Amsterdam Business School
The influence of performance and information on willingness to
change.
Name: Lion Scholte Student number: 10002248
Thesis supervisor: dr. ir. S.B.M. Morssinkhof
Date: 17-6-2016 Word count: 13.582
MSc Accountancy & Control,
Statement of Originality
This document is written by student [Lion Scholte] 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.
Summary
In this thesis there is investigation done to the influence of performance and information on the willingness to change of employees. By doing an experiment respondents had to assume that they were the local manager of a store that sells sportswear for men. The performance and the information respondents received about the management control change was manipulated. Performance was good or bad and the respondents were good or bad informed about the change. The manipulations were needed to compare the willingness to change in different situations under the employees. The manipulations lead to four different situations by combining a good/bad performance together with informing the employees good/bad about the change. The results indicate that performance and the information people receive have a significant impact on the willingness to change. So this means that when you are willing to change from the top in a company you have to take different things into account. For example the performance, the information you give to the employees and the communication you have with your employees. Further the age and the background play an important role in willingness to change. The results indicate that older employees are more willing to change and people with an accounting background are less willing to change. Reason for the older employees to be more willing to change can be their experience with changes and how important job-security is for them. For the people with an accounting background education can be the reason they are more resistant against change.
Table of Contents
1. Introduction p.5
2. Literature Review and hypotheses p.8
2.1 Resistance to change p.8
2.2 Changes in management control systems p.10
3. Hypothesis development p.16 3.1 Hypotheses p.16 4. Research method p.20 4.1 Research set-up p.20 4.2 Respondents p.22 5. Analysis p.23 5.1 Descriptive statistics p.23 5.2 Hypothesis testing p.24
5.2.1 Hypothesis one and two p.24
5.2.2 Hypothesis three p.27 5.2.3 Hypothesis four p.31 6. Conclusion p.32 6.1 Conclusion p.32 6.2 Limitations p.35 6.3 Further research p.35 7. References p.36 8. Appendices p.38
1 Introduction
‘’Never change a winning team’’
The above quote is from a formal football coach Sir Alfred Ernest Ramsey who was a very successful coach in England during his career. This quote is still used a lot in sport but also in companies there is blindness for change during successful periods (Audia et al., 2000). Greater past success leads to more resistance against change what will result in declining performance following Audia, Locke and Smith (2000). The reason for this is that there is greater satisfaction when the past performance are good. Further there is more confidence in the correctness of current strategies, higher goals and self-efficacy. When we compare this blindness for change to the paper of Watson (1971) it is not strange. Watson shows that it is in the people’s nature to resist against change and to hold on to what is known and seen as normal. According to Watson everyone have to overcome fear and suspicion when something new is introduced but
sometimes changes are quickly ‘’caught on’’ and sometimes not.
When we know that people can react with resistance against changes and that people will resist more against changes when past performance is better. It is interesting to investigate how new managers use control systems as levers of strategic renewal. This is done by Simons (1994) who investigated 10 newly-appointed managers and followed them for approximately 18 months. Simons made two distinctions between the managers which resulted in four groups to compare. First he made a distinction between the need for revolutionary change and the need for
evolutionary change. Revolutionary change means that the past performance were not so good and there was need for big fundamental changes. On the opposite evolutionary change means that past performance were good and most important for the new manager was to maintain success. The second distinction was the position where the new manager came from. On the one hand they were internal promoted and on the other hand they were outsiders from the company. The results indicate that all managers supported strategic change but the past results had
influence on how the new managers introduced their control systems. When past results were bad the new manager could say we have to do it totally different, after good past results the manager had to find other ways to promote change.
What we know so far is that, people can react with resistance against changes and this resistance will be more when past performance is good. Further new managers use control systems to achieve strategic renewal. In this paper changes in management control systems are investigated and how supportive employees are during different situations. Where in the existing literature the focus is on how you can change from the top, down to your employees differs the focus in this paper. Here change in management control systems is investigated and the
willingness to change of the employees is measured. In the experiment done in this paper the respondents were assumed to take a role as employee in an organization. Every respondent received the same general information about the organization. Further the respondents received more specific case information where the performance and the way of informing the
respondents was manipulated. Reason for this manipulations was to see how willing the
respondents were to change in the different situations, and to see the influence of performance and the way of informing people on their willingness to change.
In the first research question the difference in willingness to change management control systems between the good and the bad performance situations is investigated. The expectation is that people are more willing to change during bad performance (Audia et al., 2000; Watson, 1971). In the second research question investigation was done to the role of information between the different situations. In two of the four situations employees are good informed about the change in management control systems. In the other two situations employees are less good informed about the change. According to Christensen et al. (2014) different forms of information leads to different decisions. Based on Strebel (1996) and Soin (2002) the expectation is that better (worse) informed employees will resist less (more) against change. In the third research question difference in willingness to change management control systems between people with and without an accounting background is investigated. This comes from the work of Granlund (2001) and Sangster (1996) they found that accounting education and the professional norms for prudence in financial accounting create reserved attitudes regarding change among accounting practitioners what would lead to less willingness to change.
The last research question investigates the willingness to change and the age of people. According to Kunze et al. (2013) the traditional held stereotype is that older people will resist more against change. After their research Kunze et al. (2013) found that this was the other way around, older people resist less against changes. This was also found by Herscovitch and Meyer (2002), Oreg (2006), and Finegold et al. (2002). They found relations between age, tenure, commitment and the importance of job-security what leads to less resistance against change.
New in this paper is that the focus is on the employees and their willingness to change instead of what is the best way to introduce changes for management to the employees. Where Simons (1994) and Ferreira and Otley (2009) advice what is best to introduce changes in an organization, the focus in this paper is on the willingness to change under the employees. Further this is the first paper to my acknowledge where the influence of performance and the way employees are informed on willingness to change is measured.
performance, compared to the periods of good performance. Further the influence of the information people receive on the willingness to change was investigated. Here was found that during bad performance the information people receive does not have significant influence. When we compare this during periods with good performance it is different, when the performance is good people are less willing to change except when they are good informed about the changes. During the investigation of the different situations there is no significant difference found between the bad performance situations and the good performance situation where information given about the change was good. When performance is good but the information people receive is less good the mean score of willingness to change is significantly lower than in the other situations. Further the influence of accounting background and age was investigated. Here was found that people with an accounting background are significant less willing to change. Older employees are more willing to change, something that was also found by Kunze et al. (2013).
Section 2 presents the literature review, section 3 shows the hypotheses, section 4 describes the experiment done and how the respondents were found, in section 5 the results are showed and section 6 will give the conclusion, limitations and ideas for further research.
2 Literature review and hypotheses
In this paragraph existing literature about resistance to change and changes in management control systems will be discussed..
2.1 Resistance to change
In this section the existing literature about resistance to change will be discussed.
According to Watson (1971) it is normal people resist to change and like to hold constant what is normal for them. He found that in the beginning of something new, people react with fear and suspicion and that some things are ‘’caught on’’ faster than others. Besides this Kotter and Rathgeber (2007) found that at times of changes, people are very negative about new ideas and initiatives. People like to deny problems or have a negative attitude against changes to fore come changes and hold things as they are. In their book Kotter and Rathgeber (2007) made a short novel story to show how people react to changes. They show how important it is to help the people understand why changes are necessary and what is going to change. This information is very important to let people participate in the changing project and to understand the change, also it helps to take away their negative attitude. Dent and Goldberg(1999) agree with Watson (1971) with the fact that resistance to change is seen as normal, every textbook written about management or organizational change talks about resistance against change. Dent and Goldberg (1999) do not think that it is the change people resist but that people resist against the fear of losing pay, comfort or status and that people think these losses are going together with changes. To help against the fear of losing things after changes Dent and Goldberg (1999) agree with Kotter and Rathgeber (2007) that taking away the negative attitude can be done by informing people about the changes. The why and how answers must be answered so people are better prepared for the changes.
Audia et al. (2000) found a link between changes and performance. They state that when past performance is good the resistance against change will be higher. When there is greater past success this will lead to greater strategic resistance against changes. After success with the old strategy there is more confidence in this strategy and the idea that this is the correct strategy, what will lead to resistance. Building further on this there is an interesting view from Jermias (2001). According to Jermias (2001) people are committed to a particular course of action and so on people will be insensitive for potential benefits of the rejected alternative. Results from his experiment indicated that people's judgments about the usefulness of costing systems were influenced by their commitment to their favored system. People assessed only a subset of their knowledge to support their desired conclusion. Consequently, committed people refused to
change their chosen system even when facing negative feedback. In addition, the results confirmed that people normatively know that their judgment should be objective yet they unconsciously make prejudiced judgments biased toward their committed course of action. Kay and Friesen (2011) give four reasons why resistance against change can be expected. First they name system threat, where new systems threaten old situations that are seen as normal. When these threats occur people’s first reaction is to defend against it by resist to the change. Second there is system dependence, how more you are dependent on something how higher your commitment is to this. And in line with Jemias (2001) Kay and Friesen (2011) show that more commitment leads to more resistance against change. Third Kay and Friesen (2011) name the system inescapability, when systems are not easy to escape people are scared to escape them and are not willing to change. For example people that have a religion do not want to change this religion because this can go compared with loss of friends and family. So when systems are inescapable the willingness to change is low and people do not always look at their options objective. Fourth the amount of personal control has to deal with the resistance to change. In general –especially in western countries- people like to have control over their lives but total control is not possible. When outcomes are not in control of the people they are dependent to some extent, for example people are dependent on the workplace during reorganization. Henry (1997) states that people are asked to reexamine and modify their behavior so organizational change automatically leads to resistance. According to Henry (1997) resistance must be seen as normal and even healthy, when there would be no resistance against changes organizations would be entirely unstable. Further she gives a list of 19 factors that leads to more resistance against change. Akerlof and Dickens (1982) investigated the attitude against change in an economic perspective. They state that people are seeing themselves as smart, nice people and information that is against this opinion or against what is known as right, is wrong. When people think something is wrong their actions are rejection and ignorance because there is a difference in beliefs. Furthermore Kuhn (1970) claims that a (paradigm) failure is needed to break an old routine system for people establish a new one. The failure needs to cause crises so that people are forced to be receptive to the arguments that they would otherwise ignore (Gersick, 1991).
Herscovitch and Meyer (2002) investigated employees’ commitment to a job and the resistance against change. They found that people who are more committed to their job resist less against change. When there is more commitment to their job this means that the individual employees have more binding with the objectives of the organization and they will accept the need for changes from management faster than people who are less committed to their company (Herscovitch and Meyer, 2002).
Kunze et al. (2013) did research to resistance to change and investigated the influence of age. They found it interesting that from both the theoretical and practical perspective the
commonly held stereotype was that older people would resist more against change. After their research Kunze et al. (2013) found that age was significant negative related with resistance to change, so older people resist less against changes. Important counterparts were that age comes together with status and tenure what links the Kunze et al. (2013) research to the Herscovitch and Meyer (2002) research. Here was found that tenure is negative related with resistant to change. So when people are older or working longer at an organization their resistance against change will be lower. Oreg (2006) agrees with this findings in his paper he did research to the influence of age and tenure on organizational change. He found out that tenure and age are negative related to resistant to change. His reason for this is that people who are older might have more experience with changes in the organization, so they have less fear about the future after the change. Finegold et al. (2002) found also a positive relationship between age, tenure and commitment. Their reason is that people under the age of 30 have more chances to develop their skills and still have a long career to go. Their attitude will be more negative against change in organizations because they have a lot potential to switch jobs and develop their selves. Older employees, especially those above the age of 45, will accept changes because they have less potential to develop their selves and they do not like it to switch jobs. The security for their job is very important and at younger age this is not because then you know there is demand enough to relative young employees. From these studies we conclude that resisting against changes is in the nature of people. When things change people may take actions like rejection or ignorance to hold on to what is seen as right or normal. When age is higher the resistance against change will be lower.
2.2 Changes in management control systems
In this section the existing literature about changes in management control systems will be discussed.
Management control is about making sure that an organization reaches its objectives (Merchant and van der Stede, 2007). According to Simons (1987) management control systems are the formal, information-based routines and procedures used by managers to maintain or alter patterns in organizational activities. Simons (1994) investigated 10 new managers and found that all new managers changed organizational control systems. It was expected that after bad past performance change was needed. This are fundamental revolutionary changes, but also after good performance new managers would like to change. Evolutionary changes or small changes were not so easy to implement as revolutionary changes because past performance were good
and the goal was to maintain success. Simons named four important systems that influence business strategy. First the beliefs system or the core values of the organization formal systems used by top managers to define, communicate, and reinforce the basic values, purpose, and direction for the organization. Beliefs systems are created and communicated through formal documents such as credos, mission statements, and statements of purpose. Analysis of core values influences the design of beliefs systems. Second the boundary systems what are formal systems used by top managers to establish explicit limits and rules which must be respected. Boundary systems are stated typically in negative terms or as minimum standards. Boundary systems are created through codes of business conduct, strategic planning systems, and operating directives provided to business managers. Analysis of risks to be avoided influences the design of boundary systems. Third the diagnostic controls what are formal feedback systems used to monitor organizational outcomes and correct deviations from preset standards of performance. Diagnostic control systems- exemplified by business plans and budgets- are the prototypical feedback systems used to track variances from preset goals and manage by exception. Analysis of critical performance variables influences the design of diagnostic systems. The last systems are the interactive control systems what are formal systems used by top managers to regularly and personally involve themselves in the decision activities of subordinates. Any diagnostic control system can be made interactive by continuing and frequent top management attention and interest. The purpose of making a control system interactive is to focus attention, force a dialogue and learning throughout the organization. Analysis of strategic uncertainties influences the design of interactive systems.
Where Simons (1994) has only four levers of the system, Ferreira and Otley (2009) created a performance management framework with twelve levers. Almost all of the twelve levers can be traced back to the four levers from Simons (1994). Both management control systems focuses on the implementation of controls from the top management down to the organization but the reaction from the employees on the implementation is not really investigated. For the Ferreira and Otley (2009) paper this is not strange because the paper is more a comprehensive theoretic framework without testing it in an organization or company. Further Chenhall et al.(2010) investigated changes of management control systems in a NGO and how the individuals react to this. During the project Chenhall et al.(2010) found a lot of resistance against the changes to move from a traditional NGO structure to a more business-like culture. They state that people in a NGO do not like to have a business feeling for something they see as doing morally good. In their paper Chenhall et al. (2010) were focused on the influence of the changes in management control systems on the social capital. This can be seen
like an acceptance by the employees, and how you can build up this social capital by using the belief systems in a right way. When belief systems are used actively the employees of an organization can identify themselves with the core values of the organization, this helps management to gain and maintain social capital under their employees (Chenhall et al., 2010).
Krankhardt and Stern (1988) investigated changes in management control systems and they see that changes occur like a crisis. According to Krankhardt and Stern (1988) employees who work together create friendships in the organization they work. When things are going to change there will be uncertainty and fear of the future after the changes. The employees who work together share the same fears about the changes and are all uncertain about the future. This will create a stronger bond between the employees but also a shared resistance against the
changes in management control systems. Krankhardt and Stern (1988) found that in more informal organization the resistance against change is lower because the bond between management and employees is quite good. Further communication is easier in an informal organization than in a formal organization. So we can conclude out of this paper that when the communication and information sharing is good between management and the employees, resistance to change will be lower. Formal organizations are less better in communication and sharing information with their employees so there will be more resistance against change (Krankhardt and Stern, 1988).
Brass et al. (1998) agree with Krankhardt and Stern (1988) that the relationship between management and employees is important for the behavior of people in an organization. Brass et al. (1998) found that in times of unethical behavior in organizations people look at their
colleagues to decide how to behave. According to Burns and Scapens (2000) the behavior of employees is decided by routines. They describe the four stages of the deciding how to behave. First rules are set by management which is the encoding stage, what is followed by the enacting stage where employees understand the rules in the way they interpret them. After the employees interpret the rules they reproduce it by doing their work again and again, they will do this in the way they think is best. This can be a little different than how management meant it by making the rules, but when things are reproduced they will be routines and the routines will be institutionalized and seen as the normal way of working (Burns and Scapens, 2000).
Nelson and Winter (1982) agree with this vision and found that when there are changes in an organization, people can resist against it conscious or unconscious. When the resistance is conscious people in the organization use the earlier called rejection or ignorance strategy. If the resistance is unconscious people do not understand the new rules after the change and so on they cannot translate the new rules into good routines. Thus at times of changing and creating
new rules and routines, it is important that everybody understands the new rules.
Scapens and Roberts (1993) followed an implementation of a new accounting change at a company called Omega plc, they found a lot of resistance against the change. In the Omega company there was a new accounting system introduced called PCCP and this was introduced by an outside project manager Cliff Rollinson. The project had to ensure a total new form of
accountability throughout the divisions of the company. Where Omega was known before as a successful company in their market who had a decentralized structure, the new project would lead to a more centralized structure where there was more centralized control for the top management. As a result the division level managers felt some threat from the new project and they were not happy with the more centralized control. They found the lack of local autonomy and responsibility frustrating. On the other side where the project was thought to give more effective control for top management this was not what happened, as cause of the resistance.
In Finland Kasurinen (2002) did a case-study over the introduction of a Balanced Scorecard in a multinational company, he divided the people who resist into three categories confusers, frustrators and delayers. Dividing the different groups of people who can resist to the change, makes it easier to recognize their role in the changing process and to facilitate attempts to explain the change. The paper of Kasurinen (2002) can be helpful for organizations to analyze the influencing forces of change at the early stages of a project. Argyris (1990) describes just like Kasurinen (2002) the implementation of something new. Argyris (1990) goes some further than Kasurinen (2002), where Kasurinen (2002) describes what to take into account on forehand Argyris (1990) describes the whole implementation project. According to Argyris (1990) the implementation starts with an instruction of the theory so employees understand the theory, wish to use the theory and are permitted to use the theory. As cause of the instruction from the theory humans are able to recognize what they are expected to do, after this they will create routines and repeated actions to do what is expected. Argyris (1990) states that employees are enthusiastic when the process is clear and there is no feeling of threat and embarrassing. When there are feelings of threat and/or embarrassing the employees will take defensive actions to hold their routines constant. According to Argyris (1990) this will negatively affect the results from the organization because the employees will be defensive what will lead to the wrong routines.
Strebel (1996) agrees with Argyris (1990) that management strives for enthusiasm, acceptance and commitment from employees during changes and implementation of new projects. Only Strebel (1996) found out that often communication breaks down, implementation plans miss their mark and results fall short. In the Fortune 1000 20-50% of change management
is successful, so most of the time the new implementation from changes are unsuccessful. As reason for failure Strebel (1996) found that there is a difference in how management sees changes and how employees see it. Where management sees change as an opportunity to strengthen the business, change is not welcome for employees. They find it disruptive and intrusive. As solution Strebel (1996) mentions that it is important for employees to feel
commitment to their job. When management shows commitment to the change it makes it easier for the employees to adopt the change. Further there are other ways to getting commitment under the employees. For example clarify the tasks of employees, give the employees the feeling of trust, give the employees the feeling that they are important for the company and the last point is the information employees receive. According to Strebel (1996) it is essential for successful change that employees are good informed about what is going to change and why things are going to change. When employees are good informed they know what they can expect and feel more comfortable than in situations with less information and more uncertainty.
Soin (2002) shows in his work an implementation of a new budgeting model. In the beginning there was fear and uncertainty under their employees. There was fear for job losses and that people would be forced to early retirement. Later on the managers were encouraged to help actively in the change and to participate. This participation changed their attitudes and from now on the employees saw the benefits of the new system. Meyer and Rowan (1977) found that legitimization of the change is important to achieve acceptance under the employees.
Isomorphism which is doing something because the others do it is not a good reason, you have to implement change because your own company will be better after the change. Bhimani and Pigott (1992) support this vision they found in their case, where there was investigation done at implementation of an ABC system, that the sales department was unhappy with the change. Bhimani and Pigott (1992) gave as reason that the sales department did not understand or appreciate the new system because they were left out during the development stage. After the sales department was informed and the logic of the ABC system was explain, they appreciated the system and they saw the benefits during their work.
Granlund (2001) splits the reasons for resistance in three categories human, institutional and economic factors. Granlund (2001) starts his paper with investigating stability instead of investigating change, this is a different way of investigating. According to Granlund (2001) people who resist to change are irrational and ignorant for the need of change and they delay the necessary process. In his paper a new project implementation at a company called Foodco produced no results fast enough. Further support from top management lacked but still the implementation was not terminated. The production and sales departments were not involved in
developing the new system but still they were supportive because they had nothing to hide. This first (CADT) project failed but later on changes were tried to implement. The second big change was supported by top management but rejected by accountants because they feared more
workload, Granlund (2001) concludes that accountants in general are more resistant to changes. This is because accounting education and the professional norms for prudence in financial accounting create reserved attitudes regarding change among accounting practitioners. Sangster (1996) adds that the traditional role of the accountant does not support a proactive orientation with regard to system changes. Later in the Foodco company many management turnovers followed and the changes were after all not implemented.
Anderson and Young (1999) found that managers are more likely to support changes when the performance will be better afterwards and they receive rewards for the better results. Further they find that commitment from employees to their company and the likelihood of layoffs are important factors for resistance or support. When we go further back in history Newman and Rosenberg (1985) did research to the introduction of computer systems in
organizations, this was enjoyed by younger people. The younger people understand how to work with these systems but the older employees were not happy. The older people feared for their job because they had troubles with understanding new technology. They claim that top-down changes are most threatening for employees and those employees try to achieve collective actions against the change. So we can conclude from the existing literature that overall in organizations people are reacting different during changes in management control systems. The way changes are introduced is important. Clear communication, commitment and participation can help against resistance so informing your employees right is seem essential.
3 Hypotheses development
In this paragraph the hypotheses development will be presented. After the existing literature given in the previous sections it is now time to show how the hypotheses are developed. 3.1 Hypotheses
According to Watson (1971) resisting against changes is in the nature of people. They will resist against changes to hold constant what is normal for them. Dent and Goldberg (1999) agree with Watson that resistance to change is normal. They found it back in every textbook about organizational or managerial change. Audia et al. (2000) found a link between resistance to change and performance. When there is greater past success in the performance the resistance against change will be higher. Greater past success will lead to more confidence in the old strategy and so on there will be less need for change (Audia et al., 2000). Scapens and Roberts (1993) found in the Omega plc. company that more control for top management during good performance released a feeling of threat and uncertainty under the employees here the
implementation failed.
Kuhn (1970) adds that failure of a system is needed for people to accept the change to new systems. Gersick (1991) agrees with this vision and concludes that a crisis is needed for accepting changes, without crisis people ignore the need for change. Andersen and Young (1999) found that managers are more likely to support change when it improves performance,
performance is easier to improve after bad results. Simons (1994) found that every new manager changes management control systems. Further he found that it was easier to change for
managers after bad results when revolutionary changes were seem necessary throughout the company. After good results the evolutionary change were harder to implement under the employees.
This lead to hypothesis 1: Willingness to change will be higher (lower) when performance is bad (good).
The expectation is that the mean rating of willingness to change will be significant higher when the performance is low. So for the situations in the experiment, the expectation is that the mean of the situations with good performance will be significant lower compared to the mean of the situations where performance are bad. This mean stands for the mean of the willingness to change under the employees.
Hypothesis 1 indicates that when performance is bad, people are more willing to change than when performance is good. According to Christensen et al. (2014) there is something else we
need to take into account. Christensen et al. (2014) found that different sources of information lead to different decisions and attitudes. Kotter and Rathgeber (2007) state that it is important to inform people clear about what is going to change and why. When people understand the changes they can easier participate and this will take away their negative attitude. Dent and Goldberg (1999) agree that answering the why and how questions help people preparing for changes.
Henry (1997) states that resistance against change is healthy and normal but gives options to overcome the resistance. According to Henry (1997) it is important to communicate well. Making the purpose for change clear and make clear what is going to change for the people who are affected by the changes is important. Communication is key over here, Henry (1997) states that it is important for employees to feel free asking question and it is important to be patient answering these questions.
Krankhardt and Stern (1988) found that more informal organizations are easier to change than formal organizations. In informal organizations the bond between management and employees is better and this makes it easier to communicate and share information. Resistance against changes will be lower in informal organizations as cause of the better communication with employees and as cause of the good information employees receive about changes. So good communication and informing employees well, lead to less resistance against change (Krankhardt and Stern, 1988). According to Argyris (1990) it is important to make employees enthusiastic about changes that are coming. When employees are not good informed and not enthusiastic about the changes they feel threatened and embarrassed. This will lead to negative actions against the changes and that will lead to a negative result of the implemented changes (Argyris, 1990).
Strebel (1996) indicates that it is essential employees are good informed about what is going to change and why this happens. When people are good informed they feel more comfortable because they know what to expect and there will be less uncertainty. Soin (2002) also showed that informing employees takes away uncertainty. When employees are informed they are encouraged to help and participate in a project and they feel a positive attitude about the changes. According to Meyer and Rowan (1977) you need the changes to legitimize under the employees, they need to be informed well to accept the changes. At last Pigott and Bhimani (1992) also found that informing employees about the changes leads to better understanding and more appreciating of the changes.
In combination with hypothesis 1 where we saw that during bad performance it is easier to change, the above information leads to hypothesis 2 which is split in two parts, part a and part b.
Hypothesis 2a: When performance is bad, the sources of information given do not have a significant effect on willingness to change.
Hypothesis 2b: When performance is good, the sources of information given have a significant effect on willingness to change.
So the expectation is that when performance is bad people want to change no matter how they are informed. When the performance is good people do not want to change unless they are informed well about the changes. This will lead to the expectation that the mean of willingness to change will be high when performance is bad or when performance is good and the employees are good informed. Further it is expected that only when performance is good and the employees are bad informed, the mean of willingness to change will be significant lower.
According to Granlund (2001) people are from nature against changes and they react with ignorance. Granlund (2001) states that people with an accounting background are in general more resistant against changes because their education leads to this attitude. In the education of accountants the focus is on professional norms for prudence in financial accounting. This creates reserved attitudes regarding change among accounting practitioners. Sangster (1996) adds that the traditional role of the accountant does not support a proactive orientation with regard to system changes.
This leads to hypothesis 3: People with(out) an accounting background will be (more) less willing to change.
Here the expectation is that for employees with an accounting background the mean of willingness to change is significantly lower compared to the employees without an accounting background. The mean of all the employees with an accounting background will be compared to the mean of all the employees without an accounting background. Further the mean of the employees with an accounting background will be compared to the employees without an
accounting background for each situation. There will be four different situations where there will be a combination between good/bad performance and that the employees are good/bad
informed. In all the situations there is a significant lower mean for the employees with an accounting background expected compared to the people without an accounting background.
According to Krunze et al.(2013) the theoretical and practical view is that older people have more resistance against change but after their research this was found the other way around, older people resist less against changes. Herscovitch and Meyer (2002) found that commitment of employees to their job leads to less resistance. Commitment is higher when the tenure of the employee is longer, so employees with a longer tenure resist less against change.
Longer tenure comes together with age, how older you are the higher your tenure can be. Oreg (2006) agrees that age and tenure leads to less resistance. His argument is that older employees and employees with a longer tenure have more experience with changes and that they do not fear the outcomes of changes as much as younger colleagues.
Finegold et al. (2002) found a positive relationship between age, commitment and tenure. They also state that older employees resist less against change, reason for this is that job-security is more important for older employees because they have less chance to develop themselves. Younger employees have more room for development and a longer career ahead. They will resist more against changes because they can easier switch jobs and they have a bigger potential of skills.
This leads to the last hypothesis, hypothesis 4: Younger (older) employees will resist more (less) against changes.
Here the expectation is that the age and the rating of willingness to change is significant positive correlated, when age is higher the willingness to change is expected to be significant higher.
4 Research method
In this section the research method is described and there will be presented how respondents are found.
4.1 Research set-up
Here the set-up from the experiment will be presented.
The research method used in this paper is an experiment that was done online. Participants were invited to visit a website (hd-design.nl/exp) and to do the experiment there. When the participants arrived on the website they had to answers general questions about their age, gender, study and their years of working experience. Only after filling in all the fields with questions they could participate in the experiment, otherwise there was an error message that not all the fields were completely filled in. After filling in the general questions the participants were randomly selected to one out of four situations. The four situations started with the same general case description that gave some background information of an organization. This general case description is showed below.
ABC BV. is a Dutch company specialized in sportswear. Some stores are only specialized in men’s sportswear and other stores are for men, women and children sportswear. The company has the following company structure:
CEO (1)
Human resource(6) Marketing department (8) Local managers(17) accounting office(9) Sales employees (124)
There are 17 stores with an own local manager further there is 1 head office where the CEO, Human resource department, marketing department and accounting office are located. The CEO delegates the employees below. Further the Human resource departments is about hiring and firing employees and possess general information of their employees. The marketing department is specialized in advertising and the accounting office are paying salary and are there for
bookkeeping. In 2015 the total revenue (price per article x amount of articles sold) was €3.040.000.
Further there was below the general case description an additional text on the same page. This additional text differed in all the situations. The difference in the additional texts led to four different situations where there were two manipulations. The manipulations are done in the amount of information given to the participants or in the performance.
Performance
Good performance Bad performance Total How are the participants
informed?
Good informed Group C Group D On average good informed
Bad informed Group A Group B On average bad informed Total Average performance is
good
Average performance is bad
Table 1 The four different situations after the manipulations.
The table above shows the four different situations after the manipulations. The participants had to assume that they were the local manager of only one store of ABC BV. All the stores in the cases were specialized in only for men sportswear. When the performance was good the profit of the specific store was €243.400 when the performance was bad there was a loss of €243.400 in the specific store. In all the cases there was stated that the head office would like to change the strategy from a store specialized in only sportswear for men to a store that is specialized in sportswear for men, women and children. In the bad informed situation this was all the information respondents received. In the good informed situation the respondents received extra information that the reason for the switch is that more customers would come to the store and this should result in more revenue. Respondents had to rate on a 10-scale Likert how willing they were to support the decision of the head office.
The reason why this kind of experiment was used is based on three earlier papers. First the paper of Christensen et al. (2014) showed that different ways of informing people can lead to different outcomes. Further Bol and Smith (2011) did an experiment that was the same
organized as here. The idea of the same general information and a combination of two
manipulations what leads to four different cases is from them. The manipulations makes it easy to measure the influence of performance and the way of informing the employees on the willingness to change. At last the research of Coletti et al. (2005) was important for this
experiment. Coletti et al. (2005) used just like Bol and Smith (2011) the comparison of mean scores to see if the different situations differ significantly.
4.2 Respondents
To find respondents I posted the link of the website with the experiment on my personal Facebook page. Further I sent e-mails to my fellow students by using the e-mail addresses which are available on the blackboard page from the University of Amsterdam. When you follow a course there is a special course page on blackboard where the e-mail addresses can be find. The website where the respondents could do the case is domain of someone I know1 and he made his website available for my case. For the respondents there was made clear in the Facebook post that it was only for students or ex-students from minimal HBO level. The respondents that are fellow students are naturally from University level. For starting the case the fields with general information had to be completed, otherwise the case would not start. After all there were 163 respondents and five of them did not completed the case, probably because an error occurred at the time they filled in the experiment. So 158 respondents are taken into account during the results.
1 A special thanks to Nicky Hogendorp, a student CMD (communication and multimedia design) at the HvA for
5 Analysis
In this section the results of the experiment will be presented and the hypotheses testing will be done. 5.1 Descriptive statistics Participants Minimum amount Maximum amount Mean Std. Deviation Age 158 18 70 27,53 9,619 Gender 158 0 1 0,66 0,474 Years of working expierence 158 0 45 5,55 8,872 Rating 158 1 10 6,97 2,465 Accountancy background 158 0 1 0,48 0,501
Table 2 Descriptive statistics from the experiment.
Table 2 shows that the experiment is done by 158 respondents. They were randomly divided over the four different situations, that were created by the manipulations. The four situations were a combination between good/bad performance and good/bad informed about the changes.
The participants are aged between 18 and 70 years and the mean was 27,53 years. The gender of the participants was male or female where females were given the value 0, the minimum, and males were given the value 1 which is the maximum. The years of working experience the participants had varied between the 0 years which is no working experience and the maximum of 45 years of working experience where the mean was 5,55 years of working experience. Further the rating that was possible in the experiment was based on a 10-scale Likert so 1 was the minimum rating that people could give and 10 was the maximum rating people could give, the mean here was 6,97. This rating shows the willingness to change. The last variable was to show if the participants had accounting background or not, non accounting background was noted with a value of 0 and if the participants had accounting background the value 1 was given this leads again to a minimum of 0 and a maximum of 1.
5.2 Hypotheses testing
To test all the hypotheses, independent samples t-test were done between the means of different groups. Testing was done via SPSS, compare means and then independent samples t-test. 5.2.1 Hypothesis one and two
Hypothesis one was: Willingness to change will be higher (lower) when performance is bad (good).
Hypothesis two was split in two parts, part a and part b. Hypothesis 2a: When performance is bad, the sources of information given does not have a significant effect on willingness to change. Hypothesis 2b: When performance is good, the sources of information given have a significant effect on willingness to change.
The expectation is that the mean of the willingness to change will be significant higher when the performance is low. Further the expectation is that the mean of willingness to change during bad performance will not be influenced by the information participants receive. So we expect that during bad performance there is no significant difference between the good and bad informed participants. During good performance the expectation is that the information
participants receive will have influence. Here the expectation is that when performance is good, people will be less willing to change. When the performance is good and the participants are good informed about the change, the expectation is that the mean of the willingness to change will be significant higher compared to the situation where the performance is good and the participants are bad informed about the change.
Table 2 shows the means of the willingness to change in the different situations. In line with the expectations the willingness to change is the highest when performance is bad. During times of good performance the willingness to change is lower when this is compared to the willingness to change at times of bad performance. When we investigate the role of the
information this is in line with the expectation, during bad performance there is no big difference between the good and the bad informed participants. During times of good performance the mean of the willingness to change is much higher when the participants are good informed.
Figure 1 shows the means of the four situations. The willingness to change in the situation where performance is good and where the participants are bad informed is far below the other situations. To see if the difference between the good and the bad performance situations is significant, and to see if the differences between the individual situations is significant additional independent samples t-tests are done.
Performance
Good performance Bad performance Total How are the participants
informed? Good informed Mean Std. error mean Participants 7.36 (0.30) 42 8.00 (0.27) 39 7.67 (0.20) 81 Bad informed Mean Std. error mean Participants 4.85 (0.46) 39 7.68 (0.31) 38 6.25 (0.32) 77 Total Mean Std. error mean Participants 6.15 (0.30) 81 7.84 (0.20) 77 6.15 x 158
Table 3. The means of the willingness to change in the different situations, the standard error of the means and the amount of participants.
Figure 1. The mean scores of willingness to change in the different situations. The bold line stands for the participants that are good informed. The dotted line stands for the participants that are bad informed.
Table 4 shows the results of the independent samples t-tests. In the results there is found a significant difference between the situations of good performance and bad performance.
4,85 7,36 7,64 8 0 1 2 3 4 5 6 7 8 9 10
During good performance the people are significant less willing to change, the mean of the difference here is -1.7. This leads to a F-statistic of 22.67 and a p-value of 0.000 what is below a p-value of 0.05, and so on it is significant. These results confirm hypothesis one, willingness to change is significant higher when performance is bad.
For hypothesis two there is investigation done to the difference between the good performance situation where participants are bad informed and the good performance situations where participants are good informed. Between these situations there is also found a significant difference. The mean of the willingness to change is 2.51 higher when performance is good and the participants are good informed than when performance is good and the participants are bad informed. This mean difference led to a F-statistic of 12.83 and a value of 0.000. Again the p-value is below 0.05 what means that the difference is significant. Further there is investigated if there is a significant difference between the good performance situation where participants are good informed and the bad performance situation where the participants are good informed. This test is done because the last situation was the situation with the highest mean of the
willingness to change(table 3; figure1). When there is no significant difference between these two situations, this means that the situation of bad performance where participants are bad informed will also not be significant different from these two situations. The mean of the willingness to change of bad performance where participants are bad informed is between the other two point, what means that if the two other points do not differ significantly there will be no significant difference between all of the three mean scores. The mean difference between good
performance where participants are good informed and bad performance where the participants are good informed is 0.64. This leads to a F-statistic of 1.08 and a p-value of 0.113 which is above 0.05, what means that there is no significant difference. So from the results there can be concluded that the bad performance situations do not differ significantly from each other, what means that the way participants are informed has no influence on the willingness to change. Further the bad performance situations do not differ significantly from the situation where the performance and the way participants are informed is good.
The conclusion that can be made after these results is that the influence of how
participants are informed only has influence during periods of good performance. Only when the performance is good the influence of how participants are informed makes a significant
difference, when the performance is bad there is no significant difference between the good and the bad informed participants. The results confirm hypothesis one and two, willingness to change is higher (lower) when performance is bad (good). Further when performance is bad, the sources of information given do not have a significant effect on willingness to change. And at
last when performance is good, the sources of information given have a significant effect on willingness to change.
Which situation is tested?
Degrees of freedom Mean difference F-statistic p-value
Total good performance versus Total bad performance. 138.5 -1.70 22.67 0.000* Good performance, bad informed versus Good performance, good informed.
65.3 -2.51 12.83 0.000*
Good performance, good informed versus bad performance, good informed.
79 -0.64 1.08 0.113
Table 4. Independent t-test results between different situations. *is significant because p-value <0.05
5.2.2 Hypothesis three
Hypothesis three was that people with(out) an accounting background will be (more) less willing to change. The expectation was that people with an accounting background will be significant less willing to change. This should be find back in a significant lower rating of willingness to change for people with an accountancy background.
Figure 3 and 4 show the mean scores of the willingness to change in the different situations for both the people with- and without an accounting background. When these figures are investigated it seems that only the point where the performance is good and when the
participants are bad informed differs from the other points. This is for both the people with- and without an accounting background, this is already found in hypothesis one and two. Further the mean of the willingness to change is lower for the people with an accounting background, what
is in line with the expectations. This is also found back in table 5 and 6.
Figure 2. The means scores of willingness to change for people without an accounting background in the different situations. The bold line stands for the participants that are good informed. The dotted line for the participants that are bad informed.
Figure 3. The means scores of willingness to change for people with an accounting background in the different situations. The bold line stands for the participants that are good informed. The dotted line for the participants that are bad informed.
5,95 8,59 8,3 9,05 0 1 2 3 4 5 6 7 8 9 10
Good Performance Bad Performance
3,68 6 7 6,89 0 1 2 3 4 5 6 7 8 9 10
Performance
Good performance Bad performance Total How are the participants
informed? Good informed Mean Std. error mean Participants 8.59 (0.18) 22 9.05 (0.21) 20 8.81 (0.14) 42 Bad informed Mean Std. error mean Participants 5.95 (0.59) 20 8.30 (0.31) 20 7.13 (0.38) 40 Total Mean Std. error mean Participants 7.33 (0.36) 42 8.68 (0.20) 40 7.99 (0.22) 82 Table 5. The means of the willingness to change for people without an accounting background in the different situations, the standard error of the means and the amount of participants.
Performance
Good performance Bad performance Total How are the participants
informed? Good informed Mean Std. error mean Participants 6.00 (0.42) 20 6.89 (0.36) 19 6.44 (0.28) 39 Bad informed Mean Std. error mean Participants 3.68 (0.64) 19 7.00 (0.50) 18 5.30 (0.49) 37 Total Mean Std. error mean Participants 4.87 (0.42) 39 6.95 (0.30) 37 5.88 (0.28) 76 Table 6. The means of the willingness to change for people with an accounting background in the different situations, the standard error of the means and the amount of participants.
The independent t-test results are in table 7. Here the results indicate that for every situation the willingness to change is significant lower when the participant had an accounting background. Further all the situations are taken together and the total of people without an accounting background is compared to the total of people with an accounting background. Here the results indicate the same, people with an accounting background are significant less willing to change compared to the people without an accounting background. Further table 8 shows a significant negative correlation between accounting background and willingness to change.
These results confirm hypothesis three, people with(out) an accounting background will be (more) less willing to change.
Which situation is tested? Degrees of freedom Mean difference F-statistic p-value
Good performance, good informed.
Non-accounting vs Non-accounting background.
26.1 2.59 10.03 0.000*
Good performance, bad informed.
Non-accounting vs Non-accounting background.
37 2.27 0.15 0.013*
Bad performance, good informed.
Non-accounting vs Non-accounting background.
37 2.16 2.23 0.000*
Bad performance, bad informed.
Non-accounting vs Non-accounting background.
36 1.30 0.81 0.034*
Total non-accounting background vs total with accounting background.
144.1 2.11 7.08 0.000*
Table 7. Independent t-test results from non-accounting vs accounting background. *is significant because p-value <0.05.
5.2.3 Hypothesis four
The last hypothesis is that Younger (older) employees will resist more (less) against changes. This hypothesis was the hardest to test, the evidence for this hypothesis is found is in table 8.
In table 8 is stated that age is significant positive correlated with the willingness to change. This means that older people are more willing to change. Further age is significant positive correlated with years of working experience. This is not strange because older people had more years in their life and so they had more opportunities to spend this on working years. The years of working experience is also significant positive correlated with the willingness to change. So the last hypothesis is also confirmed, younger (older) employees will resist more (less) against changes. This means that all the hypotheses are in line with the expectations and are all confirmed.
Spearman correlations Willingness to change
Age Gender Years of working experience Accountancy background Willingness to change Correlation coefficient 1.00 x 0.31** 0.00 -0.53 0.50 0.36** 0.00 -0.48** 0.00 Sig. (2-tailed) Age Correlation coefficient 0.31** 0.00 1.00 x -0.04 0.61 0,51** 0.00 -0.36** 0.00 Sig. (2-tailed) Gender Correlation coefficient -0.53 0.50 -0.04 0.61 1.00 x -0.08 0.31 0.01 0.86 Sig. (2-tailed) Years of working experience Correlation coefficient 0.36** 0.00 0,51** 0.00 -0.08 0.31 1.00 x -0.41** 0.00 Sig. (2-tailed) Accountancy background Correlation coefficient -0.48** 0.00 -0.36** 0.00 0.01 0.86 -0.41** 0.00 1.00 x Sig. (2-tailed)
6
Conclusion
In this section the conclusion of the research in this paper will be given and besides the conclusion the limitations and some ideas for further research will be discussed. 6.1 Conclusion
In this paper investigation is done to the influence of the performance, received information, age, tenure an accounting background on the willingness to change under employees. In the experiment that was done in this paper there was a change made in a management control system. Further there were some manipulations to see the influence of different factors on the willingness to change of the employees.
Reason for this paper was that to my acknowledge the existing literature about management control systems only discuss the top-down implementation of these systems. Further there is never done a research about the feelings from employees regarding the changes. By all means, that the willingness to change of employees are never measured. Here the focus is pure on the employees and their feelings about changes in management control systems, instead of the best way to implement these changes.
In this paper there is done an experiment where participants had to assume that they were the manager of a local store specialized in sportswear for men. The company had stores specialized in sportswear for men but there were also stores where the focus was besides sportswear for men on sportswear for women and children. Participants received all the same background information about the company but then there were four manipulations in the specific situations. There were four combinations between good/bad performance and
good/bad information. This is done to measure the effect of performance and the information received by the participants, who are seen as future employees, on their willingness to change. Further the effect of age, tenure and an accounting background was investigated. Before starting the experiment there were different general information questions that the participant had to fill in. For example age, gender, highest education level, kind of study and the years of working experience. This general information was needed to measure the effect of age and educational background (if there was accounting background or not). Further the participants had to visit a website (hd-design.nl/exp) to do the experiment and had at least followed education at Dutch HBO level or higher.
There were four hypotheses. The first hypothesis was that willingness to change will be higher (lower) when performance is low (high). This is based on Audia et al. (2000) who found a link between resistance to change and performance. In the results of this paper there is evidence
that confirmed this hypothesis that the willingness to change is significant higher (lower) when performance is low (high). This is in line with Audia et al. (2000) who found that greater past success in the performance would lead to more resistance against change. This is because there is more confidence in the strategy and less need for change. Further Scapens and Roberts (1993) found during their research project at Omega plc. that changes at a time the performance was good, led to more feeling of threat and uncertainty. Kuhn (1970) and Gersick (1991) both agree that there is a crisis or failure needed to implement change an get acceptance for change. Andersen and Young (1999) found that change only is accepted when something new means better performance, so after bad performance it is easier to change. At last Simons (1994) found in his research that every new top manager likes to change but it was much easier after bad performance. Their findings are all in line with the results in this experiment. When there is greater past success in the performance, the resistance against change will be higher. Greater past success will lead to more confidence in the old strategy and so on there will be less need for change.
The second hypothesis consisted out of two parts, part a and part b. Hypothesis 2a: When performance is bad, the sources of information given do not have a significant effect on willingness to change. Hypothesis 2b: When performance is good, the sources of information given have a significant effect on willingness to change. These hypotheses are based on
Christensen et al.(2014) who found that different sources of information could lead to different outcomes. When we investigate the results of the experiment both hypotheses are confirmed. When performance is bad, the way people receive information has no significant effect on the willingness to change (hypothesis 2a). When performance is good people their willingness to change is significant higher when the participants are good informed (hypothesis 2b). So when people are good informed during good performance, this can take away the resistance to change. This resistance is there because of the good performance. The willingness to change does not differ significantly between the situations of bad performance and during good performance when participants are good informed. This means that during bad performance people are more willing to change and during good performance they are also willing to change, when they are good informed. Only when performance is good and the information people receive is bad there is a significant lower willingness to change. The results are in line with the expectations and Christensen et al. (2014) mentioned already an information effect, where different ways of informing people could lead to different decisions. Further Kotter and Rathgeber (2007) found that when people understand changes, they can easier participate and this will take away their negative attitude. According to Dent and Goldberg (1999) and Henry (1997) communication by
informing people can be essential during times of change. When an organization makes clear what is going to change and how and why, people can easier understand changes. This will lead to less uncertainty and fear about the future. Strebel (1996) also mentions the feeling of
employees during changes. When there is more information they feel more comfortable with changes because they know what they have to expect about the future (Strebel, 1996). Soin (2002) agrees with this opinion and so on the results are in line with the expectations based on existing literature.
The third hypothesis was that people with(out) an accounting background will be (more) less willing to change. Taking the results into account, this hypothesis is confirmed and in line with the expectations. The expectations are based on Granlund (2001) who mentioned that people are from nature against changes and that they will react with ignorance. Further he found that people with an accounting background are more resistant against change because their education leads to this attitude. Sangster (1996) also found that accountants do not support proactive orientation during changes.
The fourth and last hypothesis dealt with age. Younger (older) employees will resist more (less) against changes. The results indicate that there was enough evidence that confirmed this hypothesis. The finding that older people are more willing to change is in line with the
expectation and in line with Herscovitch and Meyer (2002). They found that commitment of employees is better when their tenure is longer and commitment with the job leads to more willingness to change. Oreg (2006) also agrees that age and tenure lead to less resistance against change. Older employees have more experience with changes and do not fear the uncertainty as much as the younger colleagues. Finegold et al. (2002) do also agree with the outcome of the results, they found as most important reason the job-security. Older employees give job-security much more importance than younger employees. This means that older employees are more willing to change when this is what the company wants from them. When they do what the company wants from them they think the chance of being fired will be lower.
From these studies we conclude that during bad performance, employees are willing to change because they think this will lead to good performance. During times of good
performance, willingness to change under the employees can be achieved by good informing the employees and communicate well with them. Further are people with an accounting background less willing to change and older employees are more willing to change compared to their younger employees.
