality, a conceptual model

Source (redrawn): Broadbent and Laughlin (2009, pp. 286)

Transactional PMSs are occurring when an organization has clear and unambiguous goals (ends) together with the means to achieve these ends. They have a system set in place to achieve these ends and throughout the organization is known what one must do in order to achieve them. At the basis of transactional PMSs we have an instrumental rationality – based on rational and

Models of rationality

Instrumental rationality Communicative rationality

PERFORMANCE MANAGEMENT (AND CONTROL) SYSTEMS (PMS) Selective definition of ENDS to achieve (e.g. vision and mission, key success factors in relation to ends, key performance indicators, targets) and the MEANS to be used (e.g. strategy and plans, key success factors in relation to means, structures, performance evaluation systems, reward systems) to achieve these ends.

(15)

formal actions such as clear performance indicators (e.g. amount of sales). Incorporated in the instrumental rationality we also have a theoretical orientation, rather than practical due to imprecision that might come along when practice oriented. Having clear targets, this instrumentality relates less with the stakeholders and their needs, thus the probability of different stakeholders to own the ends and means is likely to be low. Lastly, by having clear procedures/targets and formal means, the underlying authority structure is a legal-rationality.

On the other hand, within relational PMSs, ends and means are “negotiated” with the stakeholders. Thus we are dealing to a communicative rationality. In this case there is not a clear definition of performance indicators, being concerned more with the long-term value of the company (substantive rationality). In order to achieve the desired goals, a practical rationality is deployed. Also, due to the fact that the means and ends are not fixed, the organization has a reflexive authority structure.

We notice that Broadbent and Laughlin (2009) recognize the importance of the context: “(…) External and internal environment will provide challenges and opportunities to which the organization will need to choose whether to react or not” (pp. 290). This does not happen in Ferreira and Otley (2009), where they argue against the incorporation of the context as we have seen earlier in the paper. Stemming from the contextual complexity Broadbent and Laughlin (2009) sustain two perspectives of the context: disaggregated and divisionalised organizations, and organizations whose function is to regulate the PMSs of other organizations. For the disaggregated category, Ferreira and Otley (2009) admit that the 8 questions apply to the PMS of the organization as a whole. This implies that the questions should be asked at each level because different answers might arise.

(16)

Figure 3 - Models of rationality considering the contextual factors

Source (redrawn): Broadbent and Laughlin (2009, pp. 290)

As a strong point, Broadbent and Laughlin’s conceptual model is flexible in data analysis, allowing description of a variety of PMSs. Besides the descriptions of PMSs, it is important to consider this framework as some differences between design and use could steam from this point. If the organization has clear and unambiguous goals (ends) there is a lower theoretical possibility to have discrepancies between the design and use of PMSs.

2.2. Concepts of organizational justice

In social sciences the importance of ideals of justice has been recognized as a basic requirement for the effective functioning of the organizations, but also for the satisfaction of the employees (Moore, 1978). In accounting we are dealing with the so called organizational justice. For the analysis of the different outcomes many researchers have used a three factor model

Models of rationality

Instrumental rationality Communicative rationality

PERFORMANCE MANAGEMENT (AND CONTROL) SYSTEMS (PMS) Selective definition of ENDS to achieve (e.g. vision and mission, key success factors in relation to ends, key performance indicators, targets) and the MEANS to be used (e.g. strategy and plans, key success factors in relation to means, structures, performance evaluation systems, reward systems) to achieve these ends.

Transactional Relational

CONTEXT

EXPLICIT OF IMPLICIT FINANCIAL TRANSFERS AND ACCOUNTABILITY REQUIREMENTS IN A RELATIONSHIP BETWEEN

(17)

concerning justice. That is distributive, procedural and interactional justice. Usually, in management accounting research, interactional justice was incorporated in the procedural justice (Sholihin and Pike, 2009; Lau et al., 2008). The results from Greenberg (1990) suggest the two-factor model at organizational level. Kaplan and Atkinson (1998) argue that fairness is a central issue when considering employee performance evaluation and compensation and present two important behavioral considerations that a performance measurement system must reflect. First the system must be seen as fair by the individual and second, the organizational policies must be considered equitable. Giraud et al. (2008) consider that fairness is an important aspect when implementing the controllability principle in the design of management control systems.

Distributive justice was first conceptualized by Adams (1965) and is concerned with the

fairness in the distribution of resources and decision outcomes. The author argues that if outcomes are perceived as being equally distributed, then distributive justice is enhanced.

For more than a decade the research on elements of justice has been focused on distributive justice and most work has been derived from Adams (1965). The paper had at its basis the social exchange theory which has roots in sociology, psychology and economics. Homans (1958) describes social behavior as an exchange of goods (material and non-material) with people that are offering such goods, ultimately trying to acquire them back in similar inputs from third parties. His accepted point of view is that in order to determine if the outcome is fair, we must compare the inputs with the outcomes of the individual and subsequently compare this ratio with other individuals. Intuitively, is this ratio is not equal, individuals have incentives to deviate (e.g. work less if the ratio differs). What is important to notice here is the fact that the process part is left aside, leaving it with managers’ reasoning, thus subjectivity is unavoidably involved. Consequently, the upcoming of procedural justice was unavoidable. Originally introduced by Thibaut and Walker (1975), they were analyzing the influence of individuals over the process control and decision control (in a legal context). The results of the study show that disputants coped with the idea of giving up control in the decision stage if they could have control in the process stage. Leventhal (1980) extrapolates the previous study to an organizational setting, arguing that procedural justice has application outside the legal contexts. Furthermore, Greenberg (1986) states that distributive factors are as important as procedural factors and they should not be disregarded, making reference to the attention paid to procedural factors recently.

(18)

Procedural justice (Leventhanl, 1980) takes into consideration if the processes that lead to

different outcomes are considered as being fair. When individuals (lower-level employees in our case) have the right to an opinion - that would be taken into consideration - in defining the processes, procedural justice is seen as enhanced (Leventhal, 1980). He argues that we are dealing with six criteria that need to be fulfilled in order to achieve procedural justice: a) Rules should be applied consistently across persons and over time, b) bias should be suppressed (e.g. no self-interest), c) Make use of accurate information (e.g. record keeping), d) Decision can be reversed if were based on inaccurate information, e) Proper representation of the interests of each party so that different opinions are taken into account, f) Conform with the standards of ethics and morality. During the performance evaluations of the employees, perception of fairness were enhanced when employees had a saying during the performance evaluations (Landy et al., 1978). Similar results were concluded in the work of Dipboye and de Pontbriand (1981), proving that when employees expressed their viewpoints the evaluation systems were perceived as being more fair. Procedural justice can be illustrated through the self-interest model and group value model (Lind and Tyler, 1988). The first argues that people want to maximize their outcomes and thus they prefer fair procedures. The later takes into consideration all group members and their social benefits derived from being part of the group, thus not only economic reasons. The same authors argue that procedural fairness has an impact on performance with positive effects when the procedures are considered as being fair and negative effects when procedures are regarded as unfair.

Interactional justice as coined by Bies and Moag (1986) is concerned with the treatment

of an individual when decisions are made and the degree of providing him with explanations for such decisions. The authors argue that interactional justice differs from procedural justice because it represents the social exchange element of the interaction.

Another model of organizational justice was proposed by Byrne and Cropanzano (1999), which suggest that organizational justice is a multi-foci construct, one where employees consider justice as incoming from a source, the organization or the supervisor. Lavelle et al. (2007) have also constructed on this multi-foci approach.

Recent studies in management accounting started moving from performance measurement fairness regarded as simple measurement and extended the area of research to multidimensional performance measurement systems as for example, the balanced scorecard (see Lau and Sholihin,

(19)

2005). A balanced scorecard capture the activities that create value, in order to focus on them, and enables the ‘balanced’ use of both financial and non-financial elements. Thus, it can be regarded as a complex organizational tool. Strategy maps can be created in order to show employees how their action lead to value creation.

As we can see above, with time, social scientists have recognized the importance of the justice element have created three categories for through research in different contexts. Organizational justice perceptions can impact the trust relationships, performance, job satisfaction and commitment, thus is considered to be a very important aspect for the value creation of the company.

In assessing the perception of managers and lower-level employees on the design and use of PMSs, this study will use elements of organizational justice. Dominant in the management accounting literature we find two types of subjective perceptions: distributive justice which takes into consideration the fairness in distribution of outcomes and procedural justice which is used for determining outcome distributions (Greenberg, 1990). Colquitt et al. (2001) argues that the fairness element results in improved organizational outcomes. This study will make use of Greenberg’s (1990) two-factor model, as it clarifies the concepts from prior literature and is widely used by scholars, taking into consideration in the analysis both distributive and procedural justice from Adams (1965) and Leventhal (1980) which were described earlier.

Making the distinction between distributive and organizational justice was seen as a major challenge. From a theoretical point of view this was established but it remained for analysis to see if also this can stand from the worker’s point of view. By deploying open-ended questionnaires to middle managers from 3 organizations, in which they were asked to describe determinants of examples with fair and unfair performance appraisals, Greenberg (1986) derived two elements of justice: procedural and distributive determinants. This two elements accounted almost completely for the variation and resulted that managers were aware of both procedural and distributive justice. Similar results were obtain by Sheppard and Lewicki (1987) where managers were asked to describe incidents considered fair or unfair in their relationships with their own managers. Greenberg (1990) accepts another two factors derived from procedural justice. That are: System satisfaction and Outcome satisfaction. These two elements were supported by Folger and Konovsky (1989), Fryxell and Gordon (1989). By deploying a survey to 217 first-line-employees

(20)

working in a manufacturing plant, Folger and Konovsky (1989) argue that distributive justice is associated with own pay satisfaction and the procedures are related to organizational commitment. The latter obtained similar results analyzing the reactions of employees to the organizational grievance system. Sweeney and McFarlin (1993) found support for the two factor model proposed by Greenberg (1990) through the use of structural equation modeling.

Greenberg (1990) illustrates the previous research as follows:

Figure 4 - Proposed model of organizational justice

Source (redrawn): Greenberg (1990, figure 1, pp. 405)

After the analysis of PMSs at Oil Company LTD, it can be synthesized that the researcher expects the differences or alignment between design and use can also be partially attributed to the organizational justice, especially procedural justice. In theory, if procedures that lead to different outcomes are fair, overall performance of the organization will be improved. If employees consider PMSs as not being according to what is expected, what is practically feasible or if they are unfair, conflict might arise within the organization and this could lead to different use of PMSs.

Organizational Justice Procedural justice Distributive justice System satisfaction Outcome Satisfaction

Folger & Konovsky (1989) Fryxell and Gordon (1989)

Greenberg (1986) Sheppard & Lewicki (1987)

(21)

3. Research methodology

By deploying a qualitative research method, this study is capturing the point of view of many participants, bringing useful and detailed insights that are hard to capture by using a quantitative study. The main objective of this paper is to analyze how the design and use of PMSs is perceived by both managers and employees working in the petroleum industry. In order to address the question ‘how’ – and obtain deeper understanding – a qualitative study is considered as being appropriate for the aimed objective. Parker (2012) considers that the qualitative research tradition presents potentially unique insights and contributions to management accounting knowledge, by critically assessing the tradition’s features, its methodological trends and the potentials for future research.

Chua (1986) identifies 3 paradigms – mainstream, interpretive and critical – in accounting research. Quantitative studies usually fall within the mainstream category. The critical accounting research aims at changing the status quo and it is advocating for change. The interpretive accounting research – in which our study falls – has at its basis the symbolism and tries to understand the reasons of the ‘actors’; Thus, unlike a quantitative study – where the reality is fixed -, we have more than one reality which makes impossible the deployment of a quantitative study. The selection of the interpretive method is important because this study intends to achieve a rich understanding of the perception of managers and lower-level employees over the PMSs and the perceived fairness of such systems.

The following subchapter will bring more details on the methodology.

3.1. Research method

One important aspect of qualitative research compared to quantitative research is the engagement with actors, instead of an objective analysis while being distant. In this way, researchers can experience – at least to some extent – what it feels like to be there (Parker 2012). Moreover, Parker (2012) argues that the most frequent type of engagement when considering

(22)

accounting practices is a case study genre. Four options are available in such case: descriptive, illustrative, exploratory, explanatory. Our case study will focus on explaining the reasons behind the scene and explaining social phenomena, thus taking the shape of an explanatory study.

In the literature, four categories of research methods are identified: history based, archival analysis, experiment, survey, and case study. Yin (2009) argues that case studies are the preferred method when a ‘how’ question is being addressed and the focus is on exploring a contemporary phenomenon in a real life context.

Considering the ‘how’ question of this study and the arguments presented above, a case study research method is considered appropriate for our research purposes.

3.2. Data collection

In the literature is pointed out the importance of triangulation of data, either if the researcher is conducting a quantitative or a qualitative study. Especially in the qualitative studies it is important to have multiple sources of data, as subjectivity can be easily involved in the interpretation of data. Yin (2003) argues that a case study inquiry relies on multiple sources of evidence with data needing to converge in the so called triangulation.

This study makes use of semi-structured interviews, participant observation and documentary analysis in order to achieve triangulation and enhance the validity of the research. This also gives a more complete view of the investigated phenomena. This choice of using semi-structured interviews allowed the researcher to ask similar questions to a large range of employees and obtain information that can be put in contrast, while in the same time allowing the flexibility necessary for new ideas that can steam from the setting scene (Ryan et al. 2002). Flexibility was also important due to the fact that many employees from middle management did not have any info concerning the general strategy of the company and how it was related to their personal goals. On the other hand, a structured interview would not allow such flexibility because it contains a standardized and identical set of questions, which are administered by the interviewer. Unstructured interviews are more informal and do not have a predetermined set of questions, but rather exploring in depth a general area of interest. By having a clear purpose in mind, semi-structured interviews appear to be the best fit for this research. Besides the interviews, fields notes were taken, which involve a deep understanding of the context from the side of the researcher.

(23)

However, this is twofold: a greater level of subjectivity can be involved, but on the other hand richer data can be gathered by analyzing attitudes and grimaces. Although interviews are regarded as being a time consuming activity, by preparing an interview guide and agenda, the process was simplified and organized.

Participant observation was facilitated by the fact that in the past I worked in the company for 3 months and trust was established. Recently, during a seven days period, I was around the employees 9 hours every day, taking notes and waiting for the right moment to conduct the interviews. Being present in the headquarters for five days before moving on the field – to interview the line-employees – allowed the researcher to have a greater understanding of the ongoing processes. Moreover, due to the fact that the gas stations were extremely busy, the researcher had to wait for the interviewees and during this time I could observe their behavior and actions without making them uncomfortable with the discrete observation process. Informal interviewing took place while the researcher has given his help around the gas station and during their breaks. Useful information stem this way as well, as some of them were uncomfortable talking about everything during the recorded interview. Thus, both formal and informal information were used to build this study. As required by a qualitative study of this kind, the researcher had the opportunity of ‘viewing the world’ through their eyes in different contexts and my insights were enhanced, while field notes were taken to reflect this.

Valuable information was obtained through documents – internal and external - as well, such as PMSs procedure, KPIs for different positions of management, written codes of conduct, annual report, data available online, work instructions, and different documents found on the local network of the company. Such documents fit for the purpose of triangulation of data and were of great use in preparing the research. These documents backed up the information gathered through interviews and participant observation.

3.3. Case design

The research is based on a case study conducted in a Romanian company, which activates in the petroleum industry. The company was chosen for 3 main reasons. First of all, the PMS was recently introduced (18 months), the company having created a balanced scorecard at divisional level in order to create more clarity in the achievement of their goals. The fact that the PMS is

(24)

recent goes with the fact that implementation might not be up scratch, and there might be differences between design and use. The same can be argued for the level of fairness for the employees as we will see later on. Second, the novelty of the setting. Romania has a transitional economy, moving from centrally planned – until the collapse of the communist regime in 1989 – to a free market. Also, starting with 2003 became part of NATO and subsequently, in 2007, part of the European Union. All this had great impact on the business environment. The company itself went from state owned to private ownership. Thus, Romania is an interesting area of study, with few researchers concentrating on Eastern Europe, unlike the USA or Western Europe. Thirdly, the access to the company was an important factor as well. The researcher has completed an internship of 3 months just before leaving for studies. The researcher has worked as an economist in the accounting department, together with the chief accountant and the CFO. By having this position, the researcher had easier access to information and the trust of people on my side. The idea of studying this subject came retrospectively, thinking about the level of pressure that came along with the new measurement system and the integrated way of dealing with performance – by using the balanced scorecard. Moreover, due to the fact that the researcher had a lot of flexibility – moving to different employees to get to know their field -, there was the opportunity to be acquainted with the management style, organizational culture, structure and history. Some employees from accounting were in contact with the employees from the front line, telling me about their attitudes and work habits. During my stay at the company for conducting interviews, the chief accountant introduced me to the targeted people and presented me as an ex-employee and he asked him personally to provide me with the necessary information. This was very important as the company rarely has researchers and there would not have been an atmosphere of trust otherwise.

Oil is the leading source of commercial energy in the modern world, accounting for around 40 per cent of today’s world energy mix. There is every indication that oil will maintain this leading role well into the 21st century. This is in spite of the fact that, over the past decade or so, oil has come under pressure on environmental grounds, particularly in the context of the UN-sponsored climate change negotiations2. Petroleum industry includes the following processes: exploration, extraction, refining, transporting and marketing (retail). Oil Company LTD is one of the largest

(25)

companies of its kind in Romania and has operations in more than 10 countries. The company has 3 divisions in Romania and the current study had been conducted in the retail division. It is important to notice that a more complex and holistic view over performance management systems can be obtained as the company operates in an international environment. Also, as an advantage, the company has the headquarters in Bucharest - Romania, offering the researcher favorable access as compared to conducting the interviews in a foreign country. Thus, the researcher expects less unfavorable effect from barriers such as the language or culture.

This research examined how the design and use of performance management systems is perceived by both managers and employees working in the petroleum industry with particular emphasis on the lower-level employees’ perspective. Therefore the method chosen for analysis is semi-structured interviews (qualitative approach) and not survey, in order to be provided with more insights from the employees as they might experience different the performance management systems. By adopting an interpretive methodology, this study can provide a rich understanding of the way PMSs are shaped within Oil Company LTD, but also how they are used.

The research protocol will provide the company with confidentiality, mentioning just the department of the employee and the position. A confidentiality agreement has been signed for this purpose. This will encourage the interviewees’ to be more open and honest in their answers, resulting in a higher quality of the research. All interviews were digitally recorded. To have the certainty that the answers have been interpreted fairly and correctly, the results were planned to be sent to the company, but due to the sensitive nature of the justice element, and the different use of PMSs, the opposite has been decided. Moreover, the fact that some employees are the only ones having a certain position, by mentioning the position was the same as mentioning the name.

After being introduced to the employees by the chief accountant as a student at University of Amsterdam, the employees were very enthusiastic and determined to help, giving me detailed information. One aspect is to be pointed out, the fact that the researcher expected more transparency from top management. There was some information regarding the balanced scorecard that was not shared by providing documents, but by description. Apart from that, employees shared their experiences in the company, and the researcher encouraged them when they were stating their personal beliefs about the system. What is to be noticed, is the fact that the interviews were shorter than expected, as employees did not know much of the information related to the balanced

(26)

scorecard, strategy and other elements from the integrated system. This will be argued later on, with the analysis of use of PMSs.

It is important to interview both management and lower-level employees as managers have a broader view and lower-level employees can be easily biased by considering more personal elements. Thus, it is taken into consideration that lower-level employees might be too subjective and potential biases might arise. Consequently, by also analyzing management’s – which have a more holistic view – opinions, potential biases are to be handled and reduced. Therefore, the number of interviews is 15, selected from different hierarchical levels in order to triangulate the data and as suggested by Ferreira and Otley (2009), for a better understandability of the PMSs.

All interviews except one were conducted in Romanian (see table 1) - The interview with the CFO, which is an expat, was conducted in English. Seven of the interviews took place at the headquarters and eight at the gas stations on the field. The interviews were recorded, transcribed, and notes were taken.

Table 1 – Interviewee sample

Interview number

Interviewee Duration Language

1 Group Planning and Performance

Management Director

33 minutes Romanian

2 Chief Financial Officer 44 minutes English

3 Performance and development

coordinator

37 minutes Romanian

4 Customer Operation Manager 20 minutes Romanian

5 Credit Control and Collection

Manager

25 minutes Romanian

6 Retail Operation Manager 29 minutes Romanian

7 Chief Accountant 27 minutes Romanian

8 Gas Station Manager 39 minutes Romanian

9 Gas Station Manager 27 minutes Romanian

10 Staff line 29 minutes Romanian

(27)

3.4. Case analysis

In order to conduct an orderly analysis, the data was gathered in a folder stored in cloud software – for safety / data protection reasons – and divided in subcategories (e.g. “Transcribed Interviews”, “Interviews”, “Documents”).

After the interviews have been conducted, they were transcribed, put against the notes taken, and finally written with some new insights, additional to the transcripts. This was a good start for the coding scheme.

Impressions of the interviewee, such as grimaces and other non-verbal cues were taken into consideration. Some employees started talking more about the interview questions after the recording was stopped and they were more categorical in certain aspects after the official interview.

Flick (2009, p. 296) states that the purpose of interpreting the text may pursue two opposite goals. First, “to reveal or uncover statements or to put them into their context (…)” and second, “reducing the original text by paraphrasing, summarizing, or categorization”. Strauss (1987) argues that the interpreting the data is the most important part of the empirical procedure.

The coding of the transcripts was done manually, based on the researcher’s skills, such as induction, deduction, and working with the abstract. Pattern matching and logical chain of evidence were vital in ensuring the internal validity of the research. A network of codes was created using 6 stages. First, the researcher has established the unit of analysis, which were paragraphs and then the open coding started. Subsequently, narrowing down the codes by creating sub-codes which were more overarching. Reflection on the purpose of the research followed and themes have been identified. The themes have been analyzed in a way as to how they interact with each other.

(28)

4. Findings

Having set in place the purpose of the research and the theoretical background, this part of the study will set the scene in order to better comprehend the findings. The information provided in this part is also useful for the extrapolation to other settings, if relevant. General information about the company will be provided, but in a rather limited way, as to create a balance between comprehension and not divulging confidential information. The name of the company was changed for confidentiality reasons to Oil Company LTD.

4.1. Company description

Oil Company LTD is part of Oil Company Group and its domain of activity is retail. The group has 3 main areas: upstream - oil exploitation, downstream – retail, and refining. With activities in more than 10 countries and main exploitation area in the Black Sea and Mediterranean Sea, the group is very well known in Romania as one of the best and popular brands. Having a long history and representing Romania internationally, once the communism had fallen, the company went private and started expanding internationally. Oil Company LTD has now over 800 distribution locations. After a series of acquisitions, the Oil Company Group was listed at Bucharest Stock Exchange and continues the expansion, until in the late 2000s, when it is bought at its turn. After the acquisition, the shareholders decided to operate the company under the same name at the local level, due to the popularity of the brand.

The business environment in Romania is not that stable, entrepreneurs being pressurized to catch up with competitors from more developed countries. The stability element is also due to the fact that Romania recently transitioned from communism - from a centrally planned economy towards a free-market – with barriers such as culture and benefits provided by the state for the entrepreneurs.

Some of the gas stations from retail are owned by third party distributors, which have the freedom of organizing their stations after their needs. Access to such distributors could not be obtained, as they usually have different ways of doing business and do not interact as much with the retail’s management. The scheme is as follows: COCO (Company Owned, Company Operated)

(29)

and CODO (Company Owned, Dealer Operated). There are limits concerning their liberty, usually having access over the motivational system of rewards and small changes around the stations – without creating a considerable impact on the brand. With over 6000 employees, Oil Group LTD is one of the biggest employers in Romania. Plans of expansion for 2015 are presented in the media.

Oil Company LTD has recently implemented a balanced scorecard (BSc) in order to create more clarity in creating the goals and finding smart ways of achieving them. Although, what is to notices, is the fact that the BSc is more of a local decision, at divisional level and it is not used for the whole group. Thus, 18 months ago, a performance evaluation system was implemented for different levels of responsibilities, as a result of the activities integration process with the international company that acquired the group.

4.2. Performance management systems analysis

4.2.1. Mission and vision

Ferreira and Otley (2009, p. 268) argue that “the broad orientation and general direction that organizations wish to pursue are sometimes expressed by vision and mission statements”. They are a strong component of the belief system, which can guide employees in harder times.

The mission of the company is to “create value by offering competitive fuel supply solutions to individuals and businesses, through cost efficient distribution channels, promoting innovation and acting responsibly on the way of delivering return on investments to our shareholders” (official website). This reveals the fact that the company has considered elements from the balanced scorecard such as the financial perspective, customer perspective and internal business process perspective. The main stakeholders of the company, as we can notice in the above statement are the individuals and businesses.

The vision of the company is the “strive to be highly efficient, profitable and competitive marketing and sales organization in the oil and gas industry, within the markets of today and in the future. Through our integrated supply chain we aim to achieve the highest operational, safety and environmental standards” (official website). Being in an industry that is highly damaging for the

(30)

environment, the vision suggest that the general public is also a major stakeholder, including notions such as safety and environmental standards, signaling the fact that they pay attention to such issues.

After discussing with many employees, it is important to notice that they were not familiar at all with the mission and vision of the company – not the management, nor the line-employees. After a long break in speaking and giving some thought, the Performance and Development Coordinator stated:

“These definitions can be found on the internet, I do not think there is any problem in finding them there…”

As regarding the communication of the mission and vision to the employees, it was stated:

“First of all, we have the internet and the intranet, employees can inform themselves about the vision and mission”.

Thus, having passive channels rather than active is intuitively harder to reach employees and indeed, many line-workers did not even knew of the existence of intranet, and they rarely or never visited the web-page, or even worse – it was not of interest for them. For example, a line worker at the gas station was asked if he was informed regarding the mission and vision of the company, the answer follows:

“I do not think so, I haven’t been informed. I do not know the mission and vision of the company, I do not think I am really interested in knowing that”.

When the companies grow bigger and therefore, more complex, it is important to articulate the mission and vision in formal, written statements. This gives a higher level of assurance that employees know where the company is, where it is going and what does it need to achieve its purpose. Although articulated in a formal manner, these mission and vision statements have not reached the employees as planned. This is damaging in a way that the belief system is affected and employees do not have the support during periods of failure, nor the motivation to find new ways of creating value for the company (Simons, 1995) starting from the fundamental values stated by the Oil Group LTD: Our people; care, integrity and responsibility; courage; applied creativity; determination. Simons (1995, p. 83) argues that “individuals want to understand the organization’s purpose and how they can contribute, but senior managers must unleash this potential”. Thus, pure expectation that employees will take some action can be illusory.

(31)

Moreover, the fact that employees are not used to the company’s core values, leads to an atmosphere of procedural injustice, as some of them do not understand why they have to do what they have to do. This is the case for the customer satisfaction objective.

“We’re asked to do so many things and not that it is tiring, only that we do not have much time and the customers do not have enough patience to listen to all our “poem” (…)”.

By not having any causal maps or explanations for how a particular task attributed to the employee has the potential of contributing to the achievement of the mission and vision, employees can be discouraged and have a perceived procedural injustice. One of the determinants of a fair system identified by Greenberg (1986) is “soliciting and using employee input” (pp. 133). But how can employees contribute in the given case, when they do not know what are the ends and what the company is striving to achieve?

As for the overarching purposes and objectives “we also have the discussion one to one

with the immediate manager, from which the employee finds out what he have to do for the next period, and how his personal objective are subordinated to the objectives of the department/company/group from which he belongs” states a HR coordinator. The latter did not occur however. Although for the middle management some connections were made and it was slightly clearer, for line-employees the achievement of their objectives were seen more like end in themselves, that is to say, they were not acquainted with the actual final end. So basically a different use than designed – the employees did not know how their objectives are subordinated to the objectives of the department/company.

The CFO argued during the interview that the objectives are translated well, they are transparent, but feedback on the result is not always given the right way:

“[…] The Company has a monthly operation plan - which consists in short in the volume that has to be sold and the margin that has to be generated on each liter sold, something like this. It's a bit more complex, is split by channels, split by types of product and so on and so forth. But in essence, this is the way it is. So, whole company - all the departments of the company -, including retail and including commercial they have to work to this result. In the end of the month, the books are closed and the result is measured and then you know basically if you've achieved it or you didn't. And actually the whole entity kind of knows, but, here comes the trick. In my opinion the communication of these achievements or non-achievements can be done a bit better. It can be done first of all at a weekly level, not monthly level, because that's possible and accounting systems that we use they allow us to do it. Of course it's an approximation, but still quite close. So this way you have basically room for improvement, for adjusting your strategy. And so forth, to try to bring the result closer to the people and make them responsible for it, make them wish to see it”.

(32)

The monthly operational plan is the start from where they derive more granular objectives. So in his point of view, a weekly feedback would make place for adjusting the strategy in useful time and a better communication with the employees.

In middle management though, we find disagreement on the way the objectives and purposes are transmitted:

“Honestly there is room for improvement here. It is not an efficient and direct communication. For example we have X objective this year, but for me is not clear enough at company level. Probably it should be transmitted by my immediate manager, but until now was not that clear” – Middle Management Employee.

As we can see, by going down the organizational chart, clarity disappears in some cases without management awareness. Thus, the use of Balanced Scorecard and its aim to create clarity fails. Most middle management agreed that the main ways of being informed about objectives are the management meetings and discussions one to one.

More active channels, such as the placement of written statements with the mission, vision and core values of the company inside the gas station and at the offices would bring these elements closer to the employees, raise awareness and bring the ends closer to the employees. Of course, these would not be enough and a better communication between managers and employees would have to take place (e.g. communicate different channels were they can inform themselves, such as the intranet and the internet page; direct discussions). Raising awareness in top management that during the one to one discussion such as how a specific objective subordinates to the objective of the department/company would be beneficial. Substantial contribution from lower level employees could arise – they could unleash their potential and belief system (Simons, 1995) would be reinforced. Furthermore, a better understanding of what they have to do would bring perceived procedural justice and therefore more system satisfaction (Folger and Konovsky, 1989).

4.2.2. Key Success Factors

The key success factors (KSF) according to Ferreira and Otley (2009, p. 269) are “a codification of the vision and mission in more concrete terms and in a more compressed timeframe, recognizing that control measures need to be reported on a routine basis”. For Oil Company LTD,

(33)

the key success factors were focused on quality, geographical reach, fulfilling particular needs. As one manager from planning and performance management states:

“We definitely have a better quality, due to the fact that our refinery is recently modernized and

everything that we produce are at Euro 5 minimum standard. We have products with additives which respect all UE norms, way above our competition. Second, relevant geographic area covered, in a way that we have covered all areas which have economic potential and others. Moreover, we’re covering both the needs of the individuals, but also large fleets and manufacturers. Also, our distribution methods are in accordance with their particular needs”. Above we can identify factors that are critical to the long term success and are recognized as being the KSF of the company. With the fulfilment of the elements presented by the manager from planning and performance management, we can notice that we are arriving closer to the achievement of the mission and vision – alignment between the two. On the other hand, innovation and environmental issues were not presented in a “compressed” manner, but rather left aside. In order to really pursue the mission and the vision, these elements are suggested as being included and control measures created for them. Thus, a slightly misalignment between mission, vision and KSF.

One of the recent strategic orientation introduced at Oil Company LTD is customer satisfaction. This, being a recent change as we’ll see later on as well, was not incorporated in the key success factors, so the alignment can be considered as incomplete.

Line-employees were not properly informed of the key success factors, but few of them had hunches like the “quality of the serving” – suggesting customer satisfaction. Value creation must start from the bottom and from this regard, it was not possible due to unawareness of the line-employees. Propagation of KSF was not clear even for middle management and this occurred because they were not formally transmitted. A solution of this will be to have formally incorporated in procedures the communication of such factors. The same arguments concerning procedural justice stand here as well, like presented at the end of “Mission and Vision”.

4.2.3. Organizational structure

Oil Company LTD was described as being highly centralized, with rigid group policies that need to be complied with. Ferreira and Otley (2009) argue that organizational structure (Appendix 1) is important because “(…) it determines the responsibilities and accountabilities of organizational participants” (pp. 269) and they present as a fundamental control environment.

(34)

“So the organizational structure corresponds to the responsibilities of our group in the way that, roughly speaking, we have the activities that are ongoing in many divisions that are heterogeneous, but which are actually like a puzzle – forming the whole – and we have delimited responsibilities for each division under the higher management. Inside the division, considering the responsibility and the function, the objectives are sent forward. The responsibility is clearly defined and it addresses the specific of the organization. There is some freedom, but in a procedural framework” – Planning and Performance Management Director (PPMD).

Therefore, the company has some ranges of authority in which the freedom is exercised. Considering the measure that needs to be taken and the impact of such measure, there is a set of approvals that need to be handled and allow the employee to move forward with the implementation.

When considering a commercial organization, like Oil Company LTD, it is important to respond fast to market conditions which supposes the embracement of decentralization (Ferreira and Otley, 2009). The CFO notices this aspect as a weak one:

“The organization is pretty centralized because we are operating under the rigid corporate organizational chart and we have to comply with pretty group policies and procedures and approvals, so the centralization level is pretty high. In my opinion, when you talk about commercial entities that require fast and efficient decisions, centralization is not always useful. I will suggest to decentralize it a little bit more, but in a smart way”.

Adler (2011) argues that a company that has a differentiator strategy – in our case the quality of the products and client satisfaction – works best in a decentralized organization, just as the CFO points out, but from a fast decision rationale. Therefore, a misalignment between the type of organization, its aims and organizational structure.

As concerning the impact of the organizational structure over the design and performance measurement it has been argued by management that if the structure of the organization corresponds with the roles and responsibilities of each division, Oil Company LTD has the possibility to address specific KPIs, SMART, for each division, department, and employee. It is also important when addressing performance adjustment issues, when they are considering two or more employees which belong to different departments.

When asked how a change in organizational structure will affect the PMSs, the CFO argues:

“To me, a change in the organizational structure it means something not too drastic. Maybe at the top some functions will be united under one director. So, I don't know, say retail and wholesale will be united under one commercial director or development will be moved from one place to another

Reconsidering PMSs : perspectives from managers and lower-level employees

Faculty of Economics and Business, University of Amsterdam