UNDERSTANDING THE WAYS IN WHICH SELF-MANAGEMENT CONTROL SYSTEMS OPERATE:

UNDERSTANDING THE WAYS IN WHICH SELF-MANAGEMENT

CONTROL SYSTEMS OPERATE:

The influence of leadership on the effectiveness of a self-management control

system

Master Thesis BA Organizational & Management Control

University of Groningen, Faculty of economics and business

Name:

Ilona Kelder

Address:

Beerzerweg 36, 7736 PJ, Beerze

E-mail:

Ilonakelder@hotmail.com

Student#:

1913743

Supervisor faculty of economics and business:

Dr. M.P van der Steen

Second supervisor faculty of economics and business: Prof. dr. ir. P.M.G van

Veen-Dirks

Abstract

Although we know something about the relation between self-management and leadership, little is known about the relation between self-management control systems and leadership. Therefore, using a case study, this paper explores how leadership influences the effectiveness of a self-management control system. In the case company, a self-self-management control system was

implemented. Interestingly, this system was also used in this company for generating management information. This provided interesting results.

Preface Dear Reader,

With this study I will end my studies in business administration with a specialization in Organization and management control at the University of Groningen.

The topic of this thesis is self-management control systems. The focus is on how leadership influences the effectiveness of a self-management control system.

I have written this master thesis at the department of control of a financial organization. The opportunity to work within the organization has been a valuable experience and provided me with, besides an interesting topic to study, a pleasant and stimulating environment to write this thesis. I would hereby like to thank the organization for giving me the opportunity to combine my graduation with an internship.

Moreover, I wish to pay special thanks to my supervisor at the organization, for providing feedback during the progress of my research but also for challenging me during the entire process of writing the thesis and for the time he spent helping with my thesis.

Furthermore, I would like to thank my first supervisor Dr. Martijn van der Steen for our cooperation during the writing of the thesis and the useful feedback he provided me with. I would also like to thank my second supervisor prof. dr. ir. P.M.G van Veen-Dirks for co-reading my thesis.

With finishing this thesis my years as a student, which I look back on with great pleasure, have come to an end. Writing this thesis was a valuable experience. Nevertheless, I am glad it is finished. Now I am looking forward to make a new step in life and being able to benefit from all the lessons I have learned during my education in Groningen.

Hopefully you will enjoy reading this thesis, Ilona Kelder,

1 1. INTRODUCTION

Many papers have been published that contribute to our understanding of management control systems. For example, Chenhall (2003) studied the management control systems design within its organizational context; Malmi & Brown (2008) studied management control systems as a package. But also strategy was linked to management control systems (Langfield-Smith, 1997). According to Chenhall (2003) management accounting is a collection of practices such as budgeting or product costing. A management accounting system is the systematic use of management

accounting to achieve some goal. In their view, a management control system is a broader term that encompasses management accounting systems, but also includes other control such as personal and clan control, among others. This paper investigates a management control system that has a link with personal and clan control: a self-management control system. According to Frayne & Geringer (2000) self-management means that individuals are responsible for determining approaches to task

execution as well as for monitoring and managing their own behaviors. In self-managing situations, many of the functions that are traditionally reserved for managers become the responsibility of subordinates, including monitoring performance, taking corrective action, and seeking necessary guidance or resources (Manz & Sims, 1984, 1989). Different authors pointed out that the practice of management can be beneficial for a firm. Uhl-bien and Graen (1998) noted that research in self-management has increased in recent years because of the practical usefulness of self-self-management models for sustaining organizational competitiveness. Besides, according to Walton (1985) and Luthans & Davis (1979) self-management models are critical for sustaining organizational competitiveness with their emphasis on employee commitment rather than on control-oriented approaches to management. This commitment comes from self-control, and not from external control over behavior. Thereby, Griffin & Baldwin (1994) stated that creating a self-managed work force represent a major change that requires the cooperation of all members. Therefore, they proposed an information system that supports and facilitate self-managed behavior. They called this system a self-management information system.

Some authors studied self-management and leadership. For instance, the results of Manz & Sims (1980) suggested that there was a paradox in this relationship. Their conclusion was that it is a useful and legitimate role of the supervisor to develop and encourage self-management capabilities. However, they also concluded that a subordinate self-management can reduce the need for close supervision, because it can be a ‘’substitute for leadership’’. Thus, the paradox is that you would expect that a manager would withdraw themselves when a subordinate managed themselves more, but it emerged from the research of Manz & Sims (1980) that the leader also was needed for developing and encouraging self-management capabilities.

Surprisingly, there was not specific research about the relation between self-management control systems and leadership. Therefore, the goal of this study is to understand how this

relationship works. The research question is: How does leadership influence the effectiveness of self-management control systems?

2 2. THEORY

The key concepts in this paper are management accounting change, self-management control systems, self-managed behavior and leadership. The concepts self-management control systems and leadership are included in the paper’s research question. Another important concept is management accounting change, since it can give an understanding of how change works. Self-managed behavior is a key concept, because that is the ultimate goal of a self-management control system. If this goal is achieved the self-management control system is effective. The following section defines these key concepts. Furthermore, it proposes how these concepts are related.

Self-management

Self-management, more often called self-control, means that individuals are responsible for determining approaches to task execution as well as for monitoring and managing their own behaviors (Frayne & Geringer, 2000). In self-managing situations, many of the functions that are traditionally reserved for managers become the responsibility of subordinates, including monitoring performance, taking corrective action, and seeking necessary guidance or resources (Manz & Sims, 1984, 1989). Therefore, self-management is also called a substitute for leadership in the literature (Kerr and Jermier, 1978; Manz and Sims, 1980; Manz, 1986). According to Manz and Sims (1984) basis managing skills are problem assessment, goal setting, rehearsal, self-observation, evaluation, and self-reinforcement and/or punishment. Studies of self-managing activities have addressed self-managing at the individual level and team level. As indicated in the definition above, self-management at the individual level consists of monitoring and managing one’s own work. At the team-level, members work collaboratively to determine problem-solving

approaches. This paper focus on self-managing activities at the individual level. It is known that individuals might engage in dysfunctional self-managed behavior. For example, a person who sets unrealistically high goals may become frustrated rather than motivated to achieve them (Thoresen & Mahoney, 1974, p.45; Karoly, 1993). For that reason, it is important to know how to develop

functional self-managed behavior.

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Clan control according to Ouchi (1979) is related to self-management as a control

mechanism. Since, organizations that used clan control required trust among their employees and given minimal direction and standards, employees are assumed to perform well. Whereas market control could use the explicit price mechanism, and the bureaucratic control could use explicit rules, clan control can only rely upon a deep level of common agreement between members on what constitutes proper behavior, and it requires a high level of commitment on the part of each individual to those socially prescribed behaviors. Clearly, a clan control is more demanding than either a market or a bureaucracy in terms of social agreements, which are prerequisite to its successful operation, and it requires a high level of commitment on the part of each individual to those socially prescribed behaviors. However, it is not known from Ouchi (1979) how clan control can be successfully introduced. Therefore, instituting clan control is a challenge.

Self-management control systems

Griffin, Baldwin & Sumichrast (1994) recognized that creating a self-managed work force represent a major change that requires the cooperation of all members. Therefore, they proposed a conceptual model of an information system that supports and facilitate self-managed behavior. The information system is called a self-management information system (SMIS), and is proposed to support the information needs of the self-managed in service organizations. Besides, it aligns the goals of the employees with the organization’s goals and so support self-management. This idea of goal alignment is also practiced in the system of management by objectives (MBO). The essence of MBO is participative goal setting. It is a process whereby the superior and subordinate jointly identify its common goals, define each individual’s major areas of responsibility in terms of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members. An purpose of MBO is to facilitate the derivation of specific from general objectives, seeing to it that objectives at all levels in the organization are meaningfully located structurally and linked to each other (Tos, Rizzo, Caroll, 1970).

The proposed SMIS of Griffin et al. (1994) would meet the information needs of the self-managed, and still provide management with a satisfactory level of employee and service quality control. It would also facilitate the introduction of self-management practices into the organization. Griffin et al. (1994) made a distinction between developmental functions and business activities. The processes that promote and regulate self-managing behavior are called "developmental functions" and are central to self-management. Based on work by Manz and Sims (1980), developmental functions are defined as scanning and analyzing the environment, setting and contracting goals, monitoring and evaluating work, rewarding or punishing performance, learning new skills, and system maintenance. The actual business-related work accomplished by the self-management is called ‘’business activity’’. Business activities are actions in which the group (or individual) engaged to accomplish objectives, as defined by the goals contracted among and between members and

sanctioned by the organization. The proposed SMIS of Griffin et. (1994) integrated relevant and pertinent data from employees existing information systems and interactively presented them to the self-managed, in a user-friendly format. On the basis of this information employees can executed their developmental functions and this encourage self-managed behavior. Griffin et al. (1994) concluded that SMIS programs must be developed to provide feedback and other informational support.

Based on the article of Griffin et al. (1994) it is expected that the informal support and the feedback provided by the self-management control system encourage self-management. This gives us the following proposition:

4 Management accounting change

Organizational change is a central issue within organization theory, management and, increasingly accounting. Researchers have focused on different aspects of management accounting change. First of all, the literature provides several classifications of management accounting change (Sulaiman and Mitchell, 2005; Burns and Scapens, 2000; Quattrone and Hopper, 2001). Sulaiman and Mitchell (2005, p. 423 – 426) defined five types of management accounting change. 1) The

introduction of a new techniques that are extensions of the existing management accounting system; 2) The replacement of the (the whole or part of) the system; 3) The modification of the information output; 4) the modification of the technical operation of the system and 5) The removal of

management accounting techniques without replacement. Drawing on old institutional economics (especially Tool, 1993), Burns and Scapens (2000) propose three dichotomies: formal versus informal change, that is, conscious design as against tacit change; revolutionary versus evolutionary change, or in other words, fundamental disruption as opposed to gradual change, regressive versus

progressive change, that is, ceremonial as opposed to instrumental change. Furthermore, academics have done research to factors that could explain successful implementation of a new management accounting system. In the early 1990’s the challenges of implementing a new control system were believed to be mainly technical. For instance, implementation of ABC was seen as a rational process of educating managers about ABC and developing an ABC model (Anderson, 1995). This traditional mainstream view of management accounting change regarded management accounting as the provision of information that is designed to enable rational decision makers to make optimal decisions (see Scapens and Arnold, 1986). Such an approach which is embodied in, for example, management accounting research which adopts agency theory (e.g. see Baiman, 1990) or transactions cost economies (e.g. Walker, 1998) focused on equilibrium and optimal solutions. However, according to Roberts & Greenwood (1997) decision-makers are not only interested in efficiency. They argued that a man attempted to be rational, under the influence of institutional (external) and cognitive restrictions.

Although such approaches may be able to suggest new techniques, it does not assist our understanding of how such techniques come to be used in organizations, or the nature of resistance to their use (Burns & Scapens, 2000). Therefore, Burns & Scapens (2000) proposed an institutional framework, based on old institutional economies, for conceptualizing management accounting change. Their study drew on Giddens’ (1984) notion of the duality of structure, which emphasized that social structures served both as a medium and as an outcome of human action (Ribeiro and Scapens, 2006). In this vein, Burns and Scapens (2000) suggested that management accounting rules and routines functions as modalities between day-to-day actions and social structure. The

conceptualization of Burns and Scapens (2000) are used in this paper for explaining management accounting change.

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time, the rules and routines can be modified relatively quickly, as the actors repeatedly undertake their actions. But institutions, the taken-for-granted ways of thinking, tend to be much slower to change, as they are somewhat abstracted from day-to-day activity (arrow d). More recently, Kasurinen (2001) and Johansson & Baldvinsdottir (2003) have used this theory, in regards to BSC implementation, and in studying accounting for trust, respectively.

Figure 1. The process of institutionalization.

In context of management accounting, rules comprise the formal management accounting systems, as they are set out in the procedure manuals; whereas routines are the accounting practices actually in use. The institutional theory claims that accounting practices and routines are

institutionalized when they become widely accepted in the organization, such that they become the unquestionable form of management control. As such, they are more than a set of routine

procedures required by management and implemented by accountants; they are an inherent feature of the management control process, and represent the expected form of behavior and define the relations between the various groups within the organization. Institutions and routines create stability and social order through the provision of information of how other may be expected to behave (Scapens, 1994, pp. 306,313). As such, they will influence organizational activity and are likely to become quite resistant to challenge. Moreover, management accounting change is likely to be more effective when it has gradually rather than radically become institutionalized (Scapens, 1994, Burns, Ezzamel & Scapens, 1999, Burns and Scapens, 2000).

However, it is possible that the new accounting system contradict with the existing rules, routines and institutions in an organization. This can result in resistance, because the new accounting system challenges the existing routines and institutions. In such cases, it is much more difficult to implement a new accounting system than when a new accounting system does not challenge existing routines and institutions, i.e. where the change can be accommodated within existing ways of

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existing routines and institutions. Such an approach as Burns & Scapens (2000) enabled researchers to explain the process of management accounting change in specific organizations, after they have taken place. However, prediction of the outcome of planned change is likely to be much more difficult. However, this does not mean that the approach has little value in managing change. An awareness of the issues raised by an institutional approach, and in particular a recognition of the potential conflicts which may arise, will enable those involved in processes of change to be sensitive to the problems and difficulties which can arise (Burns & Scapens, 2000, p. 17).

This paper has analyzed a case study in which management of the organization intentionally changes control by introducing new techniques that are an extension of the management accounting systems in order to encourage self-managed behavior of the employees (Sulaiman and Mitchell’s first type of management accounting change). In Burns & Scapens (2000) sense, we are studying

intentional change; however, we will also explore the informal process and unintended consequences of the change. The institutional framework of Burns and Scapens (2000) is used to get a better understanding of the management accounting change in the case.

Based on the research of Burns & Scapens (2000), it is expected that in the case of a self-management control system there will be more resistance if the self-managed behavior challenged existing institutions/routines. However, it is also expected the other way around, so if the self-managed behavior does not challenge existing routines/institutions, there will be more support for the self-management control system. This leads to the following proposition:

Proposition 2: There is more resistance to the self-management control system if the self-managed behavior challenges existing routines/institutions, and this affects the effectiveness of a self-management control system.

How leadership influences the effectiveness of a self-management control system

Proposition 1 en 2 has positioned how a self-management can become effective. These propositions provided a basis for answering the research question: how does leadership influences the effectiveness of a self-management control system. According to Frayne & Geringer (2000), individuals may not want to be self-managed. Persons must possess a strong commitment to change. Without a firm belief on the individual’s part that he or she wants to set and commit to the goals of the self-management, efforts in that directions are likely to be fruitless (Stewart, Carson & Cardy, 1996). Finally, individual must self-record and assess data in a systematic fashion. If the individual is not motivated to keep track of and monitor his or her own behavior, the self-management is likely to be short-lived at best (Frayne & Geringer, 2000). Thus, it is important that employees are motivated to show self-managed behavior, and are commitment to the change to show self-management. However, the question remains how employees can be motivated to show self-managed behavior and how they committed to this behavior with the support of a system.

The following concepts; leadership style, leaders and employee as role-models and reward systems, are all considered to have an influence on encouraging self-managed behavior. In this paper, these three concepts are combined in the concept leadership. The reason for this decision is that all of the three concepts are in one way or another are linked to the leader.

Leadership style

Bass (1990, P. 19-20) defines leadership as ‘an interaction between two or more members of a group. That often involves a structuring or restructuring of the situation and the perceptions and expectations of the members. (…) Leadership occurs when one group member modifies the

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transformational theories about leadership. Since these theories are present, the distinction between transactional and transformational leadership style is often used by researchers to classify the behaviors of leaders. According to Bass (1990), different leadership styles appeal to different work-related needs of employees. Transactional leadership puts the focus on the physical needs of the employee, like the need for income, security and stability (Hopwood, 1974). Whereas

transformational leadership appeals to socio-emotional needs of an employee, like appreciation, respect, autonomy and status (Bass, 1990). Transformational leadership is described by Bass (1985) as inspiring subordinates, satisfy the emotional needs, stimulate intellectually and focus on the importance of the group and the organization. Transactional leadership is described as risk avoidant leadership within the boundaries of an organizational culture. Since this form is task-oriented, it can be effective in clarifying expectations and goals, focusing on the improvement of results in the short term. If the results are accomplished, the employees are rewarded psychological or materially by the leader. If the results are not accomplished, punishment will follow.

A recent case study of Jansen (2011) found that the leadership style is related to the success and maintenance of accounting change. They reported that managers with the desired leadership style, of the new accounting routines, are more successful in change programs than managers that have to change their leadership style. In adjusting the leadership style, it is recommended for the manager to receive coaching in managing his new leadership style (Jansen, 2011). For example, in organizations with a cybernetic control system, managers with a transactional leadership style can be effective. While transformational leaders are more effective when they rely more on implicit

controls. This is also concluded by Hopwood (1974), who stated that the way in which manager’s use accounting information is related to their leadership style. According to Pawar and Eastman (1997, p.82) change is the result of different factors, but transformational leadership is one of the most important factors that affects organizational change. In this leadership style, employees feel part of the company itself and take responsibility for them. The leader is closely engaged with its followers without using power. The leader does this by motivating employees, see the higher purpose, set challenging expectations, create visions and be open for new experiences and other’s points of view. Besides, a transformational leadership style will be more likely to advance employee commitment (Chen, 2004). Finally, Bass (1990, p.648) stated that in particular a transformational leader could use many intellectually stimulating ways to move followers out of their conceptual ruts.

In general, a leadership style is important for a successful accounting change in an organization. A transformational leadership style is one of the most important factors that affect successful

organizational change, because this style of leadership can motivate and create commitment among employees. In addition, transformational leaders are more effective when they rely on implicit controls. Finally, this kind of leadership is capable to move followers out of their conceptual ruts. Therefore, it is argued that, in the search of changing the behavior of employees to self-managed behavior with the assistance of a self-management control system, transformational leadership in managers is important. So proposition 2 is:

Proposition 3.

A transformational leadership style of a manager encourages self-managed behavior in employees. Leaders and employees as role-models

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guiding coalition. These coalition members embody the values of the vision for change and lead by example. Above all, whether intentional or not, the leader’s own self-managed behavior inevitably serves as a model to subordinates. Consequently, overdependence by the leader on the behaviors of superiors would provide a poor self-management model (Bandura, 1969).

Therefore, it is argued that for encouraging self-management in employees leaders need to act as role-model for subordinates by showing managed behavior through using the self-management control system. Moreover, by encouraging and reinforcing self-self-management in a subordinate, a leader can achieve that a self-management model is available for other subordinates. This leads us to the following proposition:

Proposition 4. Leaders can encourage self-management by acting as a role-model and by encouraging and reinforcing self-managed behavior in a subordinate.

Reward system

According to Kerr & Slocum (1987) reward systems are concerned with two major issues: performance and rewards. Performance includes: defining and evaluating performance and providing employees with feedback. Rewards include: bonus, salary increases, promotions, stock awards, and perquisites. Kerr & Slocum (1987) also identified two distinct reward systems: the hierarchy-based system and the performance-based system. In the hierarchy-based system managers’ jobs were broadly and subtly defined. Managers were accountable for how they conducted their interpersonal relationships, as well as the consequences of their actions. In this system, formal performance appraisals took place once a year. Informal feedback, however, was quite frequent. A high level of interaction existed between superiors and subordinates. Feedback occurred on the job, and was oriented more toward employee development than toward evaluation. In contrast, performance-based reward system objectively defined and measured performance, and explicitly linked rewards to performance, which was almost completely defined as quantitatively.

Kerr & Slocum (1987) concluded that the performance-based reward system can be

characterized as a market culture and the hierarchy-based reward system can be characterized as a clan culture in line with Ouchi (1979). In addition, they stated that rewards systems express and reinforce the values and norms that comprise corporate culture A careful consideration of reward system design can help decision makers successfully modify the organization’s culture. Reward systems are, in effect, powerful mechanisms that can be used by managers to communicate desired attitudes and behaviors to employees.

In summary, reward systems can express and reinforce the values and norms that comprise corporate culture. Therefore, a careful consideration of a reward system can help decision makers successfully modify the organization’s culture. As stated earlier, self-management is related to clan control. As such based on the research of Kerr & Slocum (1987) it is argued that hierarchy-based reward systems can encourage self-management. Thus the fourth proposition is:

Proposition 5. The use of a reward system in an organization encourages self-management. The above propositions have directed the investigation of how leadership influences the effectiveness of a self-management control system. Figure 1 sets out the concepts and the relations that this paper seeks to explore through a case study. The process in the dotted line depicts the process of an effective management control system. The process starts with the

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represents an influence of leadership on this process. It is not known, on which place leadership influence the process and therefore the arrow is arbitrary placed. Moreover, the emphasis in this paper will be placed on the influence of leadership on the effect of self-management control systems. However, to know how leadership can influence the effectiveness of self-management control systems it is essential to know how a self-management control system becomes effective. Therefore, the process between the dotted lines has formed the foundation for the research to investigate how leadership can influence the effectiveness of a self-management control system.

10 3. RESEARCH METHODOLOGY

Method

A case study was conducted at the case company from February 2013 to June 2013 in order to answer the research question. This approach was adopted, because it enabled to investigate the ‘’how’’ and the ‘’why’’ according to Yin (2003). In addition, according to Yin (1989) case research was very suitable for the description and explanation of complex phenomena within its real-life context. Furthermore, a case study approach made it possible to analyze the impact of diverse exogenous and endogenous factors that are difficult to quantify, such as government regulations, organizational culture, conflicts, behaviors and attitudes about change (Escobar & Lobo, 2002, as cited in Escobar, González, Lobo, 2008). Finally, it enabled to consider the historical, social, economic and

organizational context in which the studied phenomena were developed. By conducting a case study, we tried to refine the initial theoretical framework made. In fact, in doing so we worked on a process of ‘’theoretical generalizability’’ (yin, 1989). We did not claim that there was a theory developed that was universally true. Each theoretical model had to be open to refinement. So, in common with Marginson (1999) and Berry, Loughton & Otley (1991), the theoretical framework was used as a ‘guiding perspective’ as opposed to, a priori, identifying and testing theory

The study was based on this case company for two reasons. First of all, this company had introduced in 2007 a management control system, with the intention of encouraging self-managed behavior in employees. The second reason for selecting this company was the opportunity that we had full access to different information sources through combining writing the paper with an internship.

Data collection

The study included interviews with the following people: 1 director

4 managers of different departments

6 account managers of different departments

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validity and reliability of the research (Mathison, 1988). Furthermore, to improve the reliability, during the research the results were several times present to the supervisor of the case company.

In this research there was made a conceptual model with several constructs. The concepts in the process from self-management control systems to the use of self-management control systems formed the basis of the research for: how to influence the effectiveness of self-management control systems. This conceptualization of the basic process of the effectiveness of a self-management control system was needed to clearly indicate where the process could be influenced. The constructs used in this paper had a certain level of abstraction and needed to be linked to indicators and entities that are actually measurable. In order to make the concepts measurable there were asked questions related to the practical situation of the interviewee. For example: What are the tasks your manager executes regarding BUMIS?

Data analysis

Data analysis took place in several steps. First, the concepts in the conceptual model (fig.1) were used as codes. However, the researcher was also open to give codes to concepts that were not mentioned in the conceptual model. Subsequently, the interview transcripts were coded. After that, these codes were used for analyzing how several concepts were related. Next, a selection of quotes from the transcripts was made to demonstrate in this paper how the concepts in the case setting were related.

4. RESULTS

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Starting in 2007, the director of the directorate business management designed and implemented a system called BUMIS. BUMIS stands for: bottom-up management information system. According to the director of business management, starting point for the reasoning behind BUMIS was integral management:

‘’The company has chosen for integral management. (…) The company says the customer is our starting point, and we organize ourselves around the customer. So, those are a number of statements: the customer is our starting point and we organize ourselves around that customer.

After that, there was chosen within the company for the principle content-organizing.

‘’You organize yourself around the content. You can also choose not to organize yourself around the content. So, that you have an advisor for the payments, an advisor for the mortgages, an advisor for… No, we have said: we manage the relationship; we have 1 relationship manager for everything that happens with the customer. Here, there can be only one person who can say: that customer belongs to me (…) The system behind is that the account manager has an integral responsibility for the customer. So, the word integral is important. Content-organizing and integral. So, our starting point is integral responsibility. (…) If you are integral responsible for the customer it is maybe also clever to get integral responsibility for the management of your portfolio. (….)

25 years ago the director already used the principle of integral management. For assisting this principle, he worked at systems which made that possible. And, therefore, he started with BUMIS in this company.

‘’I did things just a little bit different then colleagues. I said this is your portfolio, and tell me what you did, every month. That is how I did it already 25 years ago. And that idea worked: people become enthusiastic, it is your customer, and you get your relationship. You can do your work well, but if it is your customer you will get a special feeling. This is what I noticed, and then you extend that, and so you work at systems which make that possible. I give all the customers a code, that is your code. So every month you can count all your customers, and then you can see what you have done. You can make plans, what will you do in the next year. So, people make their own company. That is the idea, it is nothing else then it is your

customer and then you will have another attitude then if you do it for someone else. So, you will do it for your customer, it is your relation; it is your own little company. That is the idea behind BUMIS’’

So the idea according to the director of business management was:

‘’ You make your own choices. And then they can say from above: you must send 100 letters this month, and afterwards you need to call them. While you know: I have already spoken 50 of the 100 customers in the past month or 2 months ago. If I send this letter the customer will not understand me and will respond that they already did so. So you direct your portfolio’’.

The control system BUMIS was linked with these ideas. More practical; BUMIS was a current

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However, for clarifying, the reporting part will also be explained. It worked like this: the different directorates’ plans consisted of strategic contributions of the directorates for achieving the targets. These strategic contributions were translated to priorities, actions and control indicators. From the annual planning cycle the control indicators were divided to the different directorates, departments and employees. This meant that every control indicator on the level of the employee provided a relevant contribution to the goal achievement of the company. Thus, a BUMIS of an employee was linked to the strategy of the company. The idea was generating management information from bottom-up so: employee reported to the manager, the manager reported to the director of the directorate and the directors reported to each other, and finally to the supervisory board.

The BUMIS philosophy assumed that each employee was familiar with its own responsibilities, bore these responsibilities, knew their actual results, self-reported about these results and if needed pro-active formulated corrective actions so that adjustments took place before a coaching conversation. Each employee within the bank had their own BUMIS, and also reported with the support of BUMIS (Nota integrale sturing middels BUMIS, 2013). Within the company the department of control coordinated the format for the BUMIS. However, employees, management and directors were self-responsible for filling the monthly report. The rationale for this was that employees will adjusted themselves when they filled their own BUMIS. Furthermore, it was the intention that the manager had every month a coaching conversation with his or her employees. The basis for this conversation should be the current BUMIS of the employee.

Challenge routines/institutions

As indicated above, account managers within the case company had to fill self the

information in the self-management control system. This leaded to a certain extent of challenging of existing routines and institutions, since before this rule the department of control of the company delivered the management information to the account managers and their managers. In this situation, the manager asked the account managers about certain deviations. In the new situation employees needed to fill their own information in the BUMIS, and needed to report to their manager how far they were with the realization of their targets. This change challenged the existing

routines/institutions, as explained by one account manager as follows:

‘’ I just disagree. My opinion is that the department of control, or business operations, or whatever should provide the numbers. Now they are saying form the bank, if you working as a team with the numbers, and also fill selves the numbers, then you can see what happens, and then you are also more aware of it... And I just disagree. It should not be that I only know where I am, when I fill the BUMIS. For me it is more a confirmation (Account manager)’’. So the filling of the self-management control system challenged the existing routines/institutions of the employees.

Resistance

Not surprisingly, there was resistance to the filling of the system, especially because in the opinion of the account managers delivering management information was a task of the department of control. There was also resistance against the self-management control system, because they did not saw the added value if they filled self the information in the BUMIS. They did not experienced that they steer themselves when they filled their own BUMIS. An account manager explained it as follows:

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fill self the data. And above, you have the risk of manipulation of the data (Account manager)’’.

Another account manager described it in this way:

‘’ You have your remembers. You get your alimentation from BBS, every first of the month or end of the month, you get from credit risk management all your control letters which are sent to your customers, and fourteen days after that you get the remembers. So, you have these items in picture. On that moment you take action, and if they are open in BUMIS you already know that, because you already had 2 signals about that. Overruns the same, we get daily the overruns list, and weekly I discuss with my intern account manager what to do. Where do we take action? On this moment, I cannot imagine what changed through BUMIS (Account manager)’’.

Thus, the account managers within the company did not directed their portfolio when they filled the BUMIS, they directed their portfolio on the basis of information they got from other information systems. So, the resistance of the employees emerged from the fact that it challenged the existing routines/institutions of the employees, but also because they did not experience the added value of filling their own BUMIS.

Managers within the company also recognized that there was much discussion about this change of filling the self-management control system, and that they need to put energy to that area for moving those employees:

‘’ I have also people in my team who still stick in the old thinking of: that is a task of the management. It is management information and you need to collect that information. There you have get to work, to move that people (manager)’’.

Managers within the company explained that there was no option for the employees to choose for working with the system or not. Filling of the self-management control system should just happen, and that was also their expectation of their subordinates. They explained:

‘’The filing of the system should just happen. My total results are also derived from their results, so that should just be fine (Account manager)’’.

Some managers dealt with the resistance by approaching the people:

‘’ Then we approach them. Therefore, the regularity and structure is so important. That is something for me, because I am less structure focused. But, the structure is for me very important. Every first week the appointments need to stand in the agenda. From now, we will continue that. The structure is very important, plus the appointments that are recorded, If possible during the conversation (manager)’’.

On the other hand, there were also managers that dealt with this resistance by changing the structure:

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manager fills one line for the whole team. That only takes 5 minutes work, and then we are sure that it is good quality (Manager)’’.

Thus, managers dealt with different styles with the resistance that emerged from the challenging of existing routines/institutions, and the resistance that emerged from not experiencing the added value of filling.

Self-management control system

Overview of the portfolio for reporting to management

Many of the interviewees saw the self-management control system as assistance in reporting about their portfolio to the management. The self-management control system consisted of key

performance indicators (KPI’s), which were important for the achievement of the objectives of the organization. So, when employees filled in these KPI’s, and also gave an explanation about these KPI’s there was a good report available about their portfolio. An account manager explained how he looked at the self-management control system:

‘’I am working on providing management information. For myself: I objectify the information I have in my head. For me there are no surprises, because that would be weird. If things go well, you are familiar with that. For example, you know where the gaps are or whatever. If all goes well, it doesn’t surprise you. But, you write down the surprises or the things which play in your portfolio for someone else, for the management who create an image about that (Account manager)’’.

‘’So look, at the end BUMIS is the tool for your manager to know how your portfolio is doing. For me, it is nothing more than writing down what I already know. Because, when you direct your portfolio you know exactly your overruns. Then, you know exactly how you are doing with your revisions. Actually, what I fill in is not more or less than what I already know’’. It does not offer me surprises. For me it is a reporting function (Account manager)’’.

Furthermore, in the organization the self-management control system was mainly seen as a system of the director of business management, and of his directorate. A manager described that the self-management control system was primarily seen as a party of the directorate business administration:

‘’ The directors said: few years ago we have implemented the system and it works fantastic. Then I said: maybe it works well within business administration, but in the other segments it is adopted as it is the party of business administration and we just do it. And for all the managers and directors before it was also a ‘’must do’’ (manager)’’.

So, the employees saw the self-management control system mainly as a tool for creating an overview of the portfolio, to facilitate the reporting to management how they were performing with their portfolio.

Awareness

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could found the information in different systems, and put thus information in the self-management control system, which then created an overview of the current state of the portfolio. They had to do this every month, and therefore they could also follow developments in their portfolio. An account manager explained:

‘’ In this way you get more feeling for the developments in your portfolio, on different levels. You will think more about that, also through searching for the numbers. You become more aware of your portfolio. For example: calling. Outgoing calling or separate activities. On that moment I ask aware: how many separate activities do I have? I can see that go down, because I am working very conscious about that. That is an appointment we have made and that is something that has a place in my BUMIS. And I can see that we are on the right way with that indicator, it is really a downward trend (Account manager)’’.

Another account manager explained how he could find his contribution, through the assistance of BUMIS:

‘’ If you purely focus on the customer it delivers nothing. However, you want to know your contribution to the customer. Look, if I working on something and I did not deliver anything for 10 times. Then, it can be a good conversation for the customer, but on a certain moment it also should yield something for the organization. And that is what I can see in BUMIS, so then I can see although the conversation delivers nothing on that moment, it does provide a contribution over the whole year. So, what I am doing now is profitable. Or it is not profitable and the next time I should do it different (Account manager)’’.

So, the self-management control system influenced the awareness of the portfolio of the account managers.

Feedback

In addition, the self-management control system delivered feedback to the account managers, because after filling BUMIS the cell turned red or green. The color green meant that the target for that month was realized. The color red meant that the target for that month was not realized. So, for the account manager it delivered feedback on, how they are doing, in relation to what was agreed. This also provided clearness to the managers, because they could saw how the employee is

performing. According to a manager:

‘’ I get the BUMIS three days before the BILA. Then look if there are deviations. (…) Red cells or deviations. Red is immediately negative, because it can also be positive. And then you look to the argumentation. If I think it is real, then for me it is good (manager). ‘’

Thus, the self-management control system delivered feedback about the portfolio to the account manager and to the manager.

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Furthermore, it provided feedback to the account manager and the manager how the portfolio is performing.

Coaching conversations

It emerged from the descriptions of the BILA’s, given by the account managers, that the overview of how the portfolio was performing and the feedback about the portfolio, were used in the coaching conversations by the managers to ask questions about the portfolio. Account managers described the BILA’s as follows:

‘’Every month, we discuss the BUMIS of the last month. Then we just discuss the highlights of the portfolio. For example: the manager asks for the reason of a certain deviation and discussed with me how we can approach that (Account manager)’’.

‘’ We just walk through the portfolio. Then the manager asks: can you give an explanation for that, or he said: that is not tight enough, you miss something or how are you deal with that? (…) But, it is also a moment for hearing how they thinking about you and how your portfolio is performing (Account manager)’’.

‘’ The coaching conversations were very informal. They just asked how are you doing with the overruns and how are you doing with that etc. Then they also indicated that it was important to fill the BUMIS tighter (Account manager)’’.

‘’They particular zoom in on the risks of the portfolio, the signals so to say (Account manager)’’.

So, these two functions of the self-management control system, providing feedback and creating an overview, contributed to the coaching conversations of the manager with the account manager. Furthermore, account managers saw the coaching conversation as an opportunity for the manager for sharing knowledge, because the manager spoke with all the account managers at least one time in the month. So, the manager was up to date about developments in other portfolios and could advice account managers when they dealt with the same developments.

‘’ Managers sees everything of each account manager. So, they can help us to do things faster or easier. In my opinion that is the advantage of a manager (Account manager)’’. ‘’ I find the coordinating role of the manager the most important. In particular, the sharing of knowledge which he sees in other portfolios. (…) If you are in the same situation as a

colleague of you then it is nice that the manager can exchange that information with you. Yes, in that way it is helpful (Account manager).

The coaching conversation was a new phenomenon that emerged during the period of research and will be discussed further in the discussion.

Leadership style

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deadlines were prepared for making sure that management information was delivered on time to the management. These activities suggested a largely transactional leadership style: management

defined together with the account managers what they expected and the employees in the

organization were busy with achieving these goals in return for job security and financial rewards. A manager described the activities he executed regarding to BUMIS as following:

‘’ Choice of key performance indicators. Definition of the key performance indicators. When do we measure, what do we measure, and which number do you use? That number do you use and you fill it there. And make an appointment. You come 20 minutes on audient to give an explanation on what and why you write down the things (Manager)’’.

This manager also indicated that he was aware that he managed so tight.

‘’It becomes under me a kind of culture of fear. Every month, I plan just 15 minutes with every account manager. Then, they are forced to fill in and they are faced with it (Manager)’’. Another manager explained that the regularity and the structure around BUMIS also assisted him, because he was less structure focused. Therefore, he had the intention to focus more on the structure as he explained:

‘’Therefore, the regularity and structure is so important. That is something for me, because I am less structure focused. But, the structure is for me very important. Every first week the appointments need to stand in the agenda. From now, we will continue that. The structure is very important, plus the appointments that are recorded, If possible during the conversation. Not long soaps, but just short. Then you can look the next time what is happened with the recorded things. You make it easier for yourself as manager, and you can also say this is what we had agreed, why did you not done it? And then, such a process will work, you make it yourself easier (Manager). ‘’

According to the account managers tight steering characterized the way of how managers managing the self-management control system. An account manager explained:

‘’ Well what you see now, on our departments we had many changes (…) you noticed that every manager tighter use the instrument. (…) For example: in the beginning, then you talk about two or three years ago, yes than it was more a general story to the BUMIS. Now you just need to note every deviation what you are going to do, how you are dealing with it, so the PDCA hè. (…) So, it is just become tighter. You just see that it is an assignment within our team; just care that your administration is in order (Account manager).

‘’ Well he monitors us and approach us, that we don’t realize it or that we did not make it or it is too crazy (Account manager)’’.

In addition, BUMIS had tight deadlines, because it was also used for management information which should be delivered each month. Account managers experienced this as no freedom, they need to do it.

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So, it appeared that from the view of the managers and the view of the account managers that the managers put much energy on the instrument BUMIS and they managed this system tight so that it delivers good management information

Furthermore, it turned out that there was also given attention during BILA’s on how to write things down. This was important for generating high qualitative management information.

‘’She should get also some benefit. So, eh... I fill, whereby, I can see for myself this is what I have done, but I also know that often. In fact, I fill the BUMIS for her, so that she can use that information. So, on a certain moment we also discussed that during the BILA’s: if you write something down, write it down on that manner, because than the manager could use it directly (Account manager)’’.

However, a manager also indicated that it was not a possibility that the manager withdraw themselves because according to him it was a very fragile process:

‘’ It is still a very fragile process. So if the manager drops out than the average commercial man will not spend 1 of 2 hours per month on monthly reports. He just does it, because it is an obligation (Manager)’’.

So, most of the managers within the case company were very task-oriented with regard to the self-management control system. Their focus was mainly on delivering high quality self-management information to the management, and therefore they were very tight on that. This task-oriented leadership style suggested a transactional leadership style. This style of management of the managers was also indicated by the account managers. Furthermore, managers indicated that this role was needed for the continuation of BUMIS.

Role models

It turned out that managers had no choice to stand behind the system or not. One manager formulated it in this way:

‘’I have also said to the director of business administration, I need to show as a manager that I totally stand behind it and that I am positive about it, but they just smell blood. Since they know that I have a somewhat different opinion about it. It is seen as an administrative process (Manager)’’.

It appeared that managers put energy to encourage a role-model in account managers so that there was a role-model available for other account-managers, but also here it was mainly focused on the use of the system and how to write down.

‘’ I put account managers on each track. N. I thought it was N., he also write down nice adjustment and yes I tell to others look to the example of N., that looks good and clear for me! (…) Yes I let them look to the right formulation of each other (Manager)’’.

Another manager also indicated that he encouraged looking to each other:

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Thus, managers had no choice to stand behind the self-management control system; they need to use that system for management information. Furthermore, in encouraging a role model in an account manager they primarily encouraged a role-model in the task of how to write down issues in the self-management control system and how to use the system. So, the encouraging of role-models in account managers influenced the self-management control system. The fact that most of the managers were oriented on the task of how to write down things, in encouraging a role model, suggested that they encouraged a role-model in a transactional way and also influenced the self-management control system in this way.

Clarity of objectives

During the interviews, it turned out that many employees were not familiar with the BUMIS philosophy. There was also not a medium within the organization to inform new employees about the BUMIS philosophy. Therefore, employees kept focus their energy on filling the BUMIS. So, the accent stayed on the use of the system. An account manager described how he learned to work with BUMIS. He just looked by his colleagues for how to use the system, so focused on the task of using the system:

‘’They only told me that there was a BUMIS and on a certain moment I just looked by my colleagues for how they worked with that. So, I searched it out for my own how to write down information about my portfolio (Account manager)’’.

Throughout the interviews an account manager also gave a description about how the change in the responsibility for filling the BUMIS was communicated:

‘’It was not communicated. We were confronted with the fact that we must fill it selves. They put that message in an e-mail. That was very unprofessional. So, what I try so say is that there was a new template and suddenly we needs to fill that self. But nobody gave us an explanation for this change, and they just write it down in an e-mail (Account manager). Furthermore, most of the interviews started with the question how the interviewee would define BUMIS. However, regularly during the interviews the researcher had to explain the philosophy of BUMIS, after the interviewee had given a description of BUMIS, because the philosophy that BUMIS is used as a tool to achieve some behavior does not appeared clearly in the interviews:

‘’Do you know the rationale of BUMIS? (Researcher)

What I said, I think from... eh... It is of course very wide hè. It is from bank-wide risk analysis. How you are doing controls, about arrears. That insight is given to the management (Account manager)’’.

Thus, the objectives of the self-management control system were not clear for all the employees. Therefore, they stay focused on the using of the self-management control system for reporting about their portfolio.

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system for management information. However, there was also a department within the case company in which they dealt different with the self-management control system. This department fell under the responsibility of the director of business administration. Therefore, the director also coaches the manager of this department. The director of business administration, but also the manager indicated both that their focus was not on the system, but that they used the system for coaching their employees. The manager indicated that he found that it is naturally that BUMIS is completed and that he puts his energy in the coaching conversations. However, he adds that BUMIS is a tool and that it is not his only source for coaching, but it is only one of the sources on which he based his coaching.

‘’I find that it is completed and it is true; that are hygiene factors. It is good to monitor that ones in the time, but my energy goes to the conversations I outlined before. So: where are you, what are you going to do? What will be your adjustment? Where do you start? My opinion is that, as a manager, you have primarily a coaching role. (…) I continue to assist that BUMIS is a tool. I have many sources on which I see coaching elements, on which I coach someone. We are talking now more than 15 minutes and I have 3/4 things which I think that strikes me, and I can do something with that. So, you do that on basis of impressions, conversations, BUMIS, on basis of first line controls. So, you have a scale of instruments which gave me information about the work of an employee. And I combine that for coaching. I will give you an example, because you are looking a little upwards. I had this morning a BILA with one of my employees. He has just filled his BUMIS very tight. He is actually on all the points on track. So, we talked about that 2 minutes and then put it away. Then we talked about his children, his study, his ambitions, about what he sees within the bank, eh... his opinion about me. That is what I want. If you do not have such a good BUMIS then you will need that one hour to get insight in the portfolio and then you cannot do other things. The director of business administration indicated that in the coaching conversation they talked more about learning effects of personal targets, than about the real key performance indicators which are derived from annual year plans. So, in this BUMIS there was also place for more personal targets:

‘’ One of my managers, he had everything under control and then we can talk about

transformational leadership. How he studied that in his education, and how he look to that. So, then we do not talk about the 18, 20 or 30 dossiers, no then we talk about

transformational leadership. How he look to that and we discuss examples with each other. (…) Then, I gave him also the assignment for the next coaching conversation to mention 3 examples when he thought about transformational leadership, when he did the things different. That has a place in his BUMIS. So, give me examples of behavior that you want show, which you thought about it in the past month (Director of business management)’’. So there was at trend visible in the organization about how the self-management control system was used, but there also were deviations from this trend. The trend which was found in the organization will be discussed in the discussion.

5. DISCUSSION

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The first proposition was: the informational support and the feedback provided by the system encourage self-managed behavior. This proposition was not confirmed in this research. First of all, the system delivered an overview of the portfolio, made employees aware of their portfolio, and consistent with the theoretical framework provided feedback to the employees about their portfolio. It was not found that the self-management control system provided informational support to the employees. Within the organization, employees delivered self the information for the management control system. The fact that employees delivered the information for the self-management control system did not match with what was proposed in the article of Griffin et al. (1994). The proposed system in the article of Griffin et al (1994) integrated relevant and pertinent data from employees existing information systems and interactively presented them to the self-managed employee. During the interviews the interviewees did regularly a call for such a system, which automatically linked the information from the different information systems to one system. This was also suggested, because especially the account managers did not experience that they managed their own behavior when they filled the self-management control system. They only indicated that the self-management control system influenced the awareness of their portfolio. The organization also used the self-management control system for reporting about how they are performing with their portfolio. This was also different than the prosed self-management

information system by Griffin et al. (1994), because the proposed system of them was only used for providing information and feedback to the employees. It was remarkable that in the case company both functions, management information for decision-making and control were combined, because Zimmerman (1997, 2001) advocated a distinction between decision-making and control. According to Zimmerman (1997, 2001), there are some accounting systems in organizations that are focused on providing information to support decision-making and others that direct employee activities or behavior. However, in the case company these two functions were combined. Moreover, consistent with Griffin et al. (1994) the self-management control system delivered feedback to the account manager, but also to his/her manager. From the results it also emerged that the self-management control system influenced the awareness of the portfolio of the account managers. This was not proposed by Griffin et al. (1994), but emerged from the case study. The second point we learned regarding to the first proposition is: the self-management control system was not capable to fully realize that employees became self-managed employees that means that employees are responsible for determining approaches to task execution, as well as for monitoring and managing their own behaviors. This was contrary what was expected in the first proposition, and was an important finding. Thirdly, the coaching conversation was also a new phenomenon that emerged during the research. From the theory, it was expected that the self-management control system encouraged self-managed behavior, but in the research it appeared that this was not the case. The function that the system provided an overview of the portfolio and provided feedback were taken into a coaching conversation and were used by the manager for structuring the conversation, but also for asking question about the portfolio of the account manager. This was different than desired by the

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The second proposition stated: there is more resistance to the self-management control system if the encouraged self-managed behavior challenges existing routines/institutions, and this affect the effectiveness of a management control system. By contrast, in our study, not self-managed behavior challenged the existing routines/institutions, but the filling of the information in the self-management control system challenged certain existing routines/institutions. The

routine/institution was: the department of control delivered the relevant information to the account managers and that managers asked account managers about the reason for certain deviations. In the situation of the self-management control system employees filled their own information in the BUMIS, and reported monthly to the manager how far they are with the realization of their targets. This challenged the routine/institution of the account managers, and consistent with Burns and Scapens (2000) there was more resistance to the self-management control system. Nevertheless, the challenge of existing routines/institutions were not the only factors in the case company that created resistance for the self-management control system, also the experience of account managers that filling does not help in managing the portfolio contributed to the resistance to the self-management control system. This resistance is in line with the research of Davis (1989), who stated that people tend to use or not to use an system to the extent they believe it will help them perform their job better. They refer to this as perceived usefulness.

The third proposition stated that a transformational leadership style of managers can encourage self-managed behavior in employees. However, within the organization it emerged that the self-management control system was mainly handled with a transactional leadership style. Through tight steering the managers realized that the account managers delivered the management information in the self-management control system. But, also the managing of the resistance to the system suggested more or less a transactional leadership style. Some managers said it should just happen and there was no discussion about it. Other managers changed the structure so that they were sure that the management information was good. They were task-oriented on delivering management information. Thus, managers handled this resistance in the company mainly with a transactional leadership style. This transactional leadership style is in contrast to what was expected in the theoretical framework. It was presumed that when the aim was self-management a more transformational leadership style was needed in the organization. Since, according to Pawar and Eastman (1997, p. 82) with a transformational leadership style employees feel part of the company itself and take responsibility for them. In this style the leader is closely engaged with its followers without using power. The leader does this by motivating employees, see the higher purposes, set challenging expectations, create visions and be open for new experiences and other’s point of view. Furthermore, Bass (1990, p. 648) stated that in particular a transformational leader can use many intellectually stimulating ways to move followers out of their conceptual ruts. However, in the case company it appeared that the focus was with a transactional leadership style mainly on the system. It seemed that this can be explained with the fact that the system was also used for generating

management information. However, not all the departments within the organization were mainly focused on delivering management information. There was also a deviation of the trend in the organization. It seemed that in this deviation a more transformation leadership was used. According to the manager of this department information in the self-management control system need to be completed and true. There should be no discussion about that. It is good to monitor that ones in time, but his energy goes to coaching the employee. A more transformational leadership style was also suggested by the interviewees during the research. They suggested that the system was a good tool to give insight in the status, but that a leader needs to coach on attitude and behavior to make the method your own. An interviewee gave the following example for coaching: if the customer calls you and he has a funding application; what are you going to do? Are you going directly to the