Factors influencing the use of enabling and/or coercive Performance
Measurement Systems in hotels
Master Thesis, MSc Business Administration
Organizational & Management Control
University of Groningen, Faculty of Business and Economics
February 2015
Supervisor: W. Kaufmann
Co-assessor: Mrs. P.M.G. van Veen-Dirks
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ABLE OF CONTENTS
1. Introduction ... 3 2. Literature Review ... 5 3. Methodology ... 14 4.1 Sample ... 14 4.2 Instrument ... 14 4.3 Independent variables ... 15 4.4 Dependent Variables ... 16 4.5 Data Analysis ... 16 4. Results ... 18 5. Discussion ... 22 6.1 Limitations ... 23 6.2 Future research ... 24 6. Conclusion ... 24 7. References ... 25 8. Appendix ... 29 6.3 Interview Questions ... 296.4 answers interview questions ... 31
6.5 Questions derived from previous research ... 31
1 Introduction
Control is a very important instrument to influence employee behavior within organizations. It is used to steer the organization into the direction thought of by the management (Wouter & wilderom, 2008). People in an organization all have their own tasks and goals they want to achieve. Aligning the organizational goals with individual goals is often hard to accomplish. Management Control Systems are used as a mean to channel objectives possessed by senior-management and to ultimately achieve goal congruence (Langfield-Smits, 1997).
Management Control Systems consist of different tools to control organizations (Malmi & Brown, 2008). One of these tools is the use of a Performance Measurement System. Performance measurement systems are sets of metrics used to quantify both the efficiency and effectiveness of action (Neely et. Al., 1995). This means, that a PMS consists of different indicators that all together measure the performance of an employee. PMS can consist of financial and non-financial measures. During the last decades a shift from performance measurement based on financial measures to being based on overall business performance has been made. Examples of such systems are: the SMART pyramid (Cross, 1988), the results/determinants matrix (Fitzgerald, 1996) and the balanced scorecard (Kaplan, 1992).
Employees often regard a PMS solely as a tool implemented by senior-management to control employees lower in the hierarchy. They feel that a PMS does not facilitate their performance. Wouters & Wilderom (2008) recognized this fact and performed research regarding the nature of a PMS. They looked at a developmental process resulting in a Performance Measurement System perceived by employees as enabling. An enabling PMS meaning a PMS that employees regard as useful for them and they want to help develop, not as a tool solely used by senior management to control them. They found that a PMS based on employees’ experiences positively impacted the enabling nature of a PMS. Furthermore the use experimentation with measure and professionalism all had positive influences.
Organizational size is one of the factors that influences control. As organizations grow, control becomes harder and therefore decisions have to be made regarding the way to organize control (Schoenherr, 1971). Different factors are influenced by organizations size. Larger organizations use more formalization, documentation and procedures (Child & Mansfield, 1969). They do so, because goal congruence in larger organizations is harder to achieve. They have to control people is such a way that organizational goals are met. According to Borys & Adler (1996) more formalization positively influences the degree of coercive control. In other words, using rules and procedures organizations try to force employees to act the way senior-management wants them to. Ahrens (2004) states that centralized organizations are controlled more coercive. For senior-management to control people lower in the hierarchy, rules and regulations are forced upon them. Research by (Mintzberg, 1982) links centralization to standardization. He states that more centralization is related to more standardization. If an organization wants their output to be standardized, rules and regulation have to force people to act in a uniform way. Marsden et. Al.(1994) states that larger organizations are more decentralized. This means that larger organizations will probably be more enabling, as decentralization relates to enabling control (Ahren & Chapman, 2004). As previous research shows, the relationship between organizational size and enabling/coercive control is rather inconclusive. Another factor that influences control is organization ownership. A differentiation between Franchised and not-franchised organizations can be made. Through franchising, the franchisor tries to sell his business format to other entrepreneurs (Kaufmann & Eroglu, 1998). The franchisor developed this business format and charges a fee to the franchisee who uses his format. Besides this fee, certain rules and regulation have to be followed by the franchisee. Franchising is designed around a standardized business format, across an entire system (Dada, et. Al., 2010). Therefore, one of the most important elements for a franchised company are the rules and regulations that he has to conform to. These rules and regulations can be seen as a form of coercive control laid upon the franchisee by the franchisor.
Degree of service offered to clients is also influential. According to Presbury et. Al. (2005) every encounter between a customer and an organization is an opportunity for the client to evaluate the level of service. Sandoff (2005) argues that service can be divided in customization and standardization. Customization means that the offered service by an organization is “tailor-made”. Enabling formalization offers this possibility by giving employees the freedom to make their own decisions. Standardization refers to “one-size-fits-all”. Demands and questions by customers are dealt with using predefined rules and regulations. This means that in similar situations all customers will be helped according to similar guidelines.
Previous research about an enabling PMS focused on the developmental process and the use of performance indicators, I will look at the influence of organizational characteristics and the use of an enabling PMS.
only offer breakfast, while others might choose for a restaurant, wellness and conference facilities. Contact between employees and guests is very important and very much influences guests experience. Hotel size can vary a lot as well (Unie van Hotelsterren, 2010). Hotels can consist of 30 floors and have hundreds of employees and rooms. On the other hand, small hotels exist as well. Especially in city centers one can find these hotels with limited staff and rooms.
What is the influence of Hotel Size, Hotel Ownership and degree of service offered in hotels on the use of enabling or coercive PMS?
To gather my data I interviewed 3 managers from different hotels. I did so because I wanted to get more in-depth information about the hotels and the use of a PMS. During these interviews I also collected my data regarding size, ownership and degree of service. Furthermore, I distributed a survey among 40 front office employees in 5 hotels to ask them about their experience with the PMS and to measure whether it was enabling or coercive. 25 people filled in my survey, a response rate of 62,5%. The remainder of my thesis is structured as follows. First I will discuss previous literature concerning my subject and introduce my hypotheses. Then I will further elaborate on the methodology I use. Subsequently I will present my results followed with the discussion and the conclusion.
2 Literature Review
My literature review will consist of the following parts. First I will discuss the use of Performance measurement systems. Then I will discuss the literature that used the theory of Adler & Borys (1996) as a basis for their research. In the last part I will present research regarding organizational size, degree of service and ownership.
activity) and food (production/distribution activity) together create guest experience. Harris et. Al. (2005) performed research regarding used performance indicators in hotels. This resulted in a framework, where different divisions prioritize different performance indicators. Performance of Front-office staff is often measured by using the following indicators: guest satisfaction, service quality and average occupancy.
According to Wouter & Wilderom (2008), PMS are mostly studied from the perspective of top-management. Rather than helping employees to perform better, it is used as a tool to control them. They performed research that resulted in an enabling Performance Measurement Systems that helped employees to better master their tasks. I will discuss their paper later on the literature review. First I will discuss the underlying theory they used for their research. The enabling approach to PMS stems from Adler & Borys (1996). They looked at formalization in organizations and distinguished between Coercive and enabling control. They thought that research had focused too much on the type of formulation in organizations regarding bureaucratic and mechanistic structures. Furthermore, they discussed the hate of employees against bad rules. When were rules considered bad? This was the starting point for their research which resulted in enabling and coercive control.
Enabling formalization helps committed employees do their jobs more effectively and reinforce their commitment (Adler & Borys, 1996). Rather than restricting employees to follow certain rules laid upon them by senior management, organizations have to enable employees to deal with inevitable contingencies. An enabling formalization depends on the characteristics of the system as well as the process of designing and implementing the system.
Coercive formalization refers to top-down control where employees follow strict rules and regulations. This restricts them from thinking themselves, but stimulates uniform outcomes and handling. It’s applied when dealing with more stable environments and mechanistic organizations (Adler & Borys, 1996). Furthermore, it emphasizes centralization and preplanning (Ahrens & Chapman, 2004). It relies, for instance, on elaborate preproduction design, specifies a vast range of eventualities with which the system can deal automatically, and gives workers only limited options for action.
In their paper, Borys and Adler (1996) used a case from Xerox copiers to clarify their distinction between enabling and coercive formalization. Xerox noticed that when their copiers broke down, people didn’t try to fix the copiers themselves. Instead they called the service desk to ask for help. To solve the issue of the copiers braking down and being unable to function for a long time, they found three options. The first one was improving their copiers, preventing them from breaking down. The Second one was training more people to service their copiers. The last option was designing their copiers in such a way that people using their copiers could fix breakdowns themselves. The last option resulted in copiers that were interactive with its users and enabled them to fix problems themselves. Borys and Adler (1996) referred to this as Enabling Formalization. The following characteristics of formalization can be distinguished. Internal transparency, Global transparency, Flexibility and Repair. I will use these characteristics as tools to measure the enabling nature of the PMS in organizations. Therefore, I will further discuss them in the following paragraphs.
Repair
that ask for immediate action, like a system break-down. On the other hand it is also possible to choose for de-skilling in order to prevent the employees to form having any influence. One can think of system panels that are locked and only accessible by specialized personnel. Dowling & Leech (2014), describe repair used in an audit report system. They define it as how the audit support system assists auditors to identify and/or deal with issues related to the performance and documentation of audit tasks. Repair refers to harnessing worker potential for the development of solutions and improvements, rather than limiting employee opportunism (Clinton, 2007). Borys and Adler (1996) talked about a usability approach, where the repair of breakdowns is more or less routine and not clearly recognized. In order to give employees the ability of repair, systems have to be designed user friendly. Instead of having to consult a manual or an expert, the built-in help systems should be sufficient to repair the break-down. This is also clear in procedure design. Instead of designing procedures to help employees to see if all systems are functioning well, they are merely designed to force employee to comply and as a form of control. Enabling procedures facilitate employees in detecting failures in the system and improve overall system design. Repair allows employees to make certain adjustments to the workflow to enhance production processes, while in a coercive circumstance, employees have to follow the standardized work procedures and any deviation from it cannot be tolerated (Johari & Jahya, 2009). In the paper of Jordan and Messner (2012), Repair is used as a tool for employees to ‘repair’ performance indicators in order to create indicators that reflect all dimensions of performance. Ahrens and chapman (2004) state that workers are not only to be trusted but are also actively encouraged to discuss practical problems with organizational rules and standards, thereby contributing to their development in line with usability criteria. Repair refers to users being able to improve the work process themselves rather than allowing breakdowns and other non-programmable events to force the work processes to halt (Wouters & Wilderom, 2008). I will use these characteristics to measure the nature of the PMS in my research, therefore I will discuss them further in the
Internal transparency
formalization also codifies best-practice experiences, and users are provided with feedback on their performance (Wouters & Wilderom, 2008). Dowling & Leech (2014), refer to internal transparency as an understanding of the working for employees of their local processes. They state that establishing the boundaries of the local process influences what is typified as internal transparency or global transparency. In their research the local process is audit engagement. Regarding the use of performance indicators, Internal transparency means that managers understand the definition and measurement of the indicators, this is crucial for identifying problems that can arise (Jordan & Messner, 2012).
Global transparency
Global transparency refers to the employees’ savvy on the broader of the systems within their working field (Johari & Jahya, 2009). In enabling formalization, employees are given full specified and contextual information to enable them comprehend the work system. The previous mentioned internal transparency evolved around the internal functioning of the equipment employees are working with. Global transparency is concerned with the broader system within which employees are working and the knowledge of these employees about this system. It seeks to make comprehensible the interdependencies between local and wider organizational processes (Bhimani, 2006). Global transparency refers to the visibility of the overall context in which organizational members perform their specific duties (Clinton, 2007). We can again make a distinction between de-skilling/coerced and an ability approach. The first one can be compared with a computer integrated system where there are control rooms that supervise the operators of other computers. The supervisors only know information available from their own unit/computer. The operators also stick to their own unit and have no clue about the functioning of the bigger system within they function. The usability approach in contrast is developed to provide operators of extensive knowledge about the broader system in which they are working and the functioning of this system. This results in full knowledge from the operators about the production process. This, again motivates employees to detect failures and search for improvements. In a coercive approach global transparency is minimized. Operators only know the functioning of their own unit, tasks are partitioned. In some cases employees do not ever see employees from other units. The enabling approach involves all employees in the bigger process. There is a lot of interaction going on between units and in this way employees do not only stich to their own environment, but get involved in other processes as well. This in turn enables them to better handle their own processes, because they know the bigger functioning of the system. Ahrens & Chapman (2004) talk about global transparency in relation to budgeting. They claim that budgets are the most widely used tool for making organizational processes globally transparent. The promote access and knowledge of budgets to every employee in the company, not only on a “need to know” basis. In this way budgets may not only enhance coordination in hierarchical relationships during budgeting and review phases, but also enable lateral coordination during the entire budget period. In other research (Dowling & leech, 2014), global transparency is promoted by an auditor’s knowledge of the firm’s policies and procedures. A coercive system will force compliance without providing knowledge to the employees about the system. Jordan & Messer (2012), claim that global transparency is achieved when managers can relate the control systems to the functioning of the organizations as a whole. This relation allows managers to see whether the control system is in line with the organizations vision and strategy or in fact is incomplete.Global transparency is about the intelligibility for employees of the
Flexibility
Flexibility enables users of a system to take different decisions (Adler & Borys, 1996). The flexibility of teams’ self-management will eventually boost the teams’ effectiveness (Johari & Yahya, 2009). Less rules, policies and procedures create this flexibility. The coercive approach results in systems that minimize reliance on the skills and knowledge of the users. The users only operate what the system cannot operate itself. The enabling approach involves the user in the system and enables the user to take different decisions. This means that the user has different options to choose from. There is interaction between the user and the system and the user can decide when it hands over control or takes control in its own hands. The enabling approach results in the user having the flexibility to choose different paths. Furthermore this flexibility results in user that modify their own system in such a way that it best suits their needs. The coercive approach prevents the user form having any flexibility. It has to follow the steps that are presented to him. Might there be any complication, supervisors have to be informed and they will handle it. One can say that flexibility in this approach is minimized. Flexibility refers to employee discretion over the use of control systems, ranging from strict compliance to outright avoidance (Clinton, 2007). Research about the use of flexibility in an audit report system showed that it pushes the auditors into making use of and develop their own knowledge because they are required to be responsible for how they apply the system on engagements (Dowling & Leech, 2014). Flexibility can be further supported by organizing the management accounting function in a way that provides expert advice tailored to the organization's technical or commercial subunits rather than organizing it along the lines of functional specialization (Ahrens & Chapman, 2004). Flexibility regarding accounting information helps managers to deal with the incompleteness of such information (Jordan & Messner, 2012). This means that they have the flexibility to complement accounting information with other sources of knowledge. Flexibility concerns the ability of users to make controlling decisions after enabling systems have provided information (Wouters & Wilderom, 2003)
The previous paragraphs show, that different researchers used the design characterstics from Borys & Adler (1996). I will now further discuss these theories that use enabling and/or coercive formalization in their research.
Chapman and Kihn (2009) tried to improve understanding of how information system integration assists managers in enhancing performance. They investigated the relationship between ISI and the four design principles of enabling formalization. Significant positive relationships between 3 of the design principles and ISI are found. Only the relationship between ISI and flexibility was slightly negative, suggesting difficulties in flexible use of budgets in the context of ISI. Their research furthermore showed that the enabling approach to budgeting has direct effect on both system success and performance.
framework within which future research might develop our understanding of the ways in which management control systems can simultaneously support the objective of flexibility and efficiency. Jordan & Messner (2012) focused their study on the extent to which manager’s care about the design of performance indicators. Performance Indicators are used in organizations to control and facilitate managers’ decisions and actions. Their study examines Operational managers’ responses to performance indicators when these are perceived as incomplete. Using a case study they found that managers’ responses to incomplete performance indicators isn’t experienced as a problem by those managers. As long as handling of the control system is flexible, the system can still be perceived as enabling despite its incompleteness. Operational managers had some complaints about the way performance indicators were defined and measured. Overall they experienced them as facilitating of their work. The incompleteness for that matter, wasn’t a real big issue for the managers. With regard to transparency they concluded that it increases managers’ acceptance of the control system, because it helps them understand the rationales behind the system. Furthermore, transparency offers chances to open up the system and identify its incompleteness which in turn might trigger managers to question the system.
A paper by Wouters & Wilderom (2007) focused on the development of a performance-measurement system that is regarded by employees an enabling, rather than something that is forced upon them by management. They found that the focus in PMS lies in the ways it helps top management monitor people lower in the hierarchy. Strategy and operational actions are built around these PMS. This results in Employees experiencing PMS as coercive, something that doesn’t help them but only monitors if they perform well enough. Enabling PMS refers to a system that supports middle- and lower employees to assess how things are going, identify problems and develop ideas for improvement. Wouter & wilderom (2008) propose a developmental approach for PMS based on three characteristics: (1) being experienced based, (2) allowing experimentation, (3) building on employees’ professionalism.
Using an Experience-based development process means that an organizations has to use the knowledge and expertise of employees when designing a PMS. Most development approaches of PMS focus on the way goals set at the top of the organization can be met lower in the organization. This is further expressed in the translation of firms’ strategic objectives to specific objectives lower in the organization and the signaling of performance levels that are below targets. These top-down performance measurement systems are likely to be unsuccessful, because they do not reflect the local organizational context and the available experience and expertise of employees. Furthermore, top management is often unaware of performance measures that are already in place and used by organizational units. These differ between organizational units and are mostly not recognized in a PMS developed top-down. PMS development is often started from scratch without recognizing performance measures already in place. Wouters & Wilderom propose that building on existing, local experience is an important characteristic of enabling PMS development as well. They expect a development process to successfully stimulate enabling formalization when it acknowledges the intellectual capital of lower-level employees. This means that it respects existing practices of and insights in performance measurement.
conditions in a particular setting, that are actually measurable and that are presented in a way that employees find understandable.
Professionalism concerns an orientation towards learning for the purpose of improving work practices. If an employee is self-motivated to improve the work practices, performance measures are more likely to be seen as enabling. Employees will see them as positive, stimulating, challenging and helpful. An employee’s level of professionalism is associated with a positive attitude towards performance measurement. Rather than looking at an enabling PMS, Johari & Yahya (2009) performed research regarding the systematic factors that influence employees’ job performance. They found that coercive or enabling formalization influences performance of employees. Personality traits of individual have to match the formalization an organization uses. Coercive organizations should hire people that like to follow rules and regulation and have low growth needs.
Previously mentioned literature focuses on the enabling/coercive framework from Borys & Adler (1996). Furthermore the use of PMS is discussed and the enabling or coercive nature of the PMS. In my research I will focus on organizational characteristics that influence the enabling nature of a PMS. These factors are Organizational size, degree of service and ownership. My research revolves around the influence of these characteristics in hotels. Hotel size can vary from a small hotel offering a few hotel rooms, being run by the owners, but can also be very large with numerous employees and hundreds of rooms. The same holds for the degree of service hotels offer. Some only have rooms and breakfast, while others offer various sorts of wellness facilities and do everything to satisfy their guests. Furthermore, franchising is a method that is widely used in the hotel industry. Everybody knows chains as van der Valk, Mercure and Hampshire. They use franchising to expand the number of their hotels. The choice for hotels between franchising or not franchising is one that is often posed and important. In the remainder of this literature review i will be focus on available literature about the previously mentioned characteristics and their relation to enabling/coercive control in the hospitality sector. Hotel Size can be defined in different ways, for instance number of rooms, square meters, and number of employees. In the hotel classification system (Unie van hotelsterren, 2010), they combine the number of employees, the number of rooms and extra facilities. With extra facilities they mean wellness, conference rooms and/or the availability of a restaurant and bar. In my research I will take the combination I previously mentioned to measure hotel size. Large organizations are often more decentralized than small organization. This is mainly due to the fact that small organization are easier to control. As found in an article by Ahrens & Chapman (2004) the degree of centralization in decision making influences the degree of coercive control.
Previous research about organizational size and organizational structure and formalization has been widely performed. For example Burns & Stalker (1961) distinguish between mechanistic and organic structures. Mechanistic structures being highly formalized, specialized, very hierarchic and centralized in the allocation of authority. Organic structures on the other hand are very decentralized, low in formalization, horizontally organized. Mintzberg (1982), separates 5 organizational structures all differing according to the degree of centralization/decentralization.
control being related to high centralization and standardization while enabling formalization relates to decentralization and lower standardization.
The relationship between organizational size and organizational structure is one that has been highly debated. What is clear that growing organization change in differentiation (Blau & Schoenherr, 1971). Growing organizations have to deal with a control problem, where extra managerial layers offer a solution. “Larger organizations have more formalization, more documentation, higher decentralization (Child & Mansflied, 1969). Most studies about organizational size and degree of centralization and formalization are performed in the ’60’s and ‘70’s. Barry (1982) tested studies from Blau & Schoenherr (1971) & Hage (1967) about organizational size, centralization, formalization and complexity. He tested different hypotheses. A positive relation was found between organizational size and structural differentiation. In 1994, Marsden et. Al. performed a study in 600 large companies in the US. They found the same relationship as Barry (1982). Furthermore they found that size was positively related to formalization and decentralization. Combining organizational size with enabling and/or coercive control results in the following hypothesis. Previous research shows that the relationship between size and the enabling degree of a PMS is inconclusive.
H3: A larger hotel size results in a more enabling performance measurement system.
According to Presbury et. al. (2005) every encounter between a customer and a hotel employee is an opportunity for the customer to evaluate the level of service provided. This means that hotels offering a high degree of service should always try to let a customer leave the counter satisfied. Before entering a hotel, a guest forms expectations about the level of service he is going to experience. He uses extrinsic and intrinsic cues that give indication about the performance standards. These cues are derived from previous experiences and are built into an expectation about what a guest normally experiences when entering a hotel (Gould-Williams, 1999). Hotels are classified according to the number of stars they possess. The more stars, the more luxurious the hotel is. This means more facilities, luxurious rooms, but also a high degree of service coming from employees. Parasuraman et. Al. (1988), developed the SERVQUAL model. It’s an integrated framework used for assessing perceptions of service quality in service and retailing organizations. Wilkins et. Al. (2007), translated this model to use it in the hotel industry. They developed a model based on 7 factors representing guest perceptions of quality. The following ones can be distinguished: Stylish comfort, quality staff, personalization, room quality, speedy service, added extras and quality of food and beverages. One factor they use to measure speedy service, is “every need is anticipated”. This means that hotel employees must try to anticipate to the situation in order to help the guest as good as possible. If an employee wants to help a guest as good as possible, he has to be able to make decisions and compare different options. Repair and flexibility are therefore important for Front Office employees. They will use these tools to do everything in their power to help customers as best as possible.
my research I am interested in the relationship between the degree of service and the nature of the performance measurement system. Therefore, my first hypothesis is as follows.
H2: A higher degree of service results in a more enabling performance measurement system.
Research about the influence of ownership in hotels and the reason to choose for franchising mainly focusses on the agency theory (Rubin, 1987). Franchising is used by the franchisor to sell his business format to other entrepreneurs (Kaufmann & Eroglu, 1998). This means that managers of franchised hotels, have to follow rules and regulations laid upon them by the franchisor. The franchisor want the franchisee to respect his formula and therefore to accept the rules and regulations that are applied. On the other hand the franchisee looks for the boundaries of the rules, because as an entrepreneur, he want to make his own decisions to influence performance (Dada et. Al., 2010). This distinction between Franchised and not-franchised businesses is very common in the hotel industry. The last years more and more hotels in the Netherlands joined a chain (Hotwath, 2012). Right now, 65% of all hotels in the Netherlands belong to a chain. Examples of Chain hotels are Novotel, Mercure and Ibis, al belonging to the French Hospitality service company Accor. Another well-known chain in the Netherlands is Van der Valk. Hotels belonging to a chain often have to deal with a high degree of standardization (Sandoff, 2006). This standardization is used to help the management to control, predict and minimize mistakes and deviation among employees (Jones et al., 1994). According to Sandoff (2006) manuals are used in hotels to live up to the degree of standardization in chain hotels and in the end customer expectations. All hotels belonging to a chain try to offer the same service, it should not matter if one visits the Van der Valk hotel in Amsterdam or Groningen. The previously mentioned manuals can be seen as a form of Coercive control, management from the chain tries to lay upon rules that have to be followed in every hotel. Degree of standardization in franchised hotels is less than company owned hotels. Or at least one could argue that not-franchised hotels have the option to choose for less standardization, whereas franchised hotels often do not have this choice. High standardization means a high degree of coerciveness. The degree of coercive control is higher in franchised hotels than in not-franchised hotels.
3 Methodology
To collect my data I used interviews and surveys. I started with three interviews in three different hotels. I used these interviews to gain more knowledge about the functioning of the PMS in the hotel and the organizational characteristics. The results I got from my interviews were used to develop my survey. One of the things I learned during the interviews, was that the use of PMS in hotels is fairly new. Therefore I had to be very clear in my survey to the employees about my questions. Furthermore, in several hotels the PMS was linked to organizational strategy. This means, that the PMS measured if employees contributed to the strategy and overall mission and goals of the hotel. I decided to ask employees about their influence on the organizational strategy as a result. Theory testing is interesting for my research because certain relationships are justified in the literature, however evidence is still inconclusive. (van der bij et. Al., 2012). To test these hypotheses I collected data and performed statistical data analysis. This analysis resulted is certain outcomes that have theoretical implications and may ask for further research.
3.1 Sample
I performed my data collection within 5 hotels in the city of Groningen. I chose these hotels for different reasons. Three of the five hotels belong to the same chain. Though they use the same label I was hoping to find differences regarding size, ownership and service level and whether there were differences regarding the performance measurement system they use. The other hotels are non-franchised hotels. Furthermore, service level differentiates among the hotels. Some only offer breakfast, while other offer all kinds of services including wellness. Size among the hotels differs as well, one is fairly small and is located in the city center, while another one is large and consists of a lot of rooms outside the city center. All together I wanted to use a sample that represented all the different forms of ownership, size and service that exist in the hotel industry. I collected my data with a survey I distributed among 40 front-office employees of the 5 hotels. I asked front-office employees because they are a homogenous group that all performs tasks that are very much alike. The basic tasks of a front office employee are processing reservations, checking guests in and out and maintaining good guest relationships. Different performance measurement may exist between different divisions in hotels. I wanted to prevent having to deal with differences regarding divisions. Of the 40 people I distributed the survey, 25 completed it, a response rate of 62,5%.
3.2 Instrument
For my research I conducted 3 interviews, 2 of them with Front-office managers and one of them with a General Manager. The interviews lasted approximately 45 minutes and were structured as follows. The first part consisted of questions about the three hotel characteristics, Size, Degree of service and Ownership. I used several questions per characteristic to measure it. This information I used as input for my research. The second part consisted about questions regarding their performance measurement system. This was purely exploratory, none of this data was directly used in my research. I asked them about their performance measurement system and their experiences with it. This part I used to gain knowledge about the functioning of the PMS in hotels. The last part consisted of questions about their PMS to gain knowledge about whether it was more enabling or coercive. The last part was divided in 4 sections, following the 4 design principles introduced by Borys & Adler (1996), Repair, flexibility, internal transparency, global transparency.
With the interviews I measured the hotel characteristics: Size, degree of service and ownership. Because it might be possible that employees do not know this information, I asked the managers. Furthermore there is no need to ask employees because this information is a given fixed number and not contingent upon respondents answers/opinion. As I mentioned I performed 3 interviews, to measure the independent variables in the other 2 hotels I send a list with questions by mail. In the appendix, you can find my interview questions.
After I conducted my interviews I developed my survey. I used the survey to measure whether the PMS the hotel used was coercive or enabling. Different from the interviews I did not measure the hotel characteristics, these were already answered by the managers and were facts so not contingent upon employee experiences.My survey consisted of 3 three parts. The first part was used to gain information about the respondent regarding the hotel they worked. The second part was used to measure whether the PMS was enabling or coercive. As I did in the interviews, I also divided this part into the 4 design characteristics proposed by Borys & Adler (1996). The last part consisted of personal questions regarding gender and age.The survey questions I used were based on information I obtained from my interviews and derived from questions that were previously used in other research. Wouters and Wilderom (2008), performed research regarding incomplete performance indicators. They developed several survey questions regarding their “experimentation” variable. I used some questions as a basis for my own questions. Furthermore, I did the same with a survey list used by Chapman & Kihn (2009). As an attachment to my thesis you can find my survey questions as well as the different questions from previous research I used as a basis. I constructed my survey using Qualtrics. With this program it’s fairly easy to create a survey using different kinds of measures. I distributed the survey by sending a link to all the managers from the different hotels. The managers then sent the link to their front office employees.
3.3 Independent variables
As I mentioned I use three independent variables in my research: Size, degree of service and Ownership. I will further explain the way I measured these variables and analyzed them hereafter. I measured hotel size with information I gathered with interviews of managers of the different hotels. As size has different dimensions I also used different questions to measure this variable. I used number of employees, number of hotel rooms, the facilities they offer and the number of square meters of the hotel. Then I categorized the hotels using the information I gathered in my interview. I did this, to give them different scores and therefore to make the variables measureable. I assigned equal weights to every measure. I divided the total score per hotel by 4 to get a mean and therefore to compare the results.
Table 1. Measuring hotel size
To measure the level of service in the hotels, I used 4 variables. One of the variables, the number of facilities, was also a measure for hotel size. One can imagine that the number of facilities that are offered increases service but also increases space that is used and therefore hotel size. For all the scores holds, the higher the score, the higher the degree of service (Ivanov, 2014). Furthermore I looked at the number of stars (Hotelclassificatie, 2010), the number of front-office employees and the average rooms price.
Score Number of facilities (Breakfast,
Restaurant, Wellness,
Conference rooms)
Number of stars Number of front office employees Average rooms price 1 1 1 ≤ 2 ≤ 60 2 2 2 ≥ 3, ≤ 5 ≥ 61, ≤ 65 3 3 3 ≥ 6, ≤ 10 ≥ 66, ≤ 70 4 4 4 ≥ 10 ≥ 71 5 5
Table2. Measuring degree of service
The ownership dimension is measured by definition. I distinguished 2 types of ownership: franchised hotels and not-franchised hotels. In my interviews I asked the managers what kind of ownership was applicable to their hotel and I used this as a result.
1. Franchised hotel 2. non-franchised Table 3. Measuring Ownership
3.4 Dependent Variables
To Measure my dependent variable, ‘an enabling or coercive performance measurement system’ I used the four design characteristics from Borys & Adler (1996): Repair, internal transparency, global transparency and flexibility. The higher the presence of the 4 dimensions, the more enabling the performance measurement system is. This automatically means that if the score is lower, the performance measurement system is more coercive. I measured the degree of coerciveness regarding the performance measurement system on a scale from 1 to 7, 1 being very coercive and 7 being very enabling. I assigned equal weights to every dimensions. Due to the fact that the first 3 dimensions consist of 6 questions and the last dimension of only 3 questions, I had to correct the scores of the ‘flexibility’ dimension to give them equal weight. I did so by multiplying the last ‘flexibility’ scores by 2.
3.5 Data Analysis
data coming from my surveys was collected in qualtrics and therefore directly uploaded in SPSS. This was the data regarding the coercive character of the PMS and consisted of the 4 design characteristics from Adler & Borys (1996): Repair, internal transparency, global transparency and flexibility. The other data regarding the independent variables: Size, degree of service and ownership was collected through interviews. Therefore, I had to add this data to my data-set manually. I translated the data using tables 1 , 2 and 3 and added it to my data-set. At this point, my data-set was ready and I could start with the analysis.
I started my analysis with measuring the reliability of my survey questions. My survey questions consisted of 4 categories, one for every design characteristic (Repair, internal transparency, global transparency and flexibility). I took the Cronbach’s Alpha of the questions belonging to the same category. The Cronbach’s Alpha is a test used to measure internal consistency of a test. It describes the extent to which all the items in a test measure the same concept or construct and hence it is connected to the inter-relatedness of the items within the test (Tavaksol & Dennick, 2011). After I looked at the reliability of survey questions I had to decide what analysis I was going to use to measure the relationships between the different hotel characteristics and the enabling/coercive character of the PMS. Because of my small sample size, a regression was not possible and therefore I chose to look at relationships by comparing means. I performed three tests, one for each of my hypotheses.
To test the relationship between hotel size and the enabling/coercive character of the PMS I used a One-Way ANOVA. A one-way ANOVA test is suitable for analyses because I want to compare multiple populations based on their means (Moore & McCabe, 2006). My data showed that hotel size could be divided in 4 groups ranging from small to extra-large. In the one-way ANOVA these 4 groups are the 4 populations I distinguish and in the One-Way ANOVA these are the independent variables. The dependent variable is the enabling/coercive character of the PMS. I measured the dependent variable with my surveys and consisted of the four design principled: repair, internal transparency, global transparency and flexibility. Together these 4 principles form the enabling/coercive character and thus my dependent variable. My results will show the mean degree of coerciveness of the PMS with regard to the hotel size of the hotel they are working. This means that all the results from employees that filled in the survey and that work in a small hotel will be categorized in the category small. This also holds for the medium, large and extra-large category. To measure the relationship between the degree of service and the enabling/coercive character of the PMS I also performed a One-way ANOVA. In this test my independent variable consisted of three populations: low, medium and high. My dependent variable was the enabling/coercive character of the PMS. To measure the relationship between the ownership variable and the enabling/coercive character of the PMS I performed a t-test. This is sufficient because only 2 populations can be distinguished: franchised and non-franchised. My independent variables therefore were franchised or not-franchised hotels. My dependent variable was the enabling/coercive character of the PMS.
4 Results
In this section, I will present the results of the different analyses I discussed in the previous chapter. I will start with the results of the Cronbach’s Alpha and then I will discuss the descriptive statistics and the results of the one-way ANOVA tests and the T-test.
Cronbach’s Alpha Number of items
Repair 0,93 6
Internal Transparency 0,88 6
Global Transparency 0,726 6
Flexibility 0,722 3
Table 4. Reliability survey questions
Table 4 Shows the Cronbach’s Alpha’s from the different sections I used in my survey to measure coerciveness of the PMS. The Alpha I measured is named after Lee. J. Cronbach who developed his theory in 1951 (Cronbach, 1951). The Cronbach’s Alpha is a test used to measure internal consistency of a test. It describes the extent to which all the items in a test measure the same concept or construct and hence it is connected to the inter-relatedness of the items within the test (Tavaksol & Dennick, 2011). The value of the alpha can lie between 0 and 1. In my survey, Cronbach’s Alpha’s are as follows. The repair section consists of 6 questions and has a Cronbach’s Alpha of α=0,93. The internal transparency section also consists of 6 questions and has a Cronbach’s Alpha of α=0,726. The Global transparency section is the last section that consists of 6 questions and results show a Cronbach’s alpha of α=0,726. The Flexibility category consists of 3 questions and has a Cronbach’s Alpha of α=0,722. Different research has been performed about the interpretation of the Cronbach’s Alpha’s values (Peterson, 1994; Peterson & Kim, 1998; Bravo & Potvin, 1991; Tavakol & Dennick, 2011). Generally accepted is an alpha of 0,7 or higher. This means that the questions that are used are related to each other in such a degree that they can be used to measure the same construct. My alpha’s are all higher than 0,7, therefore my measures can be regarded as reliable.
score corresponding group N
Size 2,25 Small 7
2,75 Medium 8
3,00 Large 5
3,75 Extra Large 5
Degree of service 2,75 low 5
3,00 moderate 12
3,25 high 8
Ownership Franchised 9
Non-Franchised 16
Table 5. Descriptive statistics
20 Hotel Size N Mean Std. Deviation Std. Error Minimum Maximum
Small 7 3,244 1,012 0,383 1,792 4,375
Medium 8 4,354 1,228 0,434 2,958 6,875
Large 5 3,650 0,650 0,291 3,042 4,750
Extra Large 5 3,950 0,884 0,395 2,583 4,958
Total 25 3,822 1,048 0,210 1,792 6,875
Table 6. Descriptive statistics hotel sizes, enabling PMS.
Sum of Squares df Mean Square F Sig.
Between Groups 4,834 3 1,611 1,573 ,226
Within Groups 21,512 21 1,024
Total 26,346 24
Table 7. ANOVA results, relationship between Size and enabling PMS
Degree of service in hotels ranges from low to high (Table. 8). 5 respondents work in a hotel with a low degree of service. On average they rate their PMS 3,65 as degree of coerciveness. Their average scores ranged from the lowest score 3,042 to the highest score 4,75. The other 3 respondents scored between these two. Remember that scores can range from 1 to 7. We can say that results from this group are not very scattered, hence the low standard deviation compared to the other groups. 12 Employees work in a medium degree of service hotel, they rate their PMS 3,538 regarding coerciveness. The last category consist of the 8 respondents that work in a hotel which offers a high degree of service. On average they rate their PMS 4,354 with regard to coerciveness. According to my hypothesis I would expect that the higher the degree of service, the higher the degree of coerciveness. From the table I conclude that this trend is not shown in my results. Furthermore the ANOVA results show (F(2, 22) = 1,62, p=0,221, this means there is no significant difference among the means of the different populations (table 9). Presbury (2005) states that all means that are available must be used to satisfy a customer. All kinds of situations can occur and therefore it’s better to have an enabling environment so employees can be proactive. On the other hand, formalization is needed to guarantee a certain degree of service and can be developed with the SERVQUAL model (Parasuraman et. Al., 1988). It seems that a certain degree of formalization is needed, but on top of that employees have to be enabled to solve situations themselves. My One-Way ANOVA results don’t show a significant relationship between degree of service and enabling/coercive PMS.
Relations between different degree's of service and enabling formalization
N Mean Std. Deviation Std. Error
95% Confidence Interval for Mean
Minimum Maximum
Degree of service N Mean Std. Deviation Std. Error Minimum Maxim um
Low 5 3,65 0,65 0,291 3,042 4,75
Moderate 12 3,538 0,988 0,285 1,792 4,958
High 8 4,354 1,228 0,434 2,958 6,875
Total 25 3,822 1,048 0,21 1,792 6,875
Table 8. Descriptive statistics ANOVA, Degree of service, Enabling PMS.
Sum of squares df Mean square F Sig.
Between groups 3,38 2 1,69 1,619 0,221
Within groups 22,965 22 1,044
Total 26,346 24
The last test I performed was a T-test. I used this test to measure the relationship between the ownership variable and the enabling/coercive nature of the PMS. My ownership variable consist of 2 populations: franchised and franchised (Table 9). From the total respondents, 16 work in a not-franchised hotel. On average a 3,807 degree of coerciveness is measured among these respondents. The scores ranged from 2,583 to 4,958. 9 Franchised hotels have a mean level of coerciveness of 3,847. Scores ranged from 1,792 to 6,875. It is clear that the means of non-franchised and franchised hotels are almost exactly the same. Furthermore, the standard deviation of the franchised category is much higher than of the franchised employees. Furthermore (F=3,012, p=0,929, this is higher than 0,05 and therefore it means that our third hypothesis is rejected (Table 10). There is no significant difference between franchised and not-franchised hotels and their coerciveness regarding the PMS. This result does not support my theory and previous research. A high degree of formalization is expected in franchised hotels (Dada et. Al., 2010). The franchisor tries to protect his format the product/service they are offering by imposing rules and regulations upon the franchisee. This higher degree of rules and regulations is supposed to come with a more coercive character of the PMS, results show this is not the case in my research.
N Mean Std. Deviation Std. Error Mean
Not-franchised 16 3,8073 ,68531 ,17133
Franchised 9 3,8472 1,55289 ,51763
Table 9. Descriptive statistics T-Test, Ownership, enabling PMS
Table 10. T-test results, relationship between ownership and enabling PMS
t df Sig. (2-tailed) Mean Difference
Std. Error Difference Equal variances
assumed -,090 23 ,929 -,03993 ,44586
Equal variances not
5 Discussion
This thesis studies the relationship between different organizational characteristics and their influence on the degree of coerciveness of the PMS used in hotels. Previous research makes a distinction between enabling control and coercing control. Coercive control means using rules and procedures to coerce people’s efforts and compliance. It is often referred to as top-down control, where employees in an organization comply with certain rules and regulations. This type of control is often used in stable environments and mechanistic organizational structures. Enabling control is defined as a system that enables people to better master their work task. Different factors influence enabling control. Internal transparency means that users have a good understanding of the logic of a system’s internal function and they have information on its status. (Adler & Borys, 1996). Global
transparency is about the intelligibility for employees of the broader system and context within which
they do their work. Flexibility concerns the ability of users to make controlling decisions after enabling systems have provided information. Repair refers to users being able to improve the work process themselves rather than allowing breakdowns and other non-programmable events to force the work processes to halt. Wouter & Wilderom (2008), were the first to look at the relationship between the degree of coerciveness and the Performance Measurement System that is used in an organization. In this research I looked at different organizational characteristics and their influence of the coerciveness of the PMW. Using Interviews and surveys the relationship between Organizational size, degree of service, ownership and enabling PMS’s is tested. I performed my research in hotels in the city of Groningen, where I distributed my survey among 40 Front-Office employees in 5 hotels. This resulted in 25 filled in surveys.
to take other decisions regarding service offered to the guest. This is further expressed in the distinction between customization and standardization regarding service (Presbury, 2005). Customization relates to enabling formalization and standardization to coercive formalization. The last relation I investigated in this research is the one between ownership and the degree of enabling PMS. I divided ownership in franchised organizations and non-franchised organizations. Results showed there was no significant relationship between franchised organizations and the degree of coercive PMS. This contradicts previous research as high formalization and therefore coercive control is expected in franchised hotels (Dada et. Al., 2010). Furthermore, franchisors use formalization to standardize their product. For guests it should not matter whether they enter a Van der Valk hotel in Groningen or Maastricht. The product should be standardized across the entire format. Accordingly, we expected franchised organizations to use more coercive PMS’s. It is possible that the hotels where I performed my research use a Franchise format, which is not coercive. One can imagine that degree of formalization among formats differs. Another factor that might explain my results is the inexperience of hotel management regarding PMS. It is possible that PMS are not widely used in hotels. Apart from testing my hypotheses, I also tested my survey questions for internal consistency. The survey questions were used to measure the degree of coerciveness of the PMS. I divided my survey according to the design characteristics of Adler & Borys (1996): Repair, Internal transparency, global transparency and flexibility. Each category consisted of several questions. I measured the Cronbach’s Alpha’s (Cronbach, 1951; Peterson, 1994; Peterson & Kim, 1998; Bravo & Potvin, 1991; Tavakol & Dennick, 2011) of these questions per category and found that internal consistency was high enough in all my categories. This is an important contribution, as my question can be useful for future research.
5.1 Limitations
that the number of stars were all the same among the different hotels in my research. Therefore, this dimension does not contribute to the richness of my data and could have been left out. Beforehand, I could not have known that the hotels all have the same number of stars.
5.2 Future research
There are different subjects coming from my research that need further research in the future. First of all general research about PMS in hotels can be very beneficial to the hotel industry. I think performance measurement is something that is not yet fully implemented in this industry and further research might stimulate this. From the interview I conducted, I noticed that managers of hotels were still learning a lot about performance measurement and PMS’s. Therefore employees might be unaware of all the performances that are measured. Furthermore, it is very likely that the results of my research will be very different in 10 years or so. The use of PMS’s in hotels will be more developed and therefore it might be interesting to perform my research again to see what differences come up. Furthermore research regarding structural factors in an organization that influence enabling or coercive control can be investigated. Structural characteristic as Centralization, decentralization, standardization etc. A lot of other factors are linked to these factors, therefore it would really contribute to our understanding of Coercive/enabling formalization.
Another option for research in the future might be based on the interview questions I used in my surveys. Because my Cronbach alpha values were high, internal consistency was sufficient. Therefore my questions can be used in new research or serve as a basis for new questions. Together with questions from other research this offers a real opportunity to base future research on. Lastly, I would like to mention that general research regarding the use of enabling or coercive control is necessary. I think the model is very applicable to all kinds of organizations and can be linked to all kinds of organizational research. During my research available literature regarding coercive/enabling control was limited.
6 Conclusion
This research tested the relationship between different organizational characteristic and the use of an enabling PMS. Organizational Control can be distinguished in coercive and enabling control (Adler & Borys, 1996). Coercive control meaning the use of rules and regulation to influence and employee behavior. Enabling control is the opposite, it gives employees the freedom to make decisions and lets them solve issues themselves. Performance Measurement Systems are used in organizations to control employees. Research about coercive and enabling PMS has been performed in the past (Wouter & wilderom, 2008). In my research I looked at organizational characteristics influencing the coerciveness of PMS’s. I performed my research in the hotel industry in the city of Groningen. Using interviews and surveys I tested three hypotheses. The first one was the influence of hotel size on the use of an enabling PMS, this relationship was not significant. The second one was the influence of degree of service in hotels on the use of an enabling PMS, no significant relationship was found. The last hypothesis tested the influence of ownership on the enabling use of a PMS. Here, I distinguished franchise hotels and not franchised hotels. Results also showed no significant relationship between one of the two dimensions and enabling PMS. All together none of my hypotheses was accepted. No significant relationship between one of the independent variables (size, degree of service & ownership) and the dependent variable coerciveness of the PMS.
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8 Appendix
Appendix A: Interview questions
Appendix B: Answers interview questions
Appendix C: Questions derived from previous research and used as a basis for my survey Appendix D: Survey questions
8.1 Interview Questions
Algemeen
1. Wat is uw naam?
2. Hoelang bent u hier al werkzaam? 3. Wat is uw functie?
Eigenschappen Hotel
Grootte
1. Hoeveel werknemers heeft dit hotel? 2. Hoeveel kamers zijn er?
3. Zijn er naast hotelkamers nog andere faciliteiten? (Vergaderzalen, Wellness, Restaurant, Ontbijt, Bar)
4. Hoeveel vierkante beslaat het vloeroppervlak van het hotel?
Service niveau
1. Hoeveel sterren heeft dit hotel?
2. Hoeveel Front Office medewerkers heeft u? 3. Wat is jullie gemiddelde kamerprijs?
4. Zijn er veel verschillende soorten kamers qua luxe en grootte?
Eigendom
1. Wie is de eigenaar van dit hotel? 2. Hoort het hotel bij een keten?
3. Maakt dit hotel gebruik van een franchise formule? 4. Wat merkt u van de vorm van eigendom?
Introductie Performance Measurement Systemen (uitleg PMS, mijn onderzoek, interesse etc.) 1. Op welke manier meet uw de prestatie van uw front office medewerkers?
2. Maakt uw hotel gebruik van een PMS? 3. Wat is uw ervaring met het systeem?
4. Wat wordt er allemaal met het PMS gemeten? Enabling vs Coercive Control
Repair
1. Op welke manier worden de werknemers betrokken bij het ontwerp van het PMS? 2. Kunnen zij verbeteringen aandragen t.a.v. het PMS en wordt dit gestimuleerd? 3. Wordt het personeel gevraagd om hun ervaringen met betrekking tot het PMS?
