2016
Name:
Riduan el Mourabit 4073258 Course:
Master Thesis Business Economics Teacher:
Dhr. Dr. J. Wagensveld RA Place and date:
Radboud University Nijmegen, March ‘17
The adoption and institutionalization
processes of teleworking
Preface
I want to thank my supervisor for providing me with helpful (critical) feedback on the several parts I have written. I want to thank him for his time and effort he has put in my research process by always being able to answer my questions, despite my poor planning. So, thank you very much for that.
I would also want to thank Samira Kasstar by making it possible to do this research within a.s.r. Without her help this wasn’t possible. And finally, I want to thank the managers, members of the project team, NGW trainers and NGW ambassadors, for providing me with relevant documents and serving as respondents in my interviews.
Index
1 Introduction...4 1.1 Teleworking...4 1.2 Scientific relevance...6 1.3 Practical relevance...6 1.4 Research questions...6 1.5 Methodology...7 1.6 Outline...7 2 Teleworking in organizations...8 2.1 Introduction...8 2.2 What is “teleworking”?...82.3 Why organizations adopt teleworking...8
2.5 Organizational changes due to teleworking...10
2.5.1 Changes in technological environment...11
2.5.2 Changes in control strategy...11
2.5.3 Changes in leadership style...14
2.6 Summary...15
3 The adapted framework of Wagensveld (2005)...16
3.1 Introduction...16
3.2 Institutional framework of Burns and Scapens (2000) and Dillard et al. (2004)...16
3.3 Social model of Beyer and Trice (1988)...21
3.4 Summary...23
4 Methodology...24
4.1 Introduction...24
4.2 Case description...24
4.3 Data collection...25
4.4 Data analysis...26
4.5 Summary...27
5 Changing in management control systems within a.s.r...28
5.1 Introduction...28
5.2 Adoption of teleworking within a.s.r...28
5.2.1. Institutionalization process of the adoption of teleworking within a.s.r...28
5.2.2. The social process of the adoption of teleworking within a.s.r...30
5.3 Further processing of teleworking within a.s.r...33
5.3.1. Institutionalization process of the further processing of teleworking within a.s.r.. 33
5.3.2. Social processes during the further processing of teleworking within a.s.r...39
6 Conclusion and Discussion...43
6.1 Introduction...43 6.2 Conclusion...43 6.3 Discussion...45 References...46 Appendix A...49 Appendix B...50 Appendix C...51 Appendix D...53
1 Introduction
1.1 Teleworking
The practice of locating labor in flexible workplaces, teleworking (or telecommuting) is becoming a trend in organizations that want to innovate their work methods or reduce costs (Brice, Nelson and Norris, 2011). These workplaces can include satellite work centers, neighborhood work centers or home-based work centers. Electronic communication systems enable communication in these flexible workplaces (Wright, 1993). The past few years have shown that telecommuting is increasingly used by organizations for several reasons (Brice et al., 2011): to give employees family-friendly flexibility in performing their job, to free up office space and to cut employee commutes, saving the company money (Girard, 1997). Research on teleworking is only starting to scratch the surface. Organizations need to understand organizational, managerial, and worker motivation and practices of telecommuting so that they get insight into what it can offer them, along with what its downsides are. Several challenges face organizations that want to implement teleworking, such as innovating the information and communication technologies (ICT) tools needed by employees to communicate with each other. Another is the development of a suitable control strategy able to accurately monitor and evaluate teleworkers when they are working at flexible places, and yet another is properly changing the leadership style to promote teleworking instead of complicating it (Brice et al., 2011). In implementing teleworking, ICT tools play an important role, since locating labor at flexible workplaces creates distance between employees and management. These tools decrease this distance. Efficient and effective ICT tools give employees the opportunity to communicate with each other directly, so that location plays no role. These ICT tools also play an important role in monitoring teleworkers, but in order to do this, organizations first need to change their control strategy, because traditional control mechanisms are unsuitable for monitoring employees who perform their tasks at a distance. Traditional controls are based on direct supervision by a manager. These managers fear that they will lose control of their employees when they are no longer physically visible, and that having them present makes them more responsible for their work (Baruch, 2001). Baruch (2001) argues that teleworkers should be controlled with a results-based standard and a culture of trust. When employees are assessed concerning their actual output, it does not matter how, where and when they have carried out their work. Brice et al. (2011) do not agree entirely with this view. They argue that behavioral controls are the most effective and
efficient monitoring method to guarantee the quality of the work. They recognize, however, that behavioral controls can be very expensive when they depend on several work characteristics. In those situations, output controls constitute the most efficient method. The choice of control mechanism also depends on the degree of uncertainty regarding opportunistic behavior, the economic impact that an employee or team could have, and the culture of an organization. As such, organizations must adapt their control strategy when they choose to implement teleworking. In order to change this control strategy, it is also important to change the leadership culture among management. Teleworking creates an environment in which issues arise for managers because there is less direct supervision. To use the new control strategy properly, managers must adapt their basic skills, such as effective interpersonal communication, mastery of electronic tools, leadership, teambuilding and performance measurement by results. A suitable management approach for achieving this end is a mix of soft skills, performance-tracking software and other technology (Richard, 2012) In this research, the adoption and further processing of teleworking is examined by using an adapted framework from Wagensveld (2005). This framework is suitable because it is a combination of two institutional frameworks (Dillard et al., 2004; Burns and Scapens, 2001), a social framework (Beyer and Trice, 1988) and a cognitive framework (Isabella, 1990). This research, however, disregards the cognitive model of Isabella (1990), since cognitive processes are not examined, and therefore it is not valuable to incorporate the cognitive model in this study. This is due to the fact that this study has a limited time and resources to examine the institutionalization process by using all the models in the framework from Wagensveld (2005). This adapted framework from Wagensveld (2005) is appropriate to examine the adoption and institutionalization of teleworking because Burns and Scapens’ (2001) framework pays attention to the processes of change. This model is extended with the institutional framework of Dillard et al. (2004). This extension makes it possible to examine the adoption process of teleworking and how higher institutions influence institutions at a lower level. To describe and understand this adoption process and the complex institutional change associated with teleworking, the combined institutional framework of Burns and Scapens (2000) and Dillard et al. (2004) is inadequate, however: Social factors also play an important role in this process of change. The social framework of Beyer and Trice (1988) is applied to offer insight into how this process of institutional change occurs.
1.2 Scientific relevance
Several researchers have indicated that the arrival of teleworking has created many research opportunities. Baruch (2001) indicates that there are opportunities arisen out of unanswered questions about the impact of teleworking on performance and effectiveness, and about the precise measurement of this performance. Brice et al. (2011) conclude their research on teleworking with the following statement: “The areas for future research and speculation are
broad and the implications are numerous” (Brice et al., 2011, p. 15). Mello (2007) argues that
there is a need for a deeper understanding of teleworking. This research contributes to this knowledge gap by deepening the understanding of why organizations choose to adopt teleworking and which further processes play a role in institutionalizing teleworking. By adding this clarity, this research provides insight into how external factors, social processes, institutions, management, board of directors as well as routines and rules, can shape the institutionalization of teleworking.
1.3 Practical relevance
The results of this study may be valuable for policy makers and managers of an organization wishing to implement teleworking, since it illustrates which processes play an important role in the institutionalization of teleworking. Managers or policy makers can use these insights to influence the implementation process of teleworking, so that teleworking could be institutionalized in the heads of the employees, managers, and the entire organization.
1.4 Research questions
The objective of this research is to provide insight into the institutionalization of the adoption and further processing of teleworking.
The next question was formulated to guide this research to its objective:
1.5 Methodology
For this study, a qualitative research approach was used to gather in-depth information necessary to analyze and understand the institutionalization process. This research takes place in a specific company, namely a Dutch insurance company named a.s.r. This company was chosen because it recently (in 2010) adopted teleworking in its organization, “Nieuw Generatie Werken” (NGW), and because the company was willing to provide access for this research. This company offers an opportunity to follow the process of change. According to Yin (2003) the qualitative approach is suitable in the situation of examining a particular case in its social context. Data was collected in the form of interviews, documents, and observations. The interviews were conducted with managers and members of the project team who were involved in the implementation of teleworking.
1.6 Outline
The next chapter will contain a literature review about teleworking research. This literature review discusses the adoption process and organizational changes of teleworking. Chapter three will present the theoretical of Wagensveld (2005). Chapter four will elaborate on the methodology and methods used in this thesis. Thereafter, chapter five will provide an analysis of the results of the case study. In the last chapter, chapter six, a conclusion and discussion about this research will be provided.
2 Teleworking in organizations
2.1 Introduction
This chapter reviews the existing literature about teleworking. Section 2.2 explains the meaning of “teleworking,”. Section 2.3. discusses the adoption process, creating a clear understanding of why organizations choose to implement teleworking and which factors outside and inside an organization play an important role in this process. Section 2.5 discusses the organizational changes caused by teleworking. Finally, this chapter will end with a summary.
2.2 What is “teleworking”?
“Teleworking” is here being defined as performing work away from the setting of a traditional office setting. It can be done at varying locations, depending on the employer. Technology plays an important role in this development, since technology makes it possible for teleworkers to communicate at a distance with colleagues, clients, and employers (Daniels, Lamond and Standen, 2001). This means that telework enables employees to work in a “boundary less” organization and to perform their jobs where and when they want to, without direct supervision (Raiborn and Butler, 2009). There are different forms of teleworking, classified across the categories by Huws (2004). The first form is home-based teleworking. In this form, teleworkers perform their jobs at their own homes. The second form is teleworking
from remote offices. Here, the job is performed in workplaces remote from the main office,
such as satellite offices or tele centers. The third form is mobile teleworking. In this form, teleworkers travel much, so they perform their work during travel or at the customer’s workplace.
2.3 Why organizations adopt teleworking
Organizations may have several reasons for implementing teleworking in their organization. Mayo, Pastor, Gomez-Mejia and Cruz (2009) have studied the conditions under which firms are most likely to adopt teleworking. They used a contingency approach to conduct this research. In this research, they try to answer the question, “Why do some organization use teleworking and other organizations not?” Research shows that organizations implement teleworking to increase the quality of work. This quality bump is due to the flexibility the employees get in making their own choices about where, when and how they work, which provides a better balance between work and private life (Mayo et al., 2009). Teleworking also
makes it possible for an organization to achieve cost efficiencies by having a broad labor force, without creating costs for facilities and equipment (Mayo et al., 2009; Brice et al., 2011).
Mayo et al. (2009) also found that the size of the firm, international employees and a contingent-reward leadership style are important factors that determine whether an organization will implement teleworking. These factors bear on this decision because smaller firms are more willing to innovate, have less inertia and are less bureaucratized. An entrepreneurial culture is also more common in smaller organizations, which makes them more likely to adopt teleworking to increase their operational and financial performance (Mayo et al., 2009). The size of an organization has an idiosyncratic effect on teleworking and the extent of bureaucratization. These institutional factors feature any explanation of the adoption of teleworking in an organization (Mayo et al., 2009).
The international background of the employees is also an important reason for organizations to implement teleworking. This situation corresponds with contingency theory, which argues that firms adopt certain organizational practices to solve employee restrictions. Teleworking is therefore the ideal solution for creating workplaces in different locations (countries), without incurring large investment cost (Mayo et al. 2009).
The third important factor according to their study is a contingent-reward leadership style. Organizations with such a management style are more willing to implement teleworking, as these managers do not believe that employees will work hard only with close monitoring. As such, managers without such a management style might resist adopting teleworking, because they are afraid for losing control. Thus, organizations that want to use teleworking have to adapt their philosophy to a results-oriented performance management system to manage and control teleworkers (Mayo et al., 2009).
Bailey and Kurland (2002) agree with the arguments of Mayo et al. (2009) that organizations choose to implement teleworking to decrease real-estate and facility costs or to respond to employees’ needs for a better work-family balance. However, it also has the advantages that it reduces travel time for employees and that it reduces air pollution. Despite these similarities, however, there are also differences between the two studies. Bailey and Kurland (2002) do not talk about the international background of the employees, which according to Mayo et al. (2009) is an important factor that might motivate organizations to adopt teleworking. Bailey and Kurland (2002) found other factors that could explain the adoption of teleworking:
namely, the differences between professional work and clerical work, and the personal circumstances of the employees. According to Bailey and Kurland (2002), the size of an organization is not necessarily an important factor, since studies of this issue show mixed results. For example, Huws et al. (1990) found that large organizations feel more compelled to implement teleworking because they are facing more social pressure to allow a favorable work-family balance for their employees, but other studies indicate the opposite. These studies show that smaller firms adopt more telecommuting, because they are more flexible (Bailey and Kurland, 2002).
Perez, Sanchez, Carnicer and Jimenez (2005) conducted a study to examine the differences in firm resources among teleworking firms and non-teleworking firms to find an explanation for why some organizations adopt teleworking and others do not. They found that better organizational, technological and human resources (HR) increase the likelihood of a firm to adopt teleworking.
Organizational resources allow teleworking firms to have more flexibility practices and variable compensation and to evaluate their employees by their output; they have more business units and outsource more activities than non-teleworking firms (Perez et al., 2005). Concerning the technological resources, Perez et al. (2005) found that teleworking firms invest more into ICT, use more and better software and equipment and also invest more in research and development (R&D).
And as last HR presents important reason to adopt teleworking because teleworking firms have more employees that are engaged in knowledge and sales activities. These employees also have the knowledge and skills to use ICT, information systems and are more involved in job design and programming (Perez et al., 2005)
2.5 Organizational changes due to teleworking
Organizations that adopt teleworking typically change organizational processes to make teleworking viable. These changes are instrumental in developing and enhancing teleworking (Kowalski and Swanson, 2005), and they are necessary because teleworking changes work practices. In the old setting the employees work predetermined hours and at set locations, but this situation is no longer the case with teleworking. The employees get more flexibility in the work hours and locations. In order to ensure that these employees remain productive and perform their job well, the organization needs to change their work practices. The main
changes relate to technological environment, control strategy and leadership style (Pearce, 2009). The following sub-sections explain these changes.
2.5.1 Changes in technological environment
To perform work that is flexible about location, it is important for teleworkers have access to information and to share information with colleagues and supervisors. Therefore, it is important to centralize information and make it accessible to all workers who need it. To implement such ICT tools is not a barrier for organization, because in almost every industrialized country, ICT knowledge allows widespread implementation of such information systems. The barrier that exists is that it requires major financial investment (Illegems, Verbeke and S’Jegers, 2001).
For a teleworking firm, it is important to plan and evaluate the technical architecture within the company’s context, with the aim to create an optimal support environment that maximizes the support for the teleworkers to share information and minimizes security risks (Richard, 2012). According to Pearce (2009), organizations must therefore pay attention to the following issues:
- Employees should have a reliable and fast internet connection. An organization must, therefore, come up with certain guidelines for internet capabilities are minimally required.
- Organizations need to invest in a reputable virtual private network (VPN). This VPN makes it possible for the employees to access corporate resources like intranet portals and internal applications by means of encrypted and secure internet traffic.
- Among the foremost of these issues is that organizations also need to invest in information sharing applications and hardware. The employees and also the managers must be able to communicate with each other and share information. For this purpose, the following applications are available: content sharing, file sharing, instant messaging, audio conferencing and online conferencing.
- The last point of attention and the biggest challenge for the organizations is security and information protection, while allows organizations to protect their information from third parties and to enable faster recovery of lost data. Therefore, organizations need to invest in a secure broadband connection, wireless connection security, internet browser security, physical security of the devices and data security.
2.5.2 Changes in control strategy
Teleworking employees are no longer always physically present in the office. Their absence has immediate consequences for the methods of managing and controlling them. Supervisors and managers accustomed to controlling employees during their work therefore face difficulty
accepting teleworking. To solve this problem, teleworking requires managers to shift from the traditional means of monitoring to a new approach (Raiborn and Butler, 2009). Katz (1987) argues that organizations using teleworking can solve this problem by hiring managers with cognitive and affective skills. Cognitive skills are necessary because they make it possible for managers to pay more attention to actual results and outputs rather than the processes and methods of the employees. This shift of emphasis represents a substantial divergence from tradition, by which managers pay more attention to controlling processes and methods. If the organization does not adapt its control system, it becomes difficult for a manager to monitor the performance of the teleworkers. A significant problem that these organizations face is that managers are afraid of losing control over their employee’s behavior, as they gain more freedom and responsibility by telecommuting (Kurland and Cooper, 2002). Consequently, managers show resistance to the adoption of telecommuting. As one manager responded, “If I can’t see my employees, how do I know they’re working?” (Kurland and Cooper, 2002, p. 3).
According to Kurland and Cooper (2002), the change of control strategies solves this problem of the managers. These control strategies are behavioral, output and clan control strategies. These control strategies ensure that the managers get more information about the output and behavior of his employees, with the result that the actions of these employees are more aligned with the interests of the firm. These three control strategies are further explained below.
Behavioral controls are appropriate when a cause-effect relationship exists between acts and output, or when results are hard to measure. Such organizations that make use of behavioral controls are characterized as top-down and centralized organizations. The managers closely control and evaluate the employee’s behavior overtime. Examples of behavior controls are audio conference meetings, face-to-face interaction, close supervision, defined tasks and job formalization, casual conversation and other informal actions. Most commonly, these control tools take the form of audio conference meetings. By using this method, managers gather the team and staff members to converse in one forum. Face-to-face interaction is another method to gather the team and staff members. The frequency of these meetings can be different for each department. Another control approach is to require teleworkers to submit writing about their daily work activities when they telework. Managers could also visit the teleworkers at their homes to ensure they are working and to ensure that they have a conducive
homeworking environment. Another method is to control employees by gathering information through casual conversation or other types of informal interaction. To control behavior, managers also make use of formalized job requirements and defined tasks, so that the teleworker knows exactly what to do and how to do it (Kurland and Cooper, 2002).
The second control strategy is output control, used when standardization is difficult to achieve or when means-ends relationships are unclear. Output controls are ideal because they clarify what needs to be achieved. According to Kurland and Cooper (2002), there are two types of output controls in telecommuting organizations: management by objectives (MBOs) and performance-linked rewards. This method of control applies not only to teleworkers but also to non-teleworkers. By setting targets, managers evaluate the performance and skill level of the worker and by creating a reward system that motivates employees to do their best at a location in which there is no direct supervision. There are also managers who evaluate employees by quantifying the behavior of teleworkers by monitoring their computer use or online actions.
The third control strategy is clan control, which requires a high level of commitment to adhering to socially prescribed behavior, fostered by common agreement or shared beliefs or values. This influence on behavior is created by training, selection, learning and creating shared values and beliefs. These controls are used to manage potential and to prevent performance problems. Managers select only the employees who are capable to telework. Criteria can include dependability, ability to work independently, maturity, experience, and limited need for much interaction in their work with colleagues and customers. Managers also try to train teleworkers by providing telecommuting training about expectations and responsibilities, in order to foster effective teleworking (Kurland and Cooper, 2002).
Managers need not use only one of these three control strategies to control their teleworkers; instead they use various behavioral, output and clan control strategies at the same time. They also use similar control strategies for both teleworkers and non-teleworkers, except that for telecommuting, certain strategies such as training and selection of teleworkers apply (Kurland and Cooper, 2002). This commonality is also important to Lautsch and Kossek (2011), because their research shows that managers are more successful when they manage and control telecommuters and non-telecommuters in the same way, wince both groups may feel disadvantaged if they are treated differently. When telecommuters feel they are fairly treated, they will deliver better quality work and experience less stress.
Felstead, Jewson and Walters (2003) also recognize teleworking brings issues such as visibility and presence. With visibility, they mean that it is difficult to observe teleworkers, and with presence, that it’s difficult to build social relationships with colleagues. The traditional direct controls are unsuitable to solve these problems. Organizations must therefore adapt their focus of control and strategies of regulation to recognize these problems. Raiborn and Butler (2009) have found that managers use a range of social technologies devised by managers, usually in an ad hoc fashion, to compensate for the visibility and presence problems they are facing. The controls changed in a way by making workers more visible and present, or the management culture changed into a culture in which visibility and presence are less important. This shift led to new surveillance devices, targets, home visits, communication systems and new ways of organizing informal team gatherings. Managers also invoked trust as a residual solution, because in a trusting relationship the teleworker will be productive in the absence of direct supervision. In this way, trust reduces the problem that a teleworker is not visible to management.
2.5.3 Changes in leadership style
As has been discussed above, to control teleworkers it is important for organizations to change their control strategy. However, the change of the control strategy is insufficient. Teleworking creates a physical distance between the managers and employees, and this distance makes communication between the parties more complicated. To solve this problem, new communication skills are required to prevent managers and employees from growing apart (Kowalski and Swanson, 2005). To build a sustainable relationship with their employees in a teleworking environment, managers must have both formal and informal communication skills. The formal skills are required to discuss business issues and the informal
communication skills are required to create a relationship in which teleworkers feel valued and feel they are part of the organization. This feeling makes them feel more committed to the organization’s goals, with the result being mutual trust (Cascio, 2000). Trust is essential in a teleworking organization, so managers need to create a trusting relationship with their
employees whereby they trust that their employees are working when they are not supervised and that they are capable of doing their jobs well (Kowalski and Swanson, 2005). Cascio (2000) even argues that trust is so essential in a teleworking organization that without trust, teleworking will be unsuccessful even if everything else is perfectly arranged. To achieve this trust, the organizational culture must be based on mutual trust between the managers and the employees. To achieve such a culture, organizations must often redesign how they value and reward work. Kowalski and Swanson (2005) argue that in securing such a culture of trust, a
critical element is a results-based performance management system. In such a system,
employees are evaluated based on their performance, rather than their spent hours. To achieve such a change is difficult because managers often fear to trust that employees will work hard with no direct supervision. This traditional view of work and the associated absence of trust presents a major barrier to make teleworking work. Managers must learn to trust their employees without having direct supervision and to believe that they can fulfill their obligations by giving them self-direction and self-control. Therefore, to build this trusting relationship it is important to empower employees and provide them greater flexibility (Kowalski and Swanson, 2005; Ismail et al., 2016).
Illegems et al. (2001) also argue that employees who are not present cannot be managed and supported by means of the traditional leadership style. Managing teleworkers requires a different approach, whereby coordination, motivation and communication are essential. Thus, management may have to replace its traditional style of face-to-face interactions and direct supervision with a new management style whereby coordination based on mutual trust is essential. However, managers are afraid of losing full control, which makes it difficult to build a trusting relationship. Organizations realize that this change in leadership style is not easy to reach without helping managers to learn how to manage teleworkers and build a suitable relationship (Lautch and Kossek, 2011). Kowalski and Swanson (2005) also argue that it is critical to support managers with teleworking training. The managers will have more positive attitudes towards teleworking when they realize the benefits of it. An important element of this training is the development of their affective skills. According to Katz (1987), these skills are required to carry interpersonal conversations and make managers more sensitive to the problems and concerns of the employees, enabling a trusting relationship with the employees. Trust sees to it that managers believe in their employees’ ability to complete quality work at a distance, with the result that closely monitoring becomes unnecessary.
2.6 Summary
“Teleworking” is being defined as performing work away from the setting of a traditional office setting. Organizations adopt teleworking for various reasons. The main reasons are to reduce costs and/or to improve the quality of work. If an organization chooses to implement teleworking there are three things they change to make teleworking possible in their organizations. These changes are modernizing ICT tools to make information sharing possible and to ensure that this happens safely. Secondly, changing their way of monitoring employees to output and clan control. This is because employees are no longer physically present. And
thirdly, changing the leadership style in a style were managers are capable enough to build a relationship with their employees on a long distance.
3 The adapted framework of Wagensveld (2005)
3.1 Introduction
This chapter explains the adapted framework of Wagensveld (2005). Wagensveld’ (2005) framework consists of two institutional models (Dillard et al., 2004; Burns and Scapens, 2000), a social model (Beyer and Trice, 1988) and a cognitive model (Isabella, 1990). This research, however, disregards the cognitive model of Isabella (1990), since cognitive
processes are not examined, and therefore it is not valuable to incorporate the cognitive model in this study. This is due to the fact that this study has a limited time and resources to examine the institutionalization process by using all the models in the framework from Wagensveld (2005). This adapted framework is suitable because it attends to the adoption process and the processes of change by using the insights of institutional and social processes to explain this complex process of change (Wagensveld, 2005). Section 3.2 explains the institutional models of Burns and Scapens (2000) and Dillard et al. (2004). Section 3.3 discusses Beyer and Trice’s (1988) model. The adapted framework is summarized in Section 3.4.
3.2 Institutional framework of Burns and Scapens (2000) and Dillard et al. (2004)
Burns and Scapens (2000) indicate in their article that for studies of changes in management accounting or other areas, such as management control, old institutional economics (OIE) is appropriate. This is because they see management accounting or control as a routine and institutionalized practice. Hence, they introduce a framework inspired by the OIE. This framework is not intended as an operational construct to conduct empirical research, but it is model that can be used to describe analytical concepts for analysis. This framework is appropriate for interpretative case studies in management accounting change or, as in this case, change of management control.
The basic principle of this framework is that changes in management controls are conceptualized in organizational rules and routines and that management control can both shape or get shaped by institutions. Institutions are defined as follows: “The shared, taken-for-granted assumptions that identify categories of human actors with their appropriate activities and relationships” (Burns and Scapens, 2000, p.8). In this research the institutions are the
shared, taken-for-granted assumptions the employees, managers and executives have about their management control systems in their organization.
Routines are seen as the patterns in the thoughts and actions of individuals, which are normal and are taken over by other groups of individuals. Routines play an important role in the relationship between institutions and actions. Routines provide stability in daily activities and can provide resistance to change. Despite this resistance, institutional change may still occur, since people are always curious, leading to experimentation and innovation, and in turn to changes in routines and rules. Thus, change and stability are not independent of each other. Both concepts simultaneously take part in a continuing process (Burns and Scapens, 2000). Rules are the formally recognized standards for how things should be done in practice. Rules are necessary to give direction to individuals and they exist in the context of management control in formal management control systems, as elaborated in manuals. Routines, on the other hand, consist of control practices that are actually carried out. Continual adherence to existing rules can eventually lead routines, but by contrast, routines can also lead to rules. This bi-directionality implies that the relationship between the rules and routines is not linear, but rather recursive and reciprocal. Rules change at discrete intervals, whereas routines have the potential to change during the process in which they are implemented. Institutions are, relative to their rules and routines, to some extent permanent, because institutions are unquestioned, taken-for-granted assumptions among groups of individuals. The degree to which an institution may change depends on the extent to which it is accepted. Thus, when an institution is not widely accepted, it is more sensitive to change (Burns and Scapens, 2000) As previously indicated, Burns and Scapens (2000) developed a framework that is suitable for research of management control changes. This framework is depicted in Figure 1 and explained further below
Fig. 1 framework of Burns and Scapens’ (2000)
This framework uses both synchronic and diachronic elements. The actions (in the “realm of action”) are shaped and restricted synchronically by the institutions, while actions also provide in a diachronic way for the production and reproduction of the institution in the “institutional realm.” The top of the figure shows the institutional area (institutional realm), and the bottom shows the area of action (realm of action). Both areas deal with the process of change. However, the changes in the institutional realm proceed much more slowly than in the realm of action. The middle part of the framework contains the routines and rules. Both act as terms and conditions which ensure that the two areas (institutions and action) are connected to each other. The routines and rules in an organization change in a cumulative way (Burns and Scapens, 2000).
The first arrow (a) in the framework represents the “encoding” process. In this process, the institutions in the institutional realm are translated into routines and rules. As organizations change their management control systems, these changes are effected by the institutions that are in place. These changes in management control systems will take on an organization-specific hue (Burns and Scapens, 2000)
The second arrow (b) represents the “enacting” process. In this process, the new routines and rules (from the encoding process) are implemented in the organization. This process can take place by means of conscious choices, but according to Burns and Scapens (2000), it is usually the result of monitoring and the application of tacit knowledge. The process of enactment can lead to resistance, which can occur when the new rules and routines are in conflict with the existing values and when the actors have the resources to resist the changes (Burns and Scapens, 2000).
The third arrow (c) is the process of “reproduction.” This process may occur when operations are repeated which can lead to routines, which can arise consciously and unconsciously. When actors have the means to modify the existing routines and rules, there is a conscious reproduction of rules and routines. When there is little or no control or when rules and routines are not fully understood, certain things can be handled differently than they should be, and this mishandling be unconsciously reproduced (Burns and Scapens, 2000). The last arrow (d) represents the institutionalization process of rules and routines that are reproduced by the reproduction process and by the behavior of individual actors. These routines and rules, in other words, become the unquestioned, taken-for-granted standards for personal conduct (Burns and Scapens, 2000).
The change process of management control systems is complex, evolutionary and path-dependent. Understanding this process requires a clear understanding of the current context of an organization with the specific routines and institutions. Institutions ensure both the change of rules and routines, but are also formed by the rules and routines (institutionalization process). The model of Burns and Scapens (2000) therefore contributes to the description and analysis of the analytical concepts (Burns and Scapens, 2000).
The framework of Burns and Scapens (2000) is ideal to explore the institutionalization process of management control within organizations, also called the organizational level. But it does not account for the institutions outside the organizational level, which do still impact the development of the institutions within the organizational level (Dillard et al., 2004). In order to shore up this shortcoming, Burns and Scapens’ (2000) framework is extended with the framework of Dillard et al. (2004, which was developed for researching accounting practices and change processes. A major difference with the framework of Burns and Scapens (2000) is that the framework of Dillard et al. (2004) is based on new institutional sociology (NIS) and not on the OIE. New institutional sociology focuses not only on the organizational level, but also takes higher institutional levels into account, which influence the institutions at the organizational level. These higher levels are the economic and political level and the organizational field level. Organizations try to conform to these institutions at the higher levels to gain legitimacy and to increase the probability of survival. This adherence means that the choices that the firms make are not seen as choices among unlimited possibilities, but are rather defined to allow organizations to choose from a legitimate set of possibilities, as created by a group of actors that form the firm’s organizational field (Wagensveld, 2005). The
concept of the organizational field is central concept to NIS, since NIS focuses on a category or network of organizations that influences the behavior of individual organizations. The organizational field level, therefore, is also seen as an intermediate level between individual organizations and society. Organizations that offer the same products, services or have other similarities at an organizational level. This level is dynamic, because over time organizations can enter or exit the organizational field, or it can change through innovations. Figure 2 represents the framework of Dillard et al. (2004).
CPE
Organisational Field Level (OF)
Economic & Political Level (PE) Ci = criteria Pi = practice Power Distribution Organisational Level COF= f(CPE) POF= f(COF) PI= f(POF) &/ or f(COF) PLA= f(PI) &/ or f(COF) Innovators (I )
Late Adopters (LA)
Power Distribution’
C’PE
P’OF C’OF
Figure 2: Institutional framework of Dillard et al. (2004).
This framework represents three levels: the economic and political level, organizational
field level, and organizational level. These levels are further explained below.
The top level of this framework is the economic and political level, consisting of the overarching societal level of political, economic, and social systems. In these systems, norms and values are created. Thereafter, by means of sense-making criteria (Cpe), these norms and values are institutionalized and legitimized in the norms and practices in the levels below. The intermediate level of the framework is the organizational field level. In this level, the institutions at the top level are translated into specific expectations of the organizational field. These institutions enter the organizational field through the organizational field criteria (Cof). The institutions formed at this level ensure that practices at the organizational field are legitimized (Pof).
The third level of this framework is the
organizational level,
which consists of two groups: the innovators (I) and late adopters (LA). Innovators can
be seen as
organizations that develop new practices (P1), but they do this within the boundaries of the organizational field. Late adopters imitate these new practices (P1a) of the innovators. At this level, the framework of Burns and Scapens (2000) can be integrated, since it ensures that the process of change and institutionalization at the organizational level can be better understood. Figure 3 illustrates this combination of frameworks.
Figure 3 Combined framework of Burns and Scapens (2000) and Dillard et al. (2004).
This combined framework could be used for research into how institutions are created, maintained, and changed through actions. Its focus is on the adoption and institutionalization
CPE
Organisational Field Level (OF)
Economic & Political Level (PE) Ci = criteria Pi = practice Power Distribution Organisational Level COF= f(CPE) POF= f(COF) Power Distribution’ C’PE P’OF C’OF Routines Rules a bc d Realm of Action I nstitutional Realm Time Routines Rules b cb c a d bcbcb c a: encoding b: enacting c: reproduction d: institutionalisation
processes, which is why this framework can be used to identify factors that influence these processes. For organizations that want to change the institutions in the organization, it is important to create incentives to change and create transformational readiness among employees. Transformational readiness represents the willingness organization members to change and to adopt new practices, such as new management controls. This adaptability implies that all organization members must be prepared for the new standards, so that they will accept the change, and so that it can then be institutionalized (Armenakis and Harris, 2002). To understand these processes the organizations follows to create transformational readiness among the employees, these two models are extended with the social model of Beyer and Trice (1988), as explained below.
3.3 Social model of Beyer and Trice (1988)
For organizations, it is important to be aware that they can influence the acceptance of new ideas, systems, and practices, for which purpose managers may employ rites or ceremonies to accomplish. Rites are planned sets of activities that possess valuable information within an organization, so they act as social vehicles and symbols to communicate information and the intention and beliefs of the managers. Many of these rites are rooted in the organization, and as a result, one is not aware of their existence. But awareness of the potential magnitude these rites can help organizations in the social process of legitimizing and creating acceptance for the things they want to change (Wagensveld, 2005).
In this research, this social process of change is seen as five patterns of rites. The two first rites focus on the reduction of forces that contribute to the acceptance of the old way of working. The third and fourth rites focus on creating new behavior, values, and attitudes by changing the old way of working by adopting new systems, processes, and standards. The last category of rites try to ensure that the new way of working becomes the dominant so that it becomes institutionalized (Wagensveld, 2005). These five “steps” of rites are explained below.
The first step is the rites of questioning and destruction. These rites challenge the established order of an organization by showing evidence that the current systems, standards, or processes are not functioning like they should.
The second step is the rites of degradation and conflict. In these rites, the current way of working is challenged and undermined. In this rites, many organizations replace managers who show resistance or who are unable to go with the new flow.
The third step is the rites of rationalization and legitimation. In these rites, employees are sensitized to why the new way of working is necessary, accomplished by providing explanations. What also is an important factor in this process is the support of top management. Employees are more willing to accept change when they experience the commitment of top management.
The fourth step is rites of passage and enhancement, by which organizations try to overcome resistance, increase support for the new work practices and encourage ownership over the process of change. Organizations try to affect this encouragement by offering information days and training.
The last step is the rites of integration and conflict reduction. In these rites, managers try to bring more balance to the organization by solving conflicts between individuals or departments and by instilling a vested interest in the new way of working. These rites are important after a period of a major change, because they solidify the new system, standard or process, so that subsequently, after a period, it can be institutionalized in an organization.
3.4 Summary
This research uses the framework of Wagensveld (2005) without the cognitive insights of Isabella (1990). This adapted framework is suitable because it attends to the adoption process and the processes of change by using the insights of institutional and social processes to explain this complex process of change. The combined institutional model of Burns and Scapens and Dillard et al (2004) is suitable in providing an institutional explanation of why organizations adopt changes and how these changes are institutionalized within the organization. The addition of the social model of (Beyer and Trice, 1988) makes it possible to explain which and why social processes play an important role in the institutionalization process. The figure below illustrates the adapted framework of Wagensveld (2005). The orange arrows refer to social processes that occur during the adoption and institutionalization process.
4 Methodology
4.1 Introduction
In this chapter, I will provide insights in the methodology that is used. The aim is to create a clear picture of why a qualitative research for this research question is suitable. Secondly, the selected case will be described and motivated why this case was chosen. Thirdly, the data collection will be explained and how this is analyzed during this research. Finally, this chapter will end with a summary.
4.2 Case description
The aim of this research is to create a deeper understanding of the adoption and institutionalization processes of teleworking in organizations. To gain this knowledge, this research will be conducted at a firm that recently adopted and implemented teleworking. A company that meets this requirement is a.s.r. located in Utrecht. A.s.r. is a Dutch insurance company and offers a wide range of financial products of damage-, life and income insurance, group and individual pension, health insurance, travel-and leisure, and funeral insurance. These products are offered through the following brands: De Amersfoortse, Ditzo, Europeesche Verzekeringen and Ardanta. Besides these insurance products they also offer savings and investments products (a.s.r., 2016). This study will not focus on one specific business unit, but rather on the institutionalization of teleworking altogether within a.s.r. During my employment at a.s.r. I noted that the company was implementing teleworking in the organization. Through the conversations, I held with the management and an employee of the HR department, I noted that a.s.r. had implemented teleworking across the entire organization and to successfully implement teleworking they had to consider many things. This made me as researcher interested in conducting a case study of how this process of change was shaped
4.3 Qualitative case study
This research will be conducted by means of a qualitative research approach. This is necessary to get a clear understanding of the adoption and further processing of teleworking. According to Yin (2003) this research approach is suitable for finding answers to “how and why” questions. It offers an opportunity for mapping the unpredictable factors that influence these change processes. This is possible because these changes are studied in their natural environment. This view corresponds with Burns and Scapens (2000). They indicate that
change is path-dependent because every organization has an unique internal and external composition. According to Eisenhardt (1989) it is important to select an appropriate research method and to select a proper case. In this research is chosen to select only one company, due to limited time and resources. The company is selected by means of a convenience sample. According to Yin (2003) it’s difficult to find companies that are fully prepared to cooperate in a research. For this research, a company had to be found that recently adopted teleworking and was fully prepared to cooperate in this research. A.s.r. was prepared to do so and had also recently implemented teleworking. Therefore, this research will take place at a.s.r.
4.3 Data collection
In this study, the data will be collected by means of three ways: semi-structured interviews, documents, and observations. The advantage of these three methods of data collection is that the obtained data can be compared with each other, also known as triangulation.
The choice for semi-structured interviews is because this type of interviews does not contain a pre-determined set of questions. This gives the researcher some form of flexibility to ask deeper questions and it’s appropriate to find opinions and attitudes of the interviewees (Yin, 2003). Another advantage is that this type of interview gives some guidance during the interview.
The interview questions have been prepared by means of the existing literature of chapter two and the theoretical framework of chapter three. These questions are posed to eight members of the company who played a role during the implementation of teleworking: Three interviewees were part of the project team, who were responsible for the implementation of teleworking, two interviewees were teleworking trainers who were responsible for coaching and motivating managers and employees, two interviewees were managers of the business lines damage and health insurance, and one interviewee was a teleworking ambassador who was responsible for promoting teleworking. All these interviews were held at the head office of a.s.r. in Utrecht. The second method that is used is the method of document analysis. The documents that are analyzed are documents that provide information of the implementation process and the changes that were implemented. As example of the documents that were analyzed is an information brochure made by the HR department. This information brochure contains information about the impact of teleworking and what has changed for the members of a.s.r. Another document contains information about the implementation strategy and what the goals are of teleworking.
The third method in this research is observation. The aim of the observation is to study the social and material world in which the research objects behave. For this research the actions of the employees and managers are studied in a teleworking environment. As an example, it is observed if employees and managers work according the teleworking rules. With teleworking rules is meant or employees were working time and location independently, and how managers controlled their employees. The researcher observed this teleworking environment during his regular work at the office by just simply walking by the coffee corner. With this observation strategy, the researcher can observe the workplace without distorting reality. This observation strategy was possible, because I worked as a claims handler at a.s.r. during this research. Thereafter, I made memos during the observations to capture all relevant events.
4.4 Data analysis
For the analysis of the data obtained from the three methods, use is made of a coding process. To do this, a list is made up with relevant keywords based on the existing literature of chapter two and theoretical framework of chapter three. After that the data was analyzed based on these keywords to find the relevant data for this study. During this analysis is considered that there was a possibility that the list of the keywords wasn’t complete. With as result that these keywords after discovery were added to the list of keywords. To determine the validity and accuracy of the information obtained during the interviews, use is made of the data obtained during the observations and data from the analyzed documents. During the observations, data were gathered about how employees and managers responded to implementation of teleworking. These data of the observations is suitable, to compare with the data obtained from the interviews.
As previously mentioned the keywords are determined from the existing literature review and theoretical framework. This is important for doing qualitative research. By means of a literature study should be ascertained what already is known about the research topic. This knowledge helps to determine whether there are similarities and/or contradictions with the empirical results (Eisenhardt, 1989). To select the appropriate literature use is made of a database of scientific articles (Web of science and the E-journals database of the Radboud University Nijmegen) and Google Scholar. The following search terms are used in this quest: Teleworking, Telecommuting, remote work, control change, institutional change, social change, Adoption of teleworking, Adoption of telecommuting, Teleworking implementation, telecommuting implementation, teleworking change, and telecommuting change. An important means of selecting these articles, is that the article is included in a reputable
scientific journal, with preferred an (management) accounting journal. Then based on these articles use is made of the “snowball effect” to find and study more relevant articles for this study. The used literature is included in the reference list.
4.5 Summary
The objective of this research is to create a deeper understanding of the adoption and institutionalization processes of teleworking in organizations. Therefore, is chosen to conduct a qualitative case study, because this research methodology is most suitable to find an answer for the research objective and question. The selected case study will be conducted at a.s.r. This is because this company recently implemented teleworking and gives access and full cooperation to carry out this research. The data were collected by means of semi-structured interviews, documents, and observations. Subsequently, these data were analyzed by means of coding process.
5 Changing in management control systems within a.s.r.
5.1 Introduction
This chapter analyzes the obtained interviews, documents and observations based on the adaption of Wagensveld’s (2005) framework and the literature review of Chapter 2. This analysis answers both parts of this study’s research question: How and why is teleworking institutionalized in an organization? The chapter starts by explaining the adoption process of teleworking within a.s.r, and then explains the further processing of teleworking, to answer how the institutionalization process of teleworking is shaped within a.s.r.
5.2 Adoption of teleworking within a.s.r.
5.2.1. Institutionalization process of the adoption of teleworking within a.s.r.
In 2009, a.s.r. started thinking about implementing NGW across the entire organization. This plan did not suddenly come into being. The board of directors of a.s.r. were facing several problems at that time. One of the solutions for these problems was implementing teleworking. This solution did not come simply into being, but rather was shaped by higher institutions. It is important to analyze these higher institutions to get a better understanding of the adoption process.
“As you might know a.s.r. was part of Fortis when it was taken over by the Dutch
government in 2008. This takeover and the shrinking market in the insurance market meant for us that we had to reduce costs. To achieve these goals, it was decided to bring all business units under one building, our headquarters (Utrecht). But to achieve this, we had to renovate the building. Therefore, is was a big challenge to accommodate all business units under one building, while during and after the renovation fewer workplaces were available. This situation forced us to find a solution, which was teleworking” (Noted by member 3 of the NGW team).
These higher institutions are called by Dillard et al. (2004) the “economic and political field
level” and the “organizational field level” (see Chapter 3). These higher institutions
influence the lower institutions that are shaped at the organizational level. In case of a.s.r., there were two major causes at the economic and political field level that institutionally influenced a.s.r. to implement NGW. Firstly, the change was caused by the Dutch’s government takeover of a.s.r. in 2008 and secondly by the bad economic conditions in their operating market. Pension products were under pressure and the demand of some insurance
products decreased. The impact of these situations was enormous. The poor economic conditions meant that the profitability of the organization decreased sharply, threatening its very existence. This threat was also the reason for the intervention by the Dutch government, taking over a.s.r. These new situations presented a big challenge for the board of directors. Because it was their duty to lead the company through this difficult time and to make it profitable again. To reach this goal, one of the main objectives was to reduce costs significantly, without decreasing the quality of the products and services.
“Before we decided to implement teleworking, we visited Microsoft to experience what teleworking could offer and how they implemented this major change. This visit was very educational and has contributed to the fact that we implemented teleworking. Our visit to Nokia in Finland was also very educational. At that moment, we were already being in the implementation process of NGW.” (Noted by member 1 of the NGW Team)
To reduce costs, a.s.r. implemented many forms of reorganization within all business units, but they were not the only company who were cutting their cost structure. Due to the global financial crisis, many companies were facing declining sales. To compensate for this decrease in turnover, many companies chose to cut their costs. One of these companies was Microsoft. To reduce their facility and rental costs and to give their employees flexibility, they implemented teleworking throughout their entire organization. The implementation of teleworking within Microsoft inspired a.s.r. also to consider the possibility of implementing teleworking in their organization. According to Dillard et al. (2004), the influence of Microsoft can be considered under the heading of the institutions shaped at the organizational field level. The organizational field is a group of organizations within an industry that offer similar products or services or have other characteristics in common (Wagensveld, 2005). In the case of a.s.r. and Microsoft, they do not operate in the same market and do not offer the same products or services, but they do have in common that they are big companies with several business units that offer a range of different products and services. For a.s.r., the implementation of teleworking was also an answer to reduce their facility and rent costs, since one of the cost reduction plans was to accommodate all business units under one building (headquarters in Utrecht). A significant problem was that they wanted to renovate headquarters at the same time, meaning that there were not enough workplaces for all the employees during and after this renovation. With the implementation of teleworking, they needed less workplaces, because employees had the opportunity and flexibility to work from home or from other non-office places.
The institutions that arose at the economic and political field level shaped the institutions at the organizational field level. At the organization field level, which consisted of organization that had some characteristics in common, companies were searching for possible ways to reduce costs. One of these possibilities was to implement teleworking to reduce facility and rent costs. This possibility of implementing teleworking to reduce costs found its passage to the organizational level of a.s.r. It is at this level that the institutionalization process of adoption stops and turns into the implementation process. This process is further discussed in Section 5.3, but first the social process of the adoption of teleworking is discussed below. 5.2.2. The social process of the adoption of teleworking within a.s.r.
In order to create acceptance of new ideas, systems and practices, organizations employ rites. These rites are important in the social process of change, since they can be considered planned sets of activities that contain important information during different stages of change (Wagensveld, 2005). For the duration of the adoption process of teleworking within a.s.r., discussed above, it can be concluded that the higher institutional environment, which consists of economic and political level and organizational field level, influenced the organizational level (a.s.r.) to adopt teleworking. According Wagensveld’s (2005) model, it is important to create social acceptance of change within an organization. In the case of a.s.r., it was important to create this acceptance at the board level, because the board of directors had the power to adopt changes in the organization.
“The deeper reason why we have adopted NGW, was because we had to lower our costs and therefore was chosen to accommodate all units in this building. And that’s really a difficult process. Because that meant that all our colleagues across various offices needed to be located here. Our old business support manager director Arja Hilberdink, was responsible for this process. She came with the idea to implement teleworking and also put everything in motion to convince the board of directors…” (Noted by member 2 of the NGW team)
The idea of adopting teleworking within a.s.r. was created by the management of the business support department. They saw teleworking as the solution to the problem they were facing. The problem was that board of directors made the decision to close 14 of the 15 locations, while only one location (Head office) was restored. With this decision, the business support department faced a major challenge, because they were responsible for matters concerning housing activities. The only solution for this problem related to the management of the business support department to implement teleworking. To implement teleworking, however,
the management of the business support department needed to convince the board of directors. This is the moment in which the rites of questioning and destruction took place. During these rites, the established order of the organization is challenged, enacted by means of a presentation by the sponsor of the proposed change or the use of external consultants (Wagensveld, 2005). In the case of a.s.r., the management of the business support department contacted Microsoft to arrange a day for the board of directors. They choose to contact Microsoft because that company had already implemented teleworking successfully in its own organization. On this day, members of the board of directors were able to meet top management of Microsoft and to look around. They were immediately convinced by the smarter meeting facilities, location and time independency, more satisfied employees and less workplaces, thus lower costs. After this visit, they immediately decided at the first board meeting to adopt teleworking.
“After the decision to implement teleworking. The Board of directors gave us the responsibility to implement teleworking. Actually, in the first instance it was our previous head of the NGW team Philippe Wits who had the responsibility to select the right people and to lead our team. I believe that he has chosen the right people. Because after the team’s formation came the inspiration to make this change in a pleasant way for the people on the work floor...” (Noted by member 2 of the NGW team)
After the rites of questioning and destruction, the second rites take place: the rites of
degradation and conflict, during which the process of change begins by challenging and
undermining the exiting status quo. According to Wagensveld’s (2005) framework, this phase is characterized by replacing managers who are unable to acknowledge the need to change or the formation of a project group. In the case of a.s.r., all six members of the board of directors were unanimously agreed that the implementation of teleworking was necessary. Because of this unanimity among the board members, the top management of the various business units were also quickly convinced that the adoption of teleworking was necessary for the company. The important question, though, concerned how to successfully implement teleworking through the entire organization and how to convince all managers and employees. To achieve these goals, the board of directors appointed a project team (the NGW team). This team consisted of experienced managers from various departments of HR, ICT, facilities and business lines. This NGW team was responsible for the implementation throughout the entire organization and become the focal point of all matters related to teleworking.
“I certainly believe that the support of the then six members of the board of directors gave us extra strength to successful implement NGW” (Noted by member 3 of the NGW team)
The board of directors of a.s.r. realized that a project team could be a potential instrument of change in the means of counterbalancing other vested interest in the organization and focusing daily on the implementation of teleworking, this is consistent with Wagensveld (2005). By supporting the project team, they gave a signal to the entire organization that the implementation of NGW was a top priority. This support was of great importance to successfully implement changes in an organization, because managers and employees are more willing to accept changes that are in their own interest (Young and Jordan, 2008). Section 5.3 explains how the NGW team implemented teleworking and what role institutional and social processes had played to institutionalize NGW.
