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MSc Business Administration
Organizational & Management Control
“A case study focused on the relationship between
management control and trust following the
introduction of working from home”
University of Groningen
Faculty of Economics and Business
Reinier Prakken Student number: S1690248 Jozef Israelstraat 31 9718 GC Groningen +31617107835 r.p.r.prakken@student.rug.nl Supervisors
First supervisor : Mr. A. Abassi Second supervisor: Mr. B. Qin
Words: 10829
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Contents
Abstract ... 4
1. Introduction ... 5
1.1 “Problem statement” and significance of the problem ... 5
1.2 Background introduction ... 5
2. Theory ... 7
A. Literature Review ... 7
2.1 Background ... 7
2.2 Introduction ... 7
2.3 Working from home / Teleworking ... 8
2.4 Control ... 8
2.5 The cybernetic model of control ... 9
2.6 Sources of control ... 10
2.7 Agency theory ... 12
2.8 Management control ... 13
2.9 Control in the context of teleworking ... 14
2.10 Trust ... 14
2.11 Trust & Control ... 16
2.12 Summary of literature review ... 17
B. Research questions ... 18
Research question ... 18
Sub questions ... 18
3. Methodology ... 19
3.1 Data collection methods ... 19
3.2 Analysis plan... 20
Background ... 20
Questions interviews ... 20
Plan... 21
3.3 Discussion of validity and reliability ... 21
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4.1 Descriptive coding ... 23
4.2 Topic coding ... 25
4.3 Analytical coding ... 25
4.3.1 Working from home ... 25
4.3.2 Relation manager and employee ... 27
4.3.3 Management Control ... 28
4.3.4 Trust ... 30
4.3.5 Relation management control - trust ... 31
4.3.6 Satisfied? ... 31
5. Discussion and Conclusion ... 33
5.1 Explanation of findings’ in relation to other studies (do you find the same/different results? Why do you think you found what you did?) ... 33
5.1.1 Working from home ... 33
5.1.2 Relation manager and employee ... 33
5.1.3 Management Control ... 34
5.1.4 Trust ... 35
5.1.5 Relation management control – trust ... 35
5.1.6 To conclude ... 35
5.2 Answer to the research question ... 36
5.3 Theoretical and managerial implications ... 37
5.4 Limitations... 37
5.5 Further Research ... 38
6. References ... 40
7. Appendices ... 43
Appendix 1 - Interview questions ... 43
Appendix 2 - Descriptive coding ... 46
Appendix 3 – Topic Coding ... 48
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Abstract
Due to the development of IT, working from home is gradually becoming more common. Despite this trend research on the impact and potential consequences of this innovation on the relationship between employer and employee is scarce.
I did an exploratory multiple case study and conducted several interviews at the Social Insurance Bank, the Rabobank, HP and AWVN. The focus of this case study was to explore several consequences related to working from home, specifically on control and trust and their mutual relationship.
Based on the interviews with managers and employees in combination with the existing literature, it can be stated that the introduction of working from home has led to many changes. The first thing that working from home has changed is that the focus of management control has changed from more behavior focused control towards more output focused control.
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1. Introduction
1.1 “Problem statement” and significance of the problem
Companies face increasingly competitive pressure related to rapid and continuous adaptation to a complex, dynamic, and highly interconnected global environment. Pressing challenges include keeping pace with shorter product life cycles, incorporating multiple technologies into the design of new products, co creating, products and services with customers and partners, and leveraging the growth of scientific and technical knowledge in many sectors (Fjeldstad et al., 2012).
Many changes are taken place at the workplace these days. More and more companies have adjusted their policies and allow their employees to work – regularly – from home. This has influential, big and important consequences from a management and employees perspective. How do you manage their performance if you no longer see them on a daily base. How do you manage to deal with the received freedom? Managers are obliged to change their behaviour and to focus more on output. Besides, trust in the relationship between managers and their subordinates get even more importance.
The goal of this study is to understand some causes and effects related to working from home, specifically on control and trust and their mutual relationship. My analysis will focus on both managers and employees.
1.2 Background introduction
An organization wants to be successful. While searching for the success factors of organisations, you can find many researchers (Cooper and Madigan, 2004; Ernst and Kim, 2002; Kahn et al., 2006) who have investigated this topic. Based on these researchers and their findings, it is clear that strategy, culture, process and people play a vital role in organisations.
6 circumstances and increased recruitment options. All these are clear benefits for the employers. A better quality of life, more flexible work schedules, reduced transportation cost and travel time are advantages for both employees and employers (Khaifa and Davidson, 2000).
Despite these benefits, there is also resistance to telework. Coming from many different companies (Khaifa and Davidson, 2000; Baker et al., 2006). One of the most significant challenges to implement a successful telework program lies in the management function. During research which is done so far, it is found that some managers are resistant to change. And besides, they are hesitant to change managerial practices. They still have the traditional managerial attitude that workers need to be considered working (Lupton and Haynes, 2000) and some managers stick to the old management practices of managing by walking around (Mears, 2007).
In summary, working from home (and teleworking) has become more popular in organizations. Managers and employees, who are dealing with this new phenomenon, have to adapt and sometimes implement and change their organizational controls.
This thesis will be an exploratory study using a case study approach. My thesis will consist of existing literature regarding working from home, management control and trust. Besides, I have been able to do some research in different companies. In this thesis, I will specify in more detail the concept of management control and trust in relation to working from home.
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2. Theory
A. Literature Review
2.1 Background
The focus of the case study is the relation between management control and trust in the four organizations which have introduced working from home and where I carried out several interviews with both line managers and employees. In the theoretical part, I will talk about some findings and research which is done so far regarding this topic. I will initially give a short introduction. After that, I will focus on the development regarding working from home and teleworking, control, the cybernetic model of control, the different sources of control, the agency theory, management control, trust and the possible relation between trust and control. In the end, I will give a short summary about the literature review.
2.2 Introduction
It is clear that “people” form an essential element in contributing to the success of an organisation. There are many elements related to people in this respect. It could for instance be the quality of employees working in the organisation, it could be leadership characteristics (e.g. amount of trust/ freedom) or people behaviour (e.g. whether people are stimulated to collaborate, etc.).
8 Employees are facilitated and stimulated by large scale changes in technology: the breakthrough of the World Wide Web and the advent of the mobile phone have laid the foundation for the communication network of the contemporary society, where an abundance of information is available and where employees are constantly in contact with each other, regardless time and/or place (Chesley, 2005).
According to Chesley (2005), due to large scale changes in technology, there is an abundance of information available. Besides, employees are constantly in contact with each other, regardless time and/or place.
2.3 Working from home / Teleworking
Changes in the field of information - and communication technology have led to changing needs at employers - and employee’s level and have facilitated the introduction working from home. There is no single definition of the working from home concept. The concept has been described as “social innovation” (Volberda et al., 2006), but also as “another way of working that is meaningful, effective, efficient and enjoyable (Bijl, 2009). The most comprehensive definition, and also the bridge between management control and trust, comes from TNO: “It is not only about place and time independent work; it also requires a change in the behavior culture and the way of leadership style focusing on performance objectives (TNO, 2012).”
Telecommuting and telework are terms that are often used interchangeably to describe employees who periodically, regularly, or exclusively perform work for their employers from home or another remote location that is equipped with the appropriate computer based technology to transfer work to the central organization (WorldatWork, 2009; Nilles, 1994 and Olson, 1981).
2.4 Control
9 Tannenbaum (1968) said; “organization implies control. A social organization is an ordered arrangement of individual human interactions. Control processes help circumscribe idiosyncratic behaviours and keep them conformant to the rational plan of the organization. Organizations require a certain amount of conformity as well as the integration of diverse activities. It is the function of control to bring about conformance to organization requirements and achievement of the ultimate purpose of the organization. The coordination and order out of the diverse interest and potentially diffuse behaviours of members is largely a function of control.”
In the control theory the assumption is that individuals participating in an organisation have divergent interest and goals. It is likely that these divergent interests and goals are incongruent with the organisation goals. In order to ensure that organizational members work dependably, it is important that organizations implement controls to direct implement individual efforts to meet the organisation’s goal (Ouchi, 1979 and Ouchi, 1980).
A control system is an organization’s set of procedures for monitoring, directing, evaluating, and compensating its employees. By accident or design, such a system influences employee behavior, ideally in a way that enhances the welfare of both the firm and employee (Anderson and Oliver, 1987).
2.5 The cybernetic model of control
When employees are working in office, managers have the option to control them by using behavior and outcome based performance evaluation strategies. The purpose of management control in organizations is to direct and influence the attitudes and behaviors of participants to achieve the organizations objectives (Anderson and Oliver, 1987; Eisenhardt, 1985; Jaworski et al., 1993 and Ouchi, 1979).
10 output. In organizations that are using output control, output needs to have high measurability and should be easily associated with either individuals or groups (Ouchi, 1979 and Hatch, 1979).
Another option for organizations is using behavior control. This way, behavior that is associated with high performance is established as standards or targets. Organizations which are using this kind of control, the task observability needs to be high, meaning that the process of transforming from input to output needs to be well-understood (Ouchi, 1979 and Hatch, 1997).
Eisenhardt (1985) states that Thompson (1967) and Ouchi (1979) arguing that something which is measured, is either behaviour or output controlled. Therefore, the performance evaluation strategy for control can be either behaviour or outcome based.
2.6 Sources of control
Ouchi (1979) has conceptualized three distinguishable sources of control mechanisms: markets, bureaucracies and clans. Organizations that are using market control use price competition as control mechanisms. Next to these kinds of organizations, there is also bureaucratic control. Organizations that are using this kind of control rely on rules, procedures, documentations, and surveillance as control. Besides, the organizations that implement clan mechanisms facilitate their employees to obtain high internal commitment to the firm’s objective, cultures, norms, and values mainly through the employee selection, promotion and socialization process.
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Type of Control Social Requirements Informational requirements
Market Norm of reciprocity Prices
Bureaucracy Norm of reciprocity Rules
Legitimate authority
Clan Norm of reciprocity Traditions
Legitimate authority
Shared values and beliefs
A market cannot exist without a norm of reciprocity, but it requires no social agreements beyond that. As described above, all relevant information is contained in prices and is therefore not problematic. Next to the norm of reciprocity, which is in a bureaucratic control system reflected as the notion of “an honest day’s work for an honest day’s pay”, the agreement also contains on legitimate authority, ordinarily of the rational/legal form. A clan requires not only a norm of reciprocity and the idea of legitimate authority, but also social agreement on a broad range of values and beliefs. Because the clan lacks the explicit price mechanisms of the market and the explicit rules of the bureaucracy, it relies for its control upon a deep level of common agreement between members on what constitutes proper behavior, and it requires a high level of commitment on the part of each individual to those socially prescribed behaviors (Ouchi, 1979).
Regarding Ouchi (1979), a clan is more demanding than either a market or a bureaucracy in terms of the social agreements which are prerequisite to its successful operation. A clan control is the most demanding and market control is the least demanding in terms of the social requirements.
12 In his article, Ouchi (1979) also outlined the relationship between the different control types and the forms of commitment. The commitment levels are high for both the market control and the clan control. Between these types of control you’ve got the following difference. With market control, the employees internalize that they work towards their self-interest. But as the opposite, under clan control employees internalize the organizational goals and are even willing to sacrifice their self-interests. In general, the employee commitment in a bureaucratic organization is low. Ouchi (1979) says that compliance is the minimum commitment level required. So this is definitely needed in case of a bureaucratic organization.
2.7 Agency theory
Agency theory considers the optimal contract form for that ubiquitous control relationship in which one person, the principal, delegates work to another, the agent.
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2.8 Management control
Management control is a field with an obvious, practical implementation clearly abiding in the mid-level of organisations. There is not one general definition from management control. A lot researchers who are talking about management control, are referring to Robert Anthony (Bredmar, 2012). Anthony (1965) defined management control as: “management control is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organisation’s objectives”. The purpose of management control is to keep the organization ‘under control’ in the sense of implementing its strategies so as to achieve its goals (Anthony, 1965).
Anthony (1965) states that with help from the system of management control a company manager could work with both planning and control. The way of working with management control differed in varying kinds or organisations and the understanding an analysis also differed depending on the function within an organization (Anthony, 1965).
The academic interest of management control as a concept may be traced to the end of the 1960’s, when researchers such as Tony Berry and David Otley (2003) were showing interest in this field (Bredmar, 2012). According to David Otley (2003), there is one central problem of management control. How can organizations ensure that managers (and workers) act in the organizational interest. There seemed to me to be two main aspects of this problem. The first was one of information and accountability systems; how could systems be designed that would always indicate appropriate action and report when it was being attained. The second was behavioural in nature; how could managers be motivated to do what was best for the organization, even if it meant reporting numbers which could be interpreted adversely? (Otley, 2003).
14 evident in the remarkable success of the Balanced Scorecard. Third, there has been an increased interest in ideas of corporate governance and the external control of organizations, generally focused around the theme of ensuring that senior manages work in the interests of shareholders and deliver appropriate value to the owners of a business. Fourthly, budgeting has tended to reduce in importance, partly due to the rise in these alternative controls, but more due to the levels of unpredictability and uncertainty in many business environments. As the value of planning decreases due to uncertainty, the usefulness of budgetary control has declined.
2.9 Control in the context of teleworking
So far, a few studies have been done about control in the context of teleworking. Dimitrova (2003) has examined the relationship between control and the autonomy of employees in telework. Through interviewing professionals, managerial and sales workers, she found that the changes in control and autonomy are limited to reconfiguration of the work schedule.
Besides, Kurland and Egan (1999) have conducted a survey to study the relationship between telecommuting, organizational monitoring strategies (behavior and outcome-oriented) and organizational justice perceptions (distributive, interactional or procedural justice). Their results suggest that monitoring strategies were strongly associated with organizational justice perceptions than with telecommuting, and procedural and interactional justice perceptions related significantly to telecommuting.
The focus from these two studies is to investigate the impact or the consequences of organizational controls on employees. Dimitrova (2003) concludes that the changes between the management practices in telework and non-telework are limited.
2.10 Trust
15 purchasing manager (1) can be relied on to full fill obligations (Anderson and Weitz, 1989), (2) will behave in a predictable manner, and (3) will act and negotiate fairly when the possibility for opportunism is present (Bromiley and Cummings 1995; Van den Bos et al., 1998).
Zaheer et al. (1998) conceptualize inter organisational trust as being reliable in fulfilling obligations (reliability), predictable in behaviours under uncertain circumstances (predictability) and fair in ‘negotiating when the possibility for opportunism is present (fairness)”. Viewing trust as an expectation highlights the inherent uncertainty surrounding a purchasing-manager’s behaviour.
Adler (2001) says that economic and organizational theory have shown that, compared to trust, price and authority are relatively ineffective means of dealing with knowledge-based assets. Therefore, as knowledge becomes increasingly important in our economy, he should expect high-trust institutional forms to proliferate. In his article, a review of trends in employment relations, interdivisional relations and inter firm relations finds evidence suggesting that the effect of growing knowledge-intensity may indeed be a trend toward greater reliance on trust.
Adler (2001) sees trust as a central construct in a broader argument. The first argument is that alongside the market ideal typical form of organization which relies on the price mechanism, and the hierarchy form which relies on authority, there is a third form, the community form which relies on trust. Empirically observed arrangements typically embody a mix of the three ideal-typical organization forms and rely on a corresponding mix of price, hierarchy, and trust mechanisms. Second, based on a well-established body of economic and sociological theory, Adler argues that trust has uniquely effective properties for the coordination of knowledge-intensive activities within and between organizations. Third, given a broad consensus that modern economies are becoming increasingly knowledge intensive, the first two premises imply that trust is likely to become increasingly important in the mechanism mix.
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2.11 Trust & Control
Both trust and control are mechanisms that facilitate complex decision making. (Das and Teng, 2001; Lane and Bachman, 1998; Leifer and Mills, 1996). Gambetta (1998), Milward (1996) and Zand (1962) state that emphasis on control mechanisms would lead to a decrease in trust. On the other hand, informal and socials forms of control can increase trust between actors in interaction processes (Das and Teng, 2001; Frankema and Costa, 2005). Inkpen and Curral (2004) are thinking that trust and control coevolve over time with trust influencing control and being influenced by the type of controls that the partners implement.
Edelenbos and Eshuis (2011) have studied the reciprocal relationship, the coevolution, between different forms of trust and control. They have found that trust and control are related through contingent causation, resulting in divergent paths of coevolution. Their research showed that information control can contribute to trust but that also formal control can lead to increasing trust. In their opinion and based on their findings, the coevolution of trust and control depends on the specific initial situation in which the relationship between trust and control unfolds.
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2.12 Summary of literature review
To summarize, a lot of researchers did studies regarding control. Control theories are an important area in the way an organization acts. An organization definitely has to implement some kind of control to try to align the interest of the employees/members with the goals of the organization.
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B. Research questions
The development of the last years regarding the introduction from working from home / teleworking has led to a topic which isn’t described until know as I will try in my thesis. Due to the introduction from working from home, some fundamental developments regarding controlling people by using behavior and outcome based performance evaluation strategies came up. This thesis will focus on the relation between management control and trust. Both from the management and the subordinator’s perspective. The findings of this research will hopefully deepen the debate on the development which is mentioned above.
Research question
“What is the relation between management control and trust following the introduction of working from home?”
Sub questions
1. “How can we define management control?”
2. “How can we define trust?”
3. “What has been the impact of working from home on both management control and trust?”
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3. Methodology
3.1 Data collection methods
This thesis will be an exploratory studying using a case study approach. My thesis will consist of existing literature regarding working from home/teleworking, management control and trust. My aim is to specify in more detail the concept of management control and trust in relation to working from home/teleworking, both from the perspective of the manager and the subordinate.
Until now there has not been much research done about management control, trust and their mutual relation in the light of the development from working from home/teleworking. In order to get this knowledge and information, I have searched for different companies which have introduced the concept of “working from home”.
I have been able to contact four companies which have introduced working from home. These companies are AWVN, Rabobank, Hewlett-Packard (HP) and the Social Insurance bank.
AWVN
AWVN is the largest employer’s federation (based in the Netherlands) and they did a lot of research and surveys (through interviews) on the topic of “working from home” through structured interviews both within multinational and national companies. I will be interviewing some AWVN employees who either carried out and analysed the surveys on working from home or assisted companies in setting up appropriate “working from home” policies or were instrumental in the introduction of working from home at AWVN.
20 Rabobank
The Rabobank is the largest bank within the Netherlands and is seen as a leading company in the development of new Terms and Conditions. They recently moved into a new head office and used this move to introduce the concept of working from home. The Rabobank is often quoted as an example of successful introducing working from home.
Hewlett Packard (HP)
HP is one of the largest U.S. technology companies. Their delivery program range extends from simple electronic components to software and services. For much years HP belongs to the top three suppliers’ of computers. HP (Netherlands) introduced working from home in 2007/2008 and has a profound experience in this area.
Social Insurance Bank
The Social Insurance Bank is the executor of national insurance in the Netherlands and has introduced working from home as from early 2012.
3.2 Analysis plan
BackgroundIn order to understand these new insights, it’s necessary to go deeper in the existing literature. What did researchers find about management control, trust, their mutual relation, working from home and the combinations of these topics? In order to further complete the information I have conducted several interviews at several (and totally different) companies and an employers federation. The purpose of these interviews was to broaden the information and give more insight in the field of my thesis. During these interviews I have also focused on the specific role of the interviewee and what he or she thinks has changed (including behavior, culture, trust) following the introduction of working from home. Questions interviews
During the interviews, I started with the purpose of my thesis and the reasons why I’ve chosen their company to conduct interviews. I then asked general questions about their current position and job, the organization and about working from home/teleworking. I also asked questions about management control, trust, the (possible) relation between management control and trust and the outcomes so far.
21 Plan
Qualitative coding is about data retention. The goal is to learn from the data, to keep revising it until you understand the patterns and explanations. Coding is not merely to label all the parts of documents about a topic, but rather to bring them together so they can be reviewed, and your thinking about the topic developed (Richards, 2005).
The purpose of analyzing my data is to learn from the data, try to see differences and commonalities, and to keep revising it until I understand the patters and explanations.
Richards (2005) describes three sorts of coding; descriptive, topic and analytical coding. I’ve chosen to make use of some parts from every ‘code-type’, and I have done it as follows;
- Descriptive coding; first I gave a short general description of the company according to the answers from my interviewees. Then I will give an overview from the persons I’ve interviewed.
- Topic coding; this is really labeling text according to its subject. I have made a distinction between all the information I’ve heard and summarized that (Appendix 3).
- Analytical coding; this is the most centralized part to quality enquiry. It is the coding that leads to theory ‘emergence’ and theory affirmation. The information I have coded as described above, is linked to the theoretical part (chapter 2).
This is the way I conducted my data analysis phase. By trying to get a link between the information I got from the four companies and the theory, I hopefully have deepen and increase the knowledge on the development regarding working from home/teleworking.
3.3 Discussion of validity and reliability
22 and interpret them. But in order to get an as broad analysis as feasible I have selected four totally different companies with totally different cultures.
Furthermore, the companies and the people I’ve interviewed are working in different industries and have different jobs/responsibilities. I have compared all information which I got from the interviews with the existing literature, and I have tried to generalize this.
Each company is dealing with working from home differently. But also the consequences and the way each manager and employee is dealing with it can change per company. Every manager and employee may have different views about the development regarding management control and trust, caused by the introduction of working from home.
Besides, there has not been much research done about the (possible) relation between management control and trust until know. Especially not in the light of the development resulting from working from home.
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4. Results
According to my analysis plan, I did a combination from descriptive, topic and analytical coding. This way, I got the most comprehensive findings and insights.
4.1 Descriptive coding
24 Number
interviewee Company Short description current job
Manager function? If so, how many persons? Do you have somebody 'above' you?
How long do you work for the organization?
Do you work from home? Which base approximately (right now)?
1
Social Insurance
Bank
Bridge function between the business and IT to reflect what the business needs are.
No Yes 2 years Approximately 2 years ago,
1/2 day per week
2
Social Insurance
Bank
Accountmanager in the field of
facilitites. No Yes 33 years
Approximately 2 years ago, 1 day per week
3
Social Insurance
Bank
Manager section selfservice Yes, on 17 people. Yes 20 years Rarely
4
Social Insurance
Bank
Employee section self-service (IT) No Yes 11 years 1 year ago, 0.5 day per week
5
Social Insurance
Bank
Senior puchaser No Yes 3,5 year September 2012, 0.5 day per
week
6 Rabobank Labor and organization expert No, a line function Yes 14-15 years 5 years ago, 1 day per week
7 HP Manager application development and maintenance
Yes, directly on 15 people. Indirectly on 350 people.
Yes 21 years 8 years ago, 2 days per week
8 HP Delivery manager Yes, on 70 people Yes 5 years 5 years ago, 2/3 days per week
9 HP Account general manager Yes, on 90 people Yes 18 years More then 20 years ago, 1 or 2 days per week
10 HP Service develivery manager
Yes, directly on 37 peole. Indirectly on 90 people.
Yes 26 years 26 years ago, 0.5 - 1 day per week
11 AWVN Director advice organization
Yes, directly on 3 people. Indirectly on 140 people.
Yes 23 years Since one year, 1.5 day per week
12 AWVN Advisor working consultant No Yes 31 years 10 years, accidental (0.5 day per week)
13 AWVN Senior policy advisor No Yes 25 years 25 years, 1.5-2 days per week
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4.2 Topic coding
Topic coding is the process of labeling text to a certain subject. I’ve made a distinction between the four different companies and categorized everything in working from home/teleworking/flexible working, relationship manager – employee, management control, trust, the relation between trust and control and additional information. These tables can be found in appendix 3.
4.3 Analytical coding
In this part, I have combined all the information I’ve found during my interviews with the theoretical part. This will lead to findings in form of theory emergence and theory affirmation. From here, I will be able to give an answer to my research questions.
In the theoretical part, I spoke about working from home / teleworking, control, the cybernetic model of control, the different sources of control, the agency theory, management control, control in the context of teleworking, trust and the relation between trust & control. The codes I’ve made based on my interviews, can be found in appendix 4.
Based on my research I’ve found some very interesting insights regarding the development from working home. The impact from working from home, the consequences that it ensures and the way it changes the ‘old way of working’ makes it a very interesting topic. Some information I got through the interviews is very general and will serve as background information for my analysis.
In this section, I have made a combination of the information I found in existing literature and the information I received during the interviews.
4.3.1 Working from home
26 with these first steps. One interviewee said the following; “First we did a deep research (what’s going on outside), based on that, we developed our own dream (what do we want to achieve, what’s our purpose). With the plan, we then went to the employees and asked them for their views and responses. Some people where very interested to start working this new way, some were a bit scared and hesitant. Then we went to the board of directors, it was quite an exciting moment. We did get the green light from the board of directors to go further, and at the same time to further continue the research. We decided to implement the new concept through a pilot with 15 people. Based on our findings and the personal experiences from the people who participated in the pilot (on a voluntary base – they were not required to participate) we made some adaptations in our dream and plan. Based on that, two years ago we decided that everyone in the organization would have the freedom to decide when and where to do his work.”
Rabobank did more or less the same kind of research in order to implement working from home. In other companies they didn’t do research this way. But all four companies started the implementation process after having built up experience through pilot projects.
The social insurance bank is still in the pilot phase. The Rabobank, HP and AWVN have finished their pilot phase and already implemented working from home. Some of the companies do not allow the whole organization to work from home. This is justified by stating that in some departments employees are working with confidential information and therefore are not allowed work outside the safe/secure office environment. The Social Insurance Bank for example is such a company.
As from now, I will only focus on the departments which did implement working from home.
27 The biggest changes that my interviewees discovered were the increase in flexibility, the amount of cost savings, increased employee satisfaction, increased productivity, increase of somebody’s own responsibility, less people at the office, increased amount of trust, changes in the relation manager-employee, less offices, need for more structure, need for managers to change their managerial style, to focus more on defining smart objectives and to manage/monitor more on output.
The companies which have implemented the whole ‘working from home’ concept did make a manual. Just to make sure how to deal with the changes. The companies also made some small adaptations regarding their HR terms and conditions. These conditions basically, gave more clarity on reimbursement policies (e.g. assistance in the purchase of office equipment when working from home, changes in commuting allowances etc.).
Some companies provided information sessions or workshops on the introduction of working from home.
As said above, working from home is a concept which is still in progress. But the technological developments have certainly helped to stimulate the further roll out of working from home.
4.3.2 Relation manager and employee
28 The manager can be seen as the principal, the person who delegates work to another. The employee can be seen as the agent, the person who gets delegated by the manager. When the question about a possible change in the relationship between the manager and the employee was asked, there were some different answers. Someone from the Social Insurance Bank said; “No, not really. It doesn’t feel like that. It could say something about the relationship before the implementation from working from home. That way I had a certain kind of freedom before the implementation. So no”. During the interviews I discovered that this this is very different between departments, managers and employees. Next to that, I often heard that’s difficult to say if a change in the relationship only has occurred due to the implementation from working from home. Some other responses about the changed relationship where; “Managers should no longer manage on what you are doing but manage more on what you manage (what is the output), the manager should be able to trust somebody, the team meeting should be planned deliberately, from both sides a more proactive attitude is expected, the manager and employees should both focus more on the communication and relation between them and people engagement is a bit harder”.
In the case of the implementation from working from home and according to Eisenhardt (1985), it has more to do with the second case, which is based on incomplete information. After the implementation from working from home, the manager isn’t able to know everything. The employee is aware of his behavior, the manager (partly) not. Eisenhardt (1985) said in this case a dilemma arises because the manager cannot determine if the employee has behaved appropriately. That’s the biggest issue, how can they assure that they are doing what the others expect and hope for. In this case, the interviewees said nothing about a dilemma. It’s a possibility that there will be a dilemma, but it’s definitely not a certainty (as someone said; “An important aspect in this relation is to have trust in each other’s competence, and search for the right balance”).
4.3.3 Management Control
29 by using behavior and outcome based performance evaluation strategies. The purpose of management control in organizations is to direct and influence the attitudes and behaviors of participants to achieve the organizations objectives (Anderson and Oliver 1987; Eisenhardt 1985; Jaworski et al., 1993 and Ouchi, 1979).
Regarding the level of management control perceived by the interviewees, there were different answers between the companies. Summary of the answers are the following “Social Insurance Bank; it’s a combination between output and presence but the focus is on presence. We are still working with a time – clock system”. “Rabobank; currently, management control is focusing more on output control instead on behavior control”, “HP; focus is on the output and not really on presence” and “AWVN; definitely not on presence (part of behavior), if there is any form of control, focus will be on output”.
For the Social Insurance Bank, the implementation from working from home has not really led to changes in management control because they did not implement it in the whole organization. For Rabobank, the focus will be more on output control, for HP there is not a real significant big difference but the focus is a bit more on output. For AWVN, there is no difference because the control part has always been low. The way the companies controlled their employees before and after the implementation, hasn’t changed for the Social Insurance Bank. For the Rabobank, in general it also not changed significantly but this really varies between departments (and their managers). For HP, behavior control has mostly disappeared and it’s more towards output control. As said above, for AWVN the control part is low and there is not a difference over there.
30 4.3.4 Trust
Trust is a multi-layered concept that comprises a range of attributes such as dependability, credibility, faithfulness, and information sharing, as well as the expectation of cooperation between exchange partners (Carson et al., 2006). Doing literature research, I found something about Gambetta (1988). He defines trust as the subjective probability with which an actor assesses that another actor or group of actors will perform a particular action, both before she or he can monitor such action (or independently of his or her capacity ever to be able to monitor it) and in a context in which it affects his or her own action.
Regarding the level of trust, I heard a lot different opinions. Some people from the Social Insurance Bank considered the level of trust to be very high; others considered the level of trust lower. The level of trust really varies between the departments. In the Rabobank, the level of trust is perceived as very high. This is based on broad research among many employees. For HP trust is one of the main aspects of their culture (two interviewees said; “as a manager you should give confidence, in addition you must ensure that you are there for the people if they need you”).
The people I’ve spoken to from the Social Insurance Bank, the Rabobank and HP thought that the employees will feel the same trust as the interviewees themselves felt trust. AWVN was slightly different. When I asked them this question, they said that the level of trust maybe was not as high as they suggest. They said that they should put more emphasis on the communication towards their employees. (“Why are we doing the things we do, and why this way?”).
Adler (2001) expected that, as knowledge becomes increasingly important in our economy, high –trust institutional forms to proliferate. During the interviews, the interviewees refer a lot to the influence from different knowledge levels and the different work departments (“Some people need a real structure to be even able to do something – otherwise they will drown in uncertainty”).
31 Trust is perceived higher for HP. For AWVN the implementation from working from home has not led to significantly more trust.
4.3.5 Relation management control - trust
The questions about the relation between trust and management control gave a clear picture of the opinions from all the people I’ve interviewed. Edelenbos and Eshuis (2011) consider the existing coevolution between the coevolution of trust and control to depend from the specific initial situation in which the relationship between trust and control unfolds.
When I asked the interviewees these questions, everybody came up with the fact that in general, the relation between trust and management control is a reciprocal relation. Besides, it’s very important to find a good balance between these two ‘mechanisms’.
Some answers I heard about the impact from management control on trust: “If you control too much, it will lead to a lack of confidence. Also the other way around”, “As you feel that you are being monitored, it will definitely affect me, how I get trust but also trust the other”.
Some answers when I asked the influence from trust on management control: “If you could trust people and they achieve their targets, a manager has to control less”, “If you trust somebody, than you are not actually controlling that person” and “trust is a prerequisite for working from home”.
Regarding the relation between management control and trust, all the interviewees said something about a balance. Two things I heard for example; “I don’t think that it odds with each other. I think you need both. You need control to be able to trust somebody” and “It’s a reciprocal relation”.
4.3.6 Satisfied?
33
5. Discussion and Conclusion
5.1 Explanation of findings’ in relation to other studies (do you find
the same/different results? Why do you think you found what you
did?)
5.1.1 Working from home
Between the companies I discovered some differences. But also between departments I found differences. For some work activities it’s not effective or possible to work from home. Besides, in some organizations it will not work for the entire organization. This has to do with the knowledge level; some people need more controlling aspects or explanations from their manager in order to fulfill their job.
They all started the implementation from working home through pilot projects. Some companies provided training as a tool.
The most heard reasons to implement it are increased efficiency, increase flexibility, to save costs and to adapt to the current economy. My interviewees see the increased flexibility, satisfaction, the increased amount of trust and the changed relation between the manager and the employee as the biggest changes.
5.1.2 Relation manager and employee
34 5.1.3 Management Control
Regarding (management) control, the implementation from working from home will and has changed a lot. One of the most important reasons for implementing working from home I’ve found during my interviews is the fact that companies want to increase satisfaction. Increase satisfaction for all parties involved, the organization as a whole, but also the manager and the employee. As Anderson and Oliver (1987) said, a control system influences employee behavior, ideally in a way that enhances the welfare of both the firm and the employee. By introducing working from home, organizations are definitely changing their control systems. By changing their control systems from behavior towards output control, most companies want to enhance the welfare of both the company and the employee.
Due to working from home, the shift in control is in most cases from behavior towards output control. In the past, almost everywhere the employees (and managers) worked at the office. The manager always had the opportunity to control the employee. Nowadays, this has changed. Next to this change (the manager has to work another way), the manager and employee are still responsible to get results. An organization wants them to do their job and deliver the desired results. This has an impact on both manager and employee and their mutual relationship. The way an employee will achieve these objectives will maybe differ, but the objectives itself will not change. This implies the change from behavior based control towards output based control. Saying this, I don’t want to imply that there is only output control in organizations where people are working from home. Most companies still have a combination from behavior and output related control; most of the interviews just showed a shift towards more output controlled mechanisms. An organization which has implemented working from home has (according to Ouchi, 1979) a clan control mechanism. For its control it relies upon a deep level of common agreement between members on what constitutes proper behavior, and it requires a high level of commitment on the part of each individual to the socially prescribed behavior.
35 5.1.4 Trust
The importance of having (and be able to) trust somebody has risen much. A special sentence regarding trust, “With trust you can win everything you want, in the meanwhile you can also lose everything with trust”. With winning they meant for example increase efficiency and increase flexibility. While losing everything in the meanwhile, refers to the fact that you have to stay connected with each other and the organization. You need to have common goals, shared values and a shared vision. Without this, working from home is doomed to fail.
5.1.5 Relation management control – trust
Combining all the information described above, makes the relation between management control and trust a reciprocal relationship, were both mechanisms are important. The importance from both mechanisms varies per situations so it is rather difficult (or impossible) to say if one of the two mechanisms is more important. Without trust, working from home is impossible. Without any kind of control, working from home is also impossible. The most important but rather difficult issue is to find the right balance, a balance which will never be equally weighted and will shift every time and anywhere.
5.1.6 To conclude
36
5.2 Answer to the research question
Based on the literature review in combination with my research within the four companies, I can state that the introduction of working from home has led to many changes for all parties involved.
Management control is a tool for the organization and important in order to achieve its goals. It’s a combination of many things which finds it roots in behavior (presence, attitude) control or output (achieving objectives) control. The implementation from working from home has in the four companies led to more output based control, instead of behavior based control.
I see trust as a combination of many researchers, and have become a main condition for working from home. Trust is somebody’s expectation that somebody else (1) can be relied on to full fill obligations (2) will behave in a predictable manner and (3) will act and negotiate fairly when the possibility for opportunism is present. Trust is from vital importance in a working environment. As knowledge becomes increasingly important in our economy, high trust institutional organizations will play a more important role.
The impact of working from home on both management control and trust is big. Management control and trust are both main conditions for achieving the goals after implementing working from home. Management control has shifted from behavior oriented control towards output oriented control. Still, there is a combination between these two control types. Trust has become much more important than before working from home. If a manager’s isn’t able to control as much as he did because of working from home, he is supposed to trust and be able to trust employees. Besides, an employee needs to trust the manager in sharing the same vision and goals.
Due to working from home, the relation between management control and trust is changed. Trust is playing a much more important role and control is playing a different role (the shifting from behavior based control towards output control). The balance has shifted to the middle, both mechanisms serves as a main condition and plays an important role. It is situation driven, varies per organization and department but it especially varies per manager and employees.
37 important role. The challenge in every situation is finding the right balance between these two. In general it can state that if a manager trusts somebody, the will to control that person will decrease. When the trust in somebody decreases, the will to control the same person will increase.
5.3 Theoretical and managerial implications
In order to be able and do the research I’ve done, I made some theoretical and managerial implications. Regarding the theory, I made implications about the meaning of working from home, the relationship between a manager and an employee, control and trust. During my research I discovered that all companies have a different meaning for working from home. They call it flexible working, teleworking, time and place independent working or what so ever. I assumed that working from home is a part of these concepts. That way, I have also interpreted their answers while doing my research.
Regarding managerial implications, I assumed that the meaning and level of management control and trust can be explored by taking interviews. By asking open questions, I hoped to hear fair answers which are in real life the case. During an interview, an interviewee can have the tendency to give a ‘normal’ answer. Just to finish the interview and avoid difficult questions. I trust on the reliability from the persons I spoke too and made conclusions based on the combination of answers I have heard. I also assumed that there is a relation between a manager and his/her employee. Besides, while doing my first two interviews, I discovered the fact that I assumed that there is a form of control and trust in every organization. After that and before entering the questions about management control, I asked every interviewee if there is some kind of management control and/or in the organization. All interviewees answered yes on these two questions.
5.4 Limitations
38 Next to the theoretical part, I have conducted 14 interviews in total. I spoke with 7 people who fulfill a managerial function and 7 people who don’t. This way, I wanted to create a ‘fair’ picture.
From the persons I interviewed at the Social Insurance Bank only 1 out of 5 fulfilled a managerial function. That could possible give a somewhat distorted picture. Within the Rabobank, I spoke with one person who definitely was an expert in the area of working from home. I could possibly have increased the reliability of her answers by conducting more interviews at the Rabobank.
I decided to conduct interviews at four companies. Companies which are in different phases of implementing working from home and companies which are working in total different fields. I conducted interviews in different departments and with people in totally different jobs. Although these companies were different they may not represent the total picture.
The way each company is dealing with working from home can differ per company. But also the causes that it ensures and the way each manager and employee is dealing with it can change per company. Every manager and employee can have different views about the development regarding management control and trust, caused by the introduction of working from home.
Last but not least, I didn’t focus on all the things an interviewee said. I focused on the main things according to my thesis.
5.5 Further Research
39 get a deeper insight. Further research can also be done by comparing two different managers in the same department. For example to see how these differences are received (and managed) by the employees.
40
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7. Appendices
Appendix 1 - Interview questions
I have asked the following questions during the interviews;
General questions about your current position / job 1. What’s your current job?
2. How would you describe your position in general terms?
3. Do you have a management position? If so, how many persons do you give guidance? 4. How long do you work for the organization?
General questions about the organization
5. How would you describe your organization in general terms? 6. How would you describe the culture of your organization?
7. Would the employees rate your organization as being modern or more traditional?
General questions about working from home/teleworking/flexible working?
8. When did your organization introduced Working from home / flexible working from home? 9. When did you start working from home?
10. How frequent and how long do you work from home? (average)
11. Why did you/your manager choose for this base? (Easiness, contact with employees/managers etc.)
12. Has your company written a manual for both managers and subordinates describing the rules of play following the introduction of working from home?
13. Does the introduction of working from home led to changes in the Terms and conditions of the employees? If yes please state the main changes.
14. What has the company done in order to properly introduce working from home?
15. Has the company provided any (and if so which) training to both managers and / or employees? 16. Has in your view “Working from home” led to the desired changes which were expected at the
44 17. Relationship manager and employee. Would you be able to describe from your perspective the
main changes in that relationship following the introduction of working from home?
18. Would you be able to identify the three most important reasons why your company decided to introduce Working from home?
19. Please name the three biggest changes resulting from the introduction of working from home within your company?
Management control
20. How would you define Management control within your company?
21. If all employees from your company would be asked to define the level of Management control within their company, what would be –in your view- the most shared opinion?
22. Has the introduction of working from home led to changes in Management control (within your company)? If yes, please describe these changes
23. How the employees who now work from home were controlled before and after the introduction of working from home?
24. Do you clarify these controls as output control, behaviour control, a combination or something else?
Trust
25. How would you define the level of trust between manager and employee within your company after the introduction of working from home?
26. If all employees from your company would be asked to define the level of trust between employees and Management within their company, what would be –in your view- the most shared opinion?
27. Has the introduction of working from home led to changes in the element “Trust”(within your company) If yes, please describe these.
Relation management control – trust
45 29. Would you think that the level of trust influences Management control? Here again please be as
specific as possible and describe the consequences.
30. Would you be able to describe the relation between Management control and trust following the introduction of working from home?
Finish
