Dealing with the reversed organizational order:
towards an understanding of the use of management control
Mariska de Jonge
Groningen, 27 January 2014
Master Business Administration Organizational and Management Control
Dealing with the reversed organizational order:
towards an understanding of the use of management control
Mariska de JongeUniversity of Groningen, Groningen, The Netherlands
ABSTRACT
This exploratory research investigates the reversed organizational order, a situation in which young managers control older employees. The purpose of the research was to find out whether differences in age, generation and work experience have an influence on management control preferences and use. The final aim was to discover whether young managers use control types that are in line with the preferences of older employees to see whether this might be an potential issue that might reduce conflicts. This was investigated by conducting in-depth interviews with 4 young managers and 14 older employees within one consulting firm. The main findings in this research suggest age-related differences. Young managers revealed significantly higher growth motivations than older employees. Furthermore older employees showed security motivations whereas young managers did not show these motivations. Despite these differences it was seen that with regard to management control preferences there are more similarities than differences between the two parties. Both young managers and older employees revealed a preference for personnel controls and dislike action controls. Differences in preferences were mainly found to be related to results control. Moreover, the findings suggest that other factors might also play a role, such as life phase and personality. Future research could elaborate on these factors.
Abbreviations
BUNO Business Unit Noord-Oost (Business Unit North-East)
CAO Collectieve Arbeids Overeenkomst (Collective labour agreement)
CET Cognitive Evaluation Theory
CM Competence manager
CX Competence manager of Generation X (1965-1977) CY Competence manager of Generation Y (>1978) EB Employee of Babyboomer Generation (1946-1964) EX Employee of Generation X (1965-1977)
HNW Het Nieuwe Werken (=being flexible to work whenever, wherever)
N Sample size
POP Persoonlijk Ontwikkelings Plan (=personal development plan)
PM Performance Measurement
SOC Selection Optimization and Compensation theory SST Socio-emotional Selectivity Theory
Table of content
Abstract ... 1
Abbreviations ... 2
1. Introduction ... 5
2. Research framework ... 7
2.1 Characteristics of young managers and older employees ... 7
2.2 Management control types ... 9
2.3 The influence of age on management control types ... 11
2.4 The influence of generations on types of management control ... 15
2.5 The influence of experience on management control types ... 18
3. Research methodology ... 19
3.1 Type of research and method ... 19
3.2 Data collection ... 20
3.3 Data analysis ... 21
3.4 Case selection and background ... 22
4. Research findings and discussion ... 23
4.1 Differences related to age ... 24
4.1.1 Age related findings of young managers... 24
4.1.2 Age related findings of older employees... 25
4.1.3 Discussion about age related findings ... 27
4.2 Differences related to generations ... 29
4.2.1 Generational related findings of young managers ... 29
4.2.2 Generational related findings of older employees ... 30
4.2.3 Discussion of generational related findings ... 31
4.3 Differences related to work experience ... 32
4.3.1 Work experience related finding of young managers ... 32
4.3.2 Work experience related finding of older employees ... 33
4.3.3 Discussion about work experience related findings ... 34
4.4 Management control use and preferences ... 35
4.4.1 Management control use and preferences of young managers ... 35
4.4.2 Management control preferences of older employees ... 38
4.4.3 Discussion about management control preferences ... 42
4.5 Summary of the findings ... 45
5. Conclusion ... 47
5.1 Conclusions about the research... 48
5.1.1 Research knowledge... 48
5.1.2 Research problem statement ... 50
5.1.3 Research process ... 50
5.3 Future research directions ... 52
Acknowledgements ... 53
References ... 54
Appendix A: Interview guide ... 58
Appendix B: Detailed list of interviewees... 61
Appendix C: Anecdotal evidence from interviews ... 62
Appendix C.1: Findings related to age ... 62
Appendix C.2: Findings related to generations... 68
Appendix C.3: Findings related to work experience ... 69
1. Introduction
In today’s rapidly changing world, workplaces are getting more complex due to a greater diversity of generations. Most organizations today employ people ranging in age “from their early 20s to their 70s and because of this age range, generational cohorts are receiving greater attention in research literature” (Gentry et al., 2011, p.40). Nowadays, popular press articles warn companies with headlines in the trend of generational gaps, friction, conflicts, clash or even worse: generational wars. Researchers are attempting to capture the underlying reasons that cause potential tensions and conflicts between generations and found that these are mainly caused due to a lack of understanding (Lester et al., 2012; Twenge & Campbell, 2008; Kupperschmidt, 2000), differences in perceptions/stereotyping (Meriac, Woehr & Banister, 2010; Tonks, Dickenson & Nelson, 2009), work ethic (Meriac et al., 2010), work values (Parry & Urwin, 2011), basic human values (Murphy, Gibson & Greenwood, 2010) and leadership style (Salahuddin, 2010; Oshagbemi, 2004, Sessa et al., 2007).
One of conflicts between generations that is of particular research interest is caused by the reversed organizational order, which means that young managers are controlling older employees instead of the other way around. Anecdotal evidence shows some of the difficulties and challenges that young managers and older employees face. For example an older employee of a bank said: “Good opportunity for your career, but I’m not willing to experience again the thrift of a young leader to show off their leadership!” (Older employee, ABN AMRO in NRC, 2011). However, young managers themselves also face difficulties. A young manager that participated in the study of Tonks, Dickenson and Nelson (2009) told the following story “I think the older workers have the attitude ‘I’m older, I’ve been there longer than you and I should have that job. I’m not going to pay attention to what you have to say, you don’t know what you’re talking about and you haven’t been around long enough’...They [older workers] just won’t listen. You ask them nicely or you give direct instructions, it doesn’t matter."
Nowadays “the practice of leadership is no longer an exclusive domain of the older people as it used to be” (Oshagbemi, 2004, p.15). There is an increase in younger managers supervising older employees and both the nature and quality of these relationships are ignored (Tonks, et al., 2009). One of the reasons is that an increasing amount of management traineeships allow younger employees to get sooner into a management position. This raises a lot of questions; such as “Would you be comfortable reporting to someone younger than your kids? Or hiring someone twice your age?” (Cappelli at CBSnews.com, 2011). Recently a human resource development advice agency, called GITP, has shown that age negatively affects the relationship between a manager and an employee (doorwerkgever.nl, 2010). This is also confirmed by other researchers (f.e. Kupperschmidt, 2000; Salahuddin, 2010) who state that the relationship between young managers and older employees often creates tension and/or conflict and this leads to lower job satisfaction, less loyalty and often results in a lack of effort by older employees.
supervisors did significantly better on objective performance measures than did subordinates working for relatively younger, less experienced supervisors”. A similar finding was reported by Rupp, Vodanovich and Credé (2006, p.1353) who found that “older employees are receiving more severe recommendations for poor performance than did their younger counterparts”. In addition to this, there is also a difference in work values and leadership style that causes tensions on the work floor and these have an impact on the relationship of older employees and younger managers. This can lead to motivational problems of older employees resulting in effort aversion (Merchant & Van der Stede, 2012), which means older employees put less effort in their job.
The purpose of this study is to discover if young managers use different management control types for motivational problems of older employees than older employees prefer. As several studies have shown that motivation differs with age (e.g. Kooij et al., 2011; 2013; Inceoglu et al., 2012; Lord & Farrington, 2006) the basic line of argumentation is that young managers and older employees have age and generation related differences with regard to work motivation and therefore require different types of control. Therefore it is expected that based on their motivation young managers do not use the same types of control for motivational problems as older employees would prefer. The focus will be on the use of these types of controls by young managers, as Langfield-Smith (1997, p.226) notes that “there is an important distinction between the existence and use of controls”. In her critical review of control and strategy she stated: “For control systems to support a certain strategy it may not be sufficient for certain controls merely to exist, it can be argued that the appropriate orientation for examining controls is their use and importance to key decision makers”. Controls that aim at motivating employees will only be effective when they are used by the managers, not just by their presence. Therefore careful examination of the use of controls is needed. The following research question has been formulated: Which types of controls do young managers use to prefer to counteract motivational problems and increase motivation of older employees?
The relevance of this question is to discover whether young managers use control types that are in line with age and generational differences, as many of the literature that deals with age or generational diversity at the work floor describe tensions and conflicts between young managers and older employees. The main focus of the current literature lies in explaining how tension and conflicts arise, but attempts to come up with solutions are only limited to actions such as creating understanding and having respect for other generations. Currently there is no such approach as a multigenerational approach, which might be an impossible concept given the fact that people want to be equally treated by their boss. This research addresses a new issue that might mitigate the tension and conflicts between generations by looking at it from a management control perspective.
ideas of Petroulas et al. (2010) by posing more in-depth questions and will also include a management perspective. As managers directly control employees it is important to see whether they are aware of generational or age related preferences and whether they make distinctions between different groups of employees when they use the control system. Furthermore the study of Petroulas et al. (2010) mainly looked at the ideal situation according to employee preferences. This study looks at the current management control system and how its elements are used by managers and consequently how these are received by employees. This research will thereby generate theoretical contributions that may shed a new light on the use of management control systems.
From a practical point of view, this study will provide more insight in the way that young managers use the management controls to motivate older employees. This insight can help managers to understand their practices and can lead to new insights with regard to the use of the management control systems. For example, managers might realize that the management control tools they use to motivate older employees might be based on their own preferences rather than the control problem. This insight might lead to better informed management control choices in the future and might result in a better relation between younger managers and older employees, which hopefully result in a lower human capital turnover and increased motivation and work effort.
The remainder of this research is structured as followed: the upcoming section, section 2, will provide a research framework that consists of a brief literature review defining young managers and older employees and continues with literature on management control and motivation. This section will formulate expectations about the potential influence of age, generation and work experience on management control preferences. Section 3 will deal with the research design and methods used. Consequently in section 4 the research findings will be presented. Last but not least, section 5, will discuss the conclusions and implications.
2. Research framework
This research investigates the reversed organizational order and the use of management control for motivational problems. Motivational problems can best be solved by looking at the motivation of employees and thereby aligning their motivations with a certain type of control. Several studies have showed that employees and managers of different age or generation have different motivations and work preferences (e.g. Kooij et al., 2011; Inceoglu et al., 2008; Wong et al., 2008). Based on these differences it is expected that young managers and old employees will differ also with regard to their preference for management control types. This section is organized as follows: first the characteristics of young managers and old employees will be described and thereafter management control and the specific control types will be introduced. The last three parts of this section serve as development of the research framework and formulate potential influences of age, generation and work experience on management control preferences.
2.1 Characteristics of young managers and older employees
strategic apex and have formal authority to control the operating core. In addition there is technostructure, which consists of analysts, who are not part of the formal “line” structure (or hierarchy) as they are more focused on advising the organization in f.e. design, maintenance and adaptation to its environment. The final element is the support staff, such as PR and payroll, which aims at providing indirect support to all other parts of the organization. In the remainder of this thesis will be referred to middle line managers and operational employees as described by Mintzberg (1990). The focus on middle line managers is based on the fact that there will not be many young people situated in the strategic apex being CEO. Studies have showed that most CEO’s are typically aged around 50 to 60 years (SpencerStuart, 2006; Siebelink, 2007). As middle line managers typically control operational employees the focus will therefore be at the lower level. The focus on middle line managers has furthermore the advantage that the controls are used by these managers and cannot be delegated to lower levels of the organization, whereas at the strategic apex controls are often designed but to a great extent delegated. Although the design of controls is to a great extent determined it is the middle line manager who decides which controls to use and emphasize.
Young managers and older employees are often defined in terms of chronological age. Several studies have made a distinction in age between managers or employees in order to study young versus old (e.g. Oshagbemi, 2004; Kabacoff & Stoffey, 2001; Tonks et al., 2009; Van Dalen, Henkers & Schippers, 2010). Most studies, for example Oshagbemi (2004) and Kabacoff & Stoffey (2001), use several age categories and exclude a certain age category from the sample as this enables the researcher to show the distinctiveness of two age bands. In this research it has been decided to follow Kabacoff & Stoffey (2001) as they have distinguished age in two different groups. Young managers are therefore defined being below 35 years, as this point reflects often the age at which most people obtain tenure. Older employees are being characterized with an age above 45 years, as these are working often for a longer period of time in a company. This definition of Kabacoff & Stoffey (2001) has been seen as a workable definition for selecting a case company. Furthermore this definition does not only distinguish managers and employees based on chronological age but at the same time with work experience, which has been important consideration.
In addition to chronological age young managers and old employees can be defined by their generation. Many researchers (e.g. Kabacoff & Stoffey, 2001; Kupperschmidt, 2000; Meriac et al., 2010; Tonks, et al., 2009) note that the presence of different generations in the workplace often cause tension or conflicts which are also observed in the reversed organizational order. Generational cohort theory states that generations are distinct from other generations because they have gone through different life experiences (Gentry et al., 2011). Kupperschmidt (2000, p. 66) provides a detailed explanation about generations: “A generation is a group of people who share birth years and experiences as they move through time together, influencing and being influenced by a variety of critical factors. These factors include shifts in society wide attitudes; changes in social, economic and public policy; and major events, such as the Vietnam war and recent corporate downsizings… […] ...Generational characteristics include relatively enduring values, attitudes, preferences and behaviours that form the filter through with cohorts interpret subsequent life experiences. This filter influences every aspect of a generation’s lives…” Generational cohort theory acknowledges that generations have specific attitudes towards organizations, authority, work values, needs and wants with regard to work (Kupperschmidt, 2000). As it is said that generational differences will have an influence on many organizational aspects, it is expected in this thesis that young managers and older employees will differ with regard to types of management control based on differences in work motivation and work preferences.
definitions and birth dates of generations and it becomes clear that birthdates differences constitute a maximum of 5 years. In this research the birth date cut offs of Smola & Sutton (2002) and Chen & Choi (2008) will be followed, as they have paid attention to the definition of Kupperschmidt (2000) while defining birth date cut offs. Therefore Generation Y is born after 1978, Generation X is born between 1965 and 1977 and the Babyboomer Generation is born between 1946 and 1964.
As the chronological age of a young managers is between 20 and 35 years, these belong to cohort 1978-1993. Therefore young managers would be part of Generation Y, which is seen as the “first high tech generation”. This generation is born in a world where “being connected 24 h a day” is common (Sessa et al., 2007). Uncertainty about the economy and terrorism have influenced their view significantly. They have in common with generation X that their parents also have been laid off and therefore distrust institutions (Sessa et al., 2007). Older employees have been defined by age being 45 years or older, and belong to the cohort 1946-1968. Older employees are thus part of Generation X and Babyboomer Generation. In literature Generation X is described as a generation that experienced “financial, family and societal insecurity; rapid change; great diversity and a lack of solid traditions” (Sessa et al, 2007, p. 51). This generation realizes that job security does not exist, and as they experienced the layoffs of their parents they are cynical and distrusting (Kupperschmidt, 2000). According to the literature, Babyboomers were born after World War II and grew up in a time of economic and educational expansion (Kupperschmidt, 2000). More things in life became available for this generation and therefore they are often characterized as materialists. A more detailed overview of the generations can be found in Kupperschmidt (2000), Smola and Sutton (2002) and Parry and Urwin (2011).
As a conclusion it can be said that a young manager is defined as being aged 20 to 35 years old, belongs to Generation Y and is typically a middle line manager. An older employee is defined being aged 45 to 67 years and is thereby part of the Babyboomer Generation or Generation X and is working in an operational function. In the next section management control types being studied will be introduced before developing a research framework about the influence of differences in age, generation and work experience on management control.
2.2 Management control types
The introduction reveals that the reversed organizational order should be considered as a management control problem, as the underlying cause are motivational problems. Management control place an emphasis on human behavior. “If all employees could always be relied on to do what is best for the organization there would be no need for a management control system” was argued by Merchant & Van der Stede (2012, p.9). According to Merchant and Van der Stede (2012) management controls are necessary to prevent that employees will do something that is not in the interest of the organization and to prevent failure to something employees should do. In this study the definition of Merchant and Van der Stede (2012) of management control is chosen, thereby recognizing both formal and informal controls and placing emphasis on behavior. Furthermore this definition is chosen as it is expected that the type of management controls are easy to recognize for both employees and managers in reality and do not require detailed descriptions. Although many researchers argue that management control should be approached as a package as controls can complement or substitute each other (e.g. Malmi & Brown, 2008, Widener, Shackell & Demers, 2008) this research focuses only on those control types aimed at motivational problems as these apply specifically to the reversed organizational order. As this thesis focuses only on motivational problems of older employees the controls Merchant and Van der Stede (2012) propose to use for motivational problems will be in the research framework.
Stede (2012) are based on Merchant’s initial work (1982). In this classification initially 3 types of control existed: results, action and personnel control. Later on, one type of control was added namely cultural control. Results controls hold employees responsible for the results, often this goes hand in hand with rewarding employees for generating good results (Merchant, 1982). Personnel controls, such as selection, training, workgroups and so on, emphasize “a reliance on the personnel involved to do what is best for the organization and it provides assistance for them as necessary” (Merchant, 1982, p. 46). The last control identified by Merchant initial work in 1982 are action controls, these mainly ensure that employees do perform only actions that are desirable and do not engage in undesirable actions. The added type of control, cultural control, is described by Merchant & Van der Stede (2012, p. 90) as “controls designed to encourage mutual monitoring: a powerful form of group pressure on individuals, who deviate from group norms and values. Cultural norms encompass both written and unwritten rules that govern employees behavior.”
For motivational problems a large array within these types of controls can be used, which can be found in Table 1. The table originates from Merchant’s work in 1998 and is copied by Merchant and Van der Stede (2012). This table differs from the original work as there is one extra dimension to results control added, namely rewards as Merchant and van der Stede (2012) argue that these fulfil an important role in increasing motivation. This is believed to be significant for this research and therefore this dimension will also be investigated. Looking closely at the controls proposed by Merchant and Van der Stede a distinction between the solutions can be made. Motivational problems can be solved basically in two ways: 1) increasing motivation (either intrinsic or extrinsic) and 2) restrict employees behavior to ensure effort. The first category includes rewards, selection and placement, creation of strong organizational culture, training, action accountability and results accountability, whereas the second category involves behavioural constraints and action reviews.
To delve deeper in theory of management control and motivation it is important to take a look at the crowding effect. Crowding Theory takes the view that external interventions, such as management control instruments like monetary incentives and punishments, may decrease intrinsic motivation
Control type Lack of direction Motivational
problems Personal limitations Result controls Results accountability x x Individual rewards x Action controls Behavioural constraints x Preaction reviews x x x Action accountability x x x Redundancy x Personnel controls
Selection and placement x x x
Training x x x
Provision of necessary resources x
Cultural controls
Creation of a strong organizational culture
x x
Group based rewards x x
under some conditions (Frey & Jegen, 2001). Frey’s initial book in 1997 on this topic proposed that incentives will only increase intrinsic motivation if they are perceived supporting, a so-called “crowd-in effect”, but will “crowd-out” “crowd-intr“crowd-insic motivation and thereby effort when they are perceived as controlling. Frey & Jegen (2001) have looked at the evidence of the crowding effect and found that there are several industries studied by researchers that provide evidence for the effect. For example a study of Barkema (1995 in Frey & Jegen, 2001) looks at personal versus impersonal supervision of managers of a firm, and revealed that impersonal control had no effect on the managers effort, but personal control by means of direct supervision by the board of directors negatively influenced managers efforts which is in line with the Crowding Theory. Since many of the management control tools are perceived as controlling opposed to supporting, most of them seem to crowd out intrinsic motivation.
Although extrinsic interventions can crowd out intrinsic motivation, many companies use these to increase extrinsic motivation. The main reason is that “it is difficult if not impossible, to determine which part of an employee’s motivation to perform his job are intrinsic and which not. Intrinsic motivation is important, but hard (if not impossible) to control, especially in comparison with the large array of readily available extrinsic motivators” (Frey & Jegen, 2001,p.591). Extrinsic interventions are in line with agency theory, which predicts that employees are typically self-interested and therefore primarily motivated by explicit incentives (Christ et al., 2012). Thus although extrinsic interventions might decrease intrinsic motivation, they assure goal congruence and replace intrinsic motivation by extrinsic motivation. Fortunately not all controls are assumed to decrease motivation, some theories suggest that individuals are strongly motivated by stated goals and objectives (Christ et al., 2012). In addition employee empowerment is often seen as an important way to increase motivation (e.g. Drake, Wong & Salter, 2007).
From the previous paragraphs it can be seen that management control intends to influence employees behaviour in order to obtain organizational goals. In this thesis the focus will be on lack of motivation management control problems, which can be solved in 2 different ways, on the one hand the employees behaviour can be restricted to ensure that the employee will exert some effort that is required and on the other hand it can be solved by increasing employee motivation. However, it is important to take into account that most controls crowd out intrinsic motivation of employees as they feel “controlled”. Although many companies are aware of this effect, they usually have no other option than using extrinsic motivators as it is almost impossible to measure and control intrinsic motivation. In addition to extrinsic motivators, the use of goals and objectives and employee empowerment can be used to motivate employees intrinsically.
2.3 The influence of age on management control types
lead to conflicts with older employees as a consequence of age-related differences in motivation. For this reason several questions will have to be posed in order to get an understanding of the preference and use of management control.
There are two major theories that are involved in motivations and age that could explain differences in preferences with regard to type of management control. These theories are known as Selection Optimization and Compensation (SOC) theory and socio-emotional selectivity theory (SST). SOC states that a shift in motivation can be noted that goes from growth to security motivations. According to Kooij et al. (2013, p.90 based on Dweck, 1999) growth motivations, also referred to as development motivations, are defined as “perceived importance or preference for job characteristics and work outcomes that relate broadly to achievement and mastery”. The security motivations dimension includes “the importance or preference for job features and work outcomes that satisfy material and physiological desires related to one’s general welfare, such as pay and job security and physical conditions” (Kooij et al., 2011, p. 200). SOC is based on the idea that the older people get the less resources they will allocate to growth and the more resources they will allocate to maintenance and regulation of loss as a result of specific age related losses such as intelligence and physical abilities. In addition there is Socio-emotional Selectivity theory (SST), which states that motivation will shift when people perceive their time in life as limited as opposed to unlimited (Löckenhoff & Carstensen, 2004). Chronological age is often used a proxy for the time perspective, however Löckenhoff and Carstensen (2004) state that other factors such as illness can influence the time perception. It is argued in SST that people who perceive time as limited will focus more on goals that relate to emotional meaning instead of long term goals that maximize future payoffs (Löckenhoff & Carstensen, 2004).
Several studies have provided evidence for SOC. It has been confirmed by a meta analysis by Kooij et al. (2011) that age and strength of growth and extrinsic motivation are negatively related. However, Kooij et al. (2013) decided later on to test this relation by using two samples. The first sample consisted of a healthcare company (N=448) and the second sample was a university (N=1271). The existence of SOC was only confirmed for the university sample, which indicates that this theory does not hold in all settings and might need to be adapted. Kooij et al. (2013) provided the possible explanation that older workers still might have a motivation that is related to growth by aiming to get a little more demanding job such as becoming team leaders. Lord and Farrington (2006) also provide some evidence for SOC. Lord and Farrington (2006) have looked at age related differences in the motivation of knowledge workers based on a sample of 248 employees of 37 organizations. The findings of Lord and Farrington showed that younger workers were placing more importance on advancement (similar to growth motivations), security and how their supervisor relates to them (social motivation). However, older workers found independence very important. Furthermore it turned out that younger workers work for their basic needs such as taking care of the family and work for recognition, whereas older workers are mainly working as they enjoy it and take pride in what they do. Although Lord and Farrington show that growth motivations were important to younger employees which is consistent with SOC they also point at security motivations in the same time, which is inconsistent with SOC. This could indicate security motivations are not driven by SOC.
people will perceive the time more limited. Kooij et al. (2013) found no support for their hypothesis that generativity motivations would increase with age due to a limited time perspective.
Empirical evidence of SOC and SST shows that people situated in a different age class have different motivations. Based on these motivational differences it is expected that young managers would use different control types for motivational problems than older employees would prefer. This raises the following question: Do young managers use different types of controls than older employees prefer as a result of age related differences?
With regard to SST several questions about management control preference can be raised, as it is confirmed by empirical evidence that growth motivations decrease with age due to a limited time perspective. Since young managers probably will have higher growth motivations than older employees this could result in different control preferences. When looking at growth motivations one can question a preference for training as well as for promotion. The first being part of the personnel controls, whereas the second is part of the results control as promotion is a reward tied to good results. Examining personnel controls looking at training it could be expected that this is not a very strong motivational driver for older employees. This could be explained by literature that states that older employees are less ambitious (Warr et al., 2001) and have less growth motivations (Kooij et al., 2011). Inceoglu et al. (2012) explain that older employees often participate less in training as they have less working memory and “have an anxiety for learning difficulties” (Warr & Fay, 2001 in Inceoglu et al., 2012, p.302). Furthermore SST, as discussed before, explains that older employees have a limited future perception and therefore focus less on knowledge acquisition and more on emotional meaningful social goals (Löckenhoff & Carstensen, 2004). Although most sources confirm that older employees are less motivated to participate in training and also the meta analysis of Ng and Feldman (2012) confirms this stereotype it should be noted that this lack of motivation could be caused by organizations itself. Ng and Feldman (2012) explain that older employees are often less approached for training and education, as these employees have a shorter period of time to deliver the benefits, as well as they are seen as being less capable to learn new things. For this reason it could be that older employees are not motivated to actively participate in training due to the way in which they are approached during training programs. From the point of view of a young managers training will be seen as a very important instrument for motivation as these managers are in the possession of high growth motivations. Training is considered to have motivational effects as it gives employees a more professional feeling and creates interest in performing well (Merchant & Van der Stede, 2012). As research has shown that younger employees and managers find training motivating it could be expected that younger managers will use more training than older employees prefer.
It is furthermore often believed by managers that older employees have generativity motivations, which means that people are motivated by developing and coaching others. However, Kooij et al. (2013) revealed that age is not related to generativity motivations, which could mean that all employees regardless age are in the possession of generativity motivations. Therefore young managers and older employees are not expected to differ with regard to preferences for mentoring.
older employees will not be motivated by promotion as much as younger employees as they have only limited time left in the job market.
Complementary to SOC and SST, theories linking age and motivation make often a distinction between intrinsic and extrinsic motivation. Intrinsic motivation “refers to doing something because it is inherently interesting or enjoyable”, whereas extrinsic motivation “refers to doing something because it leads to a separable outcome” (Ryan & Deci, 2000, p.55). Extrinsic motivation can be achieved by means of external interventions, whereas intrinsic motivation is situated within a person. It is showed in the meta analysis of Kooij et al. (2011) that age is positively related to intrinsic motives. Similar findings are reported by Inceoglu, Segers and Bartram (2012), who have investigated age related differences in work motivators using a sample of 9,338 respondents. Inceoglu et al. (2012) concluded that there can be observed a shift in work motivators. Their main finding was that job features and outcomes that involve a high level of personal resource (e.g. competition and power) and those that are predominantly extrinsically rewarding (e.g., career progression and material rewards) are perceived as less motivating in older age groups, while intrinsic motivators (e.g., autonomy, personal principles) are valued more compared to younger individuals. As a conclusion Inceoglu et al. state that older employees are not less motivated, but are motivated by different features of the job.
Management control can influence intrinsic motivation as was previously showed by the Motivational Crowding Effect of Frey and Jegen (2001). The Crowding Effect takes the view that external interventions may decrease intrinsic motivation under some conditions (Frey & Jegen, 2001) and this idea has also been known under the name Cognitive Evaluation Theory (CET). CET states that “underlying intrinsic motivation are the psychological needs for autonomy and competence, so the effects of an event such as reward depend on how it affects perceived self-determination and perceived competence. It is proposed for this reason that rewards can be interpreted by recipients primarily as controllers of their behavior or, alternatively, as indicators of their competence. In the former case, rewards are predicted to thwart satisfaction of the need for autonomy, lead to a more external perceived locus of causality and undermine intrinsic motivation. In the latter case, however, where rewards are positively informational, they are predicted to provide satisfaction of the need for competence and thus to enhance intrinsic motivation” (Deci, Koestner & Ryan (1999, p.468). Although it could be said that controls should always limit the Crowding Effect and look at cost-benefits of controls, it seems that the Crowding Effect could be worse for older employees than for younger employees since they are in the possession of mainly intrinsic motives.
Based on the findings of intrinsic motives for older employees it can be expected that older employees are more motivated by controls that incorporate competence and autonomy of the employee. A control that especially stresses autonomy is results accountability belonging to the control type results control. Results accountability gives employees a certain degree of autonomy by making them responsible for their results and also often give them as a consequence of their produced results incentives or punishments. Results accountability also acknowledges the employee’s competence as a manager has to trust the employees to be capable to achieve the results by means of the employee’s own handling.
mean that recognition, status, power and prestige are not that important to older employees. Promotion and monetary incentives both are addressing esteem motivations, as they provide recognition, increase status and are also seen as prestige.
As a summary of this section a conceptual model of the expected relationships is depicted below. It shows that the older the employee or manager, the greater the intrinsic motivation and therefore the less preference for individual monetary rewards and promotion and the more results accountability will be preferred. Growth motivations are expected to decline and controls that emphasize growth, such as promotion and training for career and development are for this reason expected to be less preferred by older employees but more preferred, and as a consequence being used, by young managers. Generativity motivations are not expected to differ with age and therefore also mentoring is not expected to be more preferred by managers or employees.
Based on this conceptual model it is thus important to ask the following questions with regard to age-related differences: ..
1. To what extent do young managers have a different motivation from older employees as a result of age?
2. To what extent do age-related differences in motivation result in different management control preferences?
These sub-questions are based on the literature and developed expectations in this paragraph and will include references to the conceptual model presented above. Answers to these questions will be given through an in-depth analysis of research findings in chapter 4.
2.4 The influence of generations on types of management control
Generational cohort theory states that differences between generations exist, because generations go through the same socio-cultural, political and economic events (Kupperschmidt, 2000). According to Macky, Gardner and Forsyth (2008, p. 859) the following will happen: “As generations mature through such events, then so each generation is purported to develop characteristics that differentiate it from those that precede and follow it: characteristics that will be reflected in personality traits, work values, attitudes and motivations to work in ways presumed to be important to managers (Kupperschmidt, 2000; Smola & Sutton, 2002)”. According to Petroulas, Brown and Sundin (2010, p.221) several research findings indicate that there are “systematic differences in generational characteristics that can result in generational workplace preferences for management control systems”. The following section focuses on generational differences and its relation with management control types by addressing the following question: Do young managers use different types of controls than older employees prefer as a result of generational related differences?
Figure 1.Relationship age and type of control
Age Degree of intrinsic motivation Degree of growth motivation Degree of generativity motivation Results accountability Mentoring Promotion Individual monetary rewards
Unfortunately, there are limited research findings that deal with generational differences in motivational drivers in the workplace and those that deal with it focus on broad differences rather than specifically addressing differences in the workplace (Wong et al., 2008). Many of the research on generational differences at work have focused on work values, which refers to the beliefs that employees have about the “right” and “wrong” work practices and work attitudes that people should have (Wong et al., 2008). Work motivation is related to work values, but is not the same as it differs in the sense that motivation drives actual performance (Wong et al., 2008). As literature about generational differences in motivation is limited, also other work related findings will be taken into account that are expected to result in differences in management control types. Based on findings that report differences in work values (e.g. Cogin, 2012; Smola & Sutton, 2002; Parry & Urwin, 2011) and findings that report generational differences in work motivation (e.g. Montana & Petit, 2008; Barford & Hester, 2011; Wong et al., 2008) we can expect that there are differences in control type preference. While looking at generational differences in motivations and preferences with regard to the workplace it becomes clear that Generation X and Y are more informal compared to Babyboomers. Several findings provide evidence that the younger generations have a preference for informality. For example Tolbize (2008) and Petroulas et al. (2012) show that Generation X prefers informality in the workplace and are rather sceptical about hierarchical structure. This is mainly ascribed by the authors to the fact that this generation had to grow up with the serious Babyboomers and experienced economic downturns. Babyboomers, on the other hand, place a high importance on hierarchical structures, as they have been taught that respect has to be earned (Petroulas et al., 2012). As a consequence, Generation X experiences no problem to interact with superiors, whereas Babyboomers have difficulties with this (Tolbize, 2008). This might be the result of the time in which Babyboomers grew up, in those days it was inappropriate to ask questions to a superior as this signals distrust and lack of respect. Other findings that are related to the formality report that Babyboomers may be insulted by feedback on an continuous basis. Whereas Generation X and Y do value immediate and continuous feedback (Tolbize, 2008).
In the management control literature a distinction is often made between formal and informal control types. According to Langfield-Smith (1997, p.208) “formal controls are the observable, objective components of the control system. These include output or results controls which are of a feedback nature, and often financially oriented. They include controls that aim to ensure that specific outcomes will be achieved and involve monitoring, measuring and taking corrective actions”. On the other side, there are informal controls, these are “not consciously designed and include the unwritten policies of an organization and often derive from, or are an artefact of the organizational culture” (Langfield-Smith, 1997, p.208). It becomes directly clear from this definition that results and action controls would classify as formal controls. However, the personnel and cultural control types proposed by Merchant and Van der Stede cannot be classified according to this definition, as these types of control are not completely objective neither directly observable rather they are a mixture of these being formal and informal as well as direct and indirectly observable at the same time. Therefore some authors have a less strict definition and use the terms hard and soft control. Hard control tools are the more formal controls that are directly observable, whereas soft control tools are not always directly observable, they are more subtle controls and are more make an appeal to personal functioning of employees (de Heus & Stremmelaar, 2000). Although cultural and personnel controls do not completely follow the definition to be called informal controls, these controls are typically perceived as more informal.
tend to require a lot of authority to be enforced. Personnel controls is a type of control that relies on personnel involved to do what is best for the organization and provides assistance when needed (Merchant, 1982). This type of control is based on self-monitoring, which is the principle that people have an inner force that ensures that they want to do a good job and to be committed (Merchant & Van der Stede, 2012). Therefore personnel controls do not rely on young managers authority obtained through the hierarchy. Cultural controls use a similar mechanism and use peer monitoring instead of self monitoring. Cultural controls are not easy to observe but are important as these controls “shape organizational behavioral norms and encourage employees to monitor and influence each other’s behaviors” (Merchant & Van der Stede, 2012, p.81). Due to peer monitoring a young manager will have to do less monitoring, as employees will monitor their peers and due to peer pressure employees are not likely to behave in undesired ways. It is expected that managers situated in Generation X and Y will use more informal controls as a consequence of their generation.
On the other hand, it could be expected that old employees are indifferent toward the use of informal, soft controls. Informal, soft controls are not always directly observable and therefore older employees will not gain the feeling to be controlled by these controls. As formal, hard controls are directly observable this means that these controls can easily lead to resistance by employees as they gain the feeling to be controlled. Although findings report that Babyboomers place importance on hierarchical structures and might be insulted by continuous feedback, this does not necessarily mean that formal, hard controls are preferred. For example, it is argued by Eisner (2005 in Cogin, 2012) that Babyboomers dislike a management style that is considered as authoritarian. This is not to say that Babyboomers do not respect authority as several sources state that Babyboomers have respect for authority (Tolbize, 2008; Eisner, 2005 in Cogin, 2012). Thus it is highly unlikely that these employees will resist these formal/hard controls, as they are likely to believe that managers will do what is needed and want to show respect for their authority.
As a summary of the questions and expectations the following model (in figure 2) depicts the relationships. Older generations are expected to be less collectivistic, whereas younger generations are expected to be more collectivistic. It is therefore expected that young managers would use more group rewards than older employees prefer. Furthermore it is expected that younger generations are less formal, whereas older generations are more formal. The more formal, the higher the preference for behavioral constraints, action reviews, results accountability, individual monetary rewards and promotion. Whereas the managers of younger generations that are less formal are expected to prefer group rewards and training.
Figure 2.Relationship generation and type of control
Based on the conceptual model with expected generational-related differences there are two sub-questions formulated:
3) To what extent do young managers differ from older employees as a result of generations? 4) To that extent do generational-related differences between young manages and older employees result in different management control preferences?
Although literature about generations is limited, as was argued before, it is expected that an attempt to answer these questions can result in more insight in the reversed organizational order setting. These questions and the expectations of the conceptual model will be discussed in chapter 4.
2.5 The influence of experience on management control types
Experience is to a great extent an issue that causes friction in the reversed organizational order. Often young managers are not taken serious by older employees, as they are perceived to lack experience in the job. It is expected that the lack of experience would has an influence on action controls. The reason is that action controls specify rules, standard operating, procedures and policy manuals, and thereby provide guidance on how to operate in uncertain situations.
However, action controls are considered as controlling. In management control literature there is described that controls that restrict employees behaviour, especially behavioural constraints and action reviews, can be seen as coercive controls as described by Wouters and Wilderom (2008). Coercive controls aim at compliance of employee behaviour rather than facilitating employees in their daily activities. Wouters and Wilderom (2008) pledges therefore for the use of enabling controls. The danger of using controls that are coercive of nature is according to Sundaramurthy and Lewis (2003, p. 406) that these controls “shift the locus of control from agent to principal, reducing the agent’s desire to comply and his motivation. This occurs more in situations of low trust”. It is expected that the use of more coercive controls can provide young managers a safe feeling, as it enables them to intensively
monitor behavior of employees. Furthermore this allows them to give more structure to their job, as these coercive controls are rather bureaucratic in the sense that these controls can be specified in procedures and rules. It can thus be said that coercive controls reduce the uncertainty caused by limited experience of younger managers. However, employees will get the feeling of being controlled and therefore would not prefer this type of control. It is expected that young managers will use action controls for older employees. The emphasize of action controls could then create a source of frustration, as older employees have more experience and therefore do not need specific procedures to perform their job well.
To summarize the expectations, see figure 3, it is expected that due to limited work experience young managers will restrict behavior more. For this reason they also use more behavioral constraints and action reviews. Older employees have a lot of work experience and therefore do not prefer to be restricted by these types of control.
Figure 3. Relationship work experience and type of control
This conceptual framework has led to the formulation of the following sub-research question: 5) To what extent do young managers differ from older employees in terms of management control preferences as a result of work experience?
In chapter 4 attention will be paid to this last sub-research question, which will then finally have to lead to an answer to the main research question in chapter 5.
3. Research methodology
In the following section the entire research and the process behind will be described. In the first part of this section briefly the type of research and method will be discussed, the second part will provide more information about the data collection itself and finally the case selection and data analysis will be discussed.
3.1 Type of research and method
This research can be typified as qualitative research, as data will be collected by means of a single case study consisting of interviews. According to Pratt (2009, p. 856) “Qualitative research is great for addressing “how” questions rather than “how many”; for understanding the world from the perspective of those studied (i.e. informants)…” This research looks how young managers use management control types to motivate employees by looking at the preferences of the manager and its employees. Only one research study of Petroulas et al. (2011) comes close to this goal by looking at the preferences of different generations. Other researchers have been primarily concerned with generational and age-related differences in leadership and work values. Therefore this study could be one of the first in this particular topic and for this reason it is classified as “exploratory”.
According to Collis & Hussey (2009, p. 5) “exploratory research is conducted into a research problem or issue when there are very few or no earlier studies to which we can refer for information about the issue or problem. The aim of this type of study is to look for patterns, ideas or hypotheses, rather than testing or confirming a hypothesis.” Most exploratory research is of a qualitative nature, as this allows the researcher to investigate a phenomenon or context into great detail. The first step in
exploratory research is to delve into secondary literature, as this leads to a great background on what has been done so far with the research subject and will lead to the generation of ideas (Blumberg, Cooper & Schindler, 2008)
Several issues have to be taken into account when writing qualitative research. According to Pratt (2009) there are two major frequent mistakes in qualitative research: (1) a lack of balance between theory and data and (2) making qualitative research appear quantitative. In qualitative research it is important to link theories and data, not only by means of quoting interviewees thereby showing the data but also by interpreting this and making a cohesive story with convincing arguments out of it. In addition there are a lot of articles in qualitative research that look quantitative, as they are using quantitative terms and techniques for qualitative data. One of the major limitations of qualitative research is that the collected data should be interpreted in order to get to research findings, which can lead to a selective bias as the researcher can look only at pieces of data that fit to his theory or expectations. However, one should note that “underlying any piece of research there is no such thing as a totally objective or value free research” (Hopper & Powell, 1985, p. 429). In order to prevent this selective bias and limit the subjectivity of the research semi-structured interviews will be conducted. By means of using several open-ended questions and leaving room for new issues brought up by respondent the selective bias will be reduced, as the researcher has to be open for issues that have not been previously be thought of.
3.2 Data collection
Qualitative research often starts with a literature overview in order to provide an understanding of the subject being studied. This literature can then help to structure the topics that need to be addressed during the interviews. According to Blumberg, Cooper & Schindler (2008) scientific literature review is essential to every research. It serves not only the purpose to establish the context of the problem, but also provides an understanding to the structure of the problem and relates different theories and ideas to the problem, shows the research designs and methods chose, rationalizes the problem’s significance and many more (Blumberg et al., 2008, p.106). Therefore literature will have to be thoroughly examined in order to provide a theoretical overview. Secondary research is only helpful if academic sources will be used that are reliable and valid. The reliability and validity of this research is ensured by using the databases Business Source Premier and Econlit and including mainly those articles that are “scholarly (peer reviewed)”. These databases are well known in business research and offer published articles in well known business journals. Peer reviewed articles ensures that only literature that is reviewed by other authors is included, which makes these articles more reliable and presumably of better quality.
no exact guidelines for the number of interviews that need to be performed in order to establish a valid research study. According to Pratt (2009, p.856) “there is no magic number of interviews or observations that should be conducted in a qualitative research project. What is enough depends on what question a researcher seeks to answer”. As interviews play a major role in this research careful attention will be given to the selection and number of interviewees in order to get to a purposeful set of interviewees.
3.3 Data analysis
One of the major struggles in qualitative research is the data analysis. Miles & Huberman (1984) portrayed these struggles as follows: “We have few agreed-on canons for qualitative data analysis, in the sense of shared ground rules for drawing conclusions and verifying their sturdiness”. Although there are no standardized rules for analyzing qualitative data this does not imply that there is no process that has to be followed. Data analysis in qualitative research requires a great deal of attention of the researcher. The data in qualitative research is most often detailed, complex and comes in long narrative stories. The researcher needs to interpret all this data in order to be capable to arrive at a clear format that tells the story. In order to be capable to analyse qualitative data it is important to get to know the data by reading it several times in order to be sure that all the important issues are well understood (Taylor-Powell & Renner, 2003). This means that a lot of time will be spend on each interview after it has taken place. When the data is clear and well understood by the researcher the process of categorization will be undertaken. Some researchers call this process data coding, however this is a term that applies to quantitative research, as it will not involve numerical codes (Taylor-Powell & Renner, 2003). Categorization means identifying themes or patterns and can be done by preset categories and emergent categories (Taylor-Powell & Renner, 2003). In this research both categories will be used, the preset categories are those that originate from the literature review on generational and age differences as well as the literature on management control. This means that deductive as well as inductive approaches are being used. These preset categories can be found in table 2. Emergent categories can arise during semi-structured interviews as the respondents have space to address other issues as well that are important according to them. This process of categorization of data can take a while, as it requires intensive reading and rereading of the transcripts of the interviews that have been conducted. Categorization is completed when there are no new themes or subcategories identified (Taylor-Powell & Renner, 2003). It is very important not to limit the categories and subcategories, as these allow the interpretation of the research. During the interpretation meaning and significance will be attached to the data and the categories will have to be linked in order to arrive at a good interpretation of the data.
Table 2. Preset categories based on the literature review
Main category Subcategories
Age related differences Intrinsic motivation; extrinsic motivation; growth motivation; generativity motivation
Generational differences Formality; collectivism
3.4 Case selection and background
This research will be a case study consisting of one single case. Several companies have been approached to participate in this research based on 2 main selection criteria: (1) the presence of young managers in a hierarchical management function and (2) age diversity present at the company. In total 35 companies have been approached by e-mail, phone or visit. Some of the approached companies were not appropriate for the purpose of this research as they did not fulfil the selection criteria, but most of the companies were in the middle of a reorganization or did not have sufficient time to participate.
The company that has been selected is XYZ, which is part of XYZ Group. XYZ is a leading supplier of telecommunications and ICT service (Annual report XYZ, 2012). XYZ Consulting serves different sectors of the corporate market, namely organizations in education, health services, public sector, finance and industries. XYZ Consulting offers ICT solutions to its clients, as ICT is central in today’s business processes and required in order to manage organizations. A consulting company typically is characterized by the fact that employees are not all the time present at the office, but often have to visit clients or even work at the client. This is important to realize as the contact between the manager and the employee is not on a daily basis. This is even strengthened at XYZ Consulting by applying the concept “Het Nieuwe Werken” (=HNW), which means that their employees are allowed to work wherever they are at times that are convenient for them as long as they get the job done. HNW has implications for the managers. HNW allows employees more freedom in the ways in which they are doing their job, so employees will carry a higher responsibility. This may require more a results oriented control on the side of the manager, as he is not in the position to see the way in which an employee approaches a project. It is therefore important that the manager makes his goals clear. This will probably also become clear during the interviews in the way in which managers use the management control system.
However, another character of consulting and ICT is that it attracts relatively highly educated professionals. This is because the service XYZ Consulting is providing to its clients requires a lot of knowledge and skills about ICT. ICT is changing all the time, due to new developments. It is important to constantly update the employees by training them about the latest developments. Highly educated employees could possibly have an influence on the management control system as it can be expected that managers have to prescribe less actions and have the ability to give them more freedom as these professionals have a lot of specific skills and knowledge to approach projects and therefore know how to work on a task. We can thus expect that this will be reflected in the use of the management control system.
XYZ Consulting is selected as this part of the company has 3 young managers of Generation Y available that are willing to cooperate in this research, furthermore one medium aged manager of Generation X was willing to participate. All the managers started in the same period at the company and were working in this role for 2 to 2,5 years. In addition XYZ Consulting offered the opportunity to perform interviews with older employees in order to see whether these employees agree with the control types used by their managers. In order to ensure that employees agree on the same ideas and to be capable to look for patterns between them, in total 3 to 4 employees of each manager will be asked to participate in the research. This enables the researcher not only to see differences between the employees themselves, but also to see whether the responses of the manager’s use of control types are corresponding to the experience of the employees. This means that in order to gain the necessary data in total 16 to 20 interviews will have to be performed. Due to time constraints the case organization agreed that each interview could only take up to a maximum of one hour, as the employees and managers working at this company had to visit clients or work at the client on a regular basis. The employees will be arbitrarily chosen by the back office of XYZ Consulting based on their willingness to participate. For a good understanding about the research context and issues also 2 conversations were planned with a competence managers before the interviews take place.
One of the important issues to address is my position in the field, thereby is meant what my relationship is with the case company or according to Pratt “the relationship between the researcher and the researched” (2009, p. 859). This position in the field can influence the reliability of the study. The position in the field is that of an outsider. The researcher did not know anything about the members of the case company beforehand and has not worked in the company before. Furthermore the researcher has not been part of the daily activities of the company, she has only been there in order to perform interviews. The major advantage of this is that the researcher stays neutral, as she is not involved in the case company and with its employees and managers. On the other side, this allows the researcher not to do any observations to triangulate my data.
4. Research findings and discussion
The main findings retrieved from the semi-structured interviews will be reported in this section. The data collection took place in November 2013. In total 14 employees and 4 competence managers were interviewed of XYZ Consulting BUNO (Business Unit Noord Oost), see table 3. It needs to be said that the characteristics of young managers and older employees are less strictly being applied when it comes to age as was stated in chapter 2 in order to keep it researchable. For this reason there are 3 respondents included in the research that did not meet the characteristics: one manager was older than 35 and two employees were below 45. However, this is not considered to have an influence on the outcomes as all employees were older than their manager thus the reversed organizational order setting was still being investigated. A more detailed overview of the interviewees can be found in Appendix B. In total 4 interviews with employees have been conducted by phone, as these interviewees were not capable to meet in person (i.e. travel distance, commitment to client, personal reasons). In the upcoming sections the main findings will be discussed. In appendix C more relevant quotes can be found that strengthen the research findings that are presented here.
Position Generation Y Generation X Generation Babyboom Total Manager 3 1 0 4 Employee 0 7 7 14 Total 3 8 7 18
