Mikael Cäker

Critical perspectives on MCSReflecting on the assumptions and practices that are taken for granted

by some/in some situations/in some contexts

Mikael Cäker

”Idealistic” critical perspective: Questioning the basic rationality of accounting

• Management accounting and control operates to …… support capitalists stealing the value of what employees do

• Why should surplus value only go to one of the interest groups?

… take away humanity out of considerations by valuing only money

• Should ”safe work environment” be based on a costing model?

… have financials dominate other interests in society

• Sustainability: Should the environment be valued into money in order to be considered?

• Not a question of how we should control – Questions about IF we should controland WHY we control?

• Is it ethical to work with accounting?

• We may expand our dimensions of objectives, but what language do we have to work with otherobjectives on a day-to-day basis?

• The sustainability discourse is so far the most serious attempt to broaden accounting to be in support on non-financial objectives.

Mikael Cäker

Can you find the ethical challenges in Management Control?

• Negative consequences for future budget allocations of showingsurplus in budget follow up

• Incentive systems aiming at highest possible profits

• Use of action controls to trace every step of the employee

• Succesful social control in terms of establishing strong norms of the what it is to be the ”perfect” employee

• Failure to include ”sustainable performance” in performanceevaluation

• Failure to include ”soft values” and ”invisible work” in performanceevaluation

Mikael Cäker

”Functionalistic” critical perspective: Questioning currentpractices within the basic rationality of accounting

• Managing an organization is complex• Formal controls should reduce complexity, but always risks to hide relevant information

• Critical perspectives that have developed management accounting• Sometimes developed into new normative ideas, which we need to be critical about…

1) Can we manage by only looking backwards?• Balanced ScoreCard – increasing complexity in formal models

2) Are fixed targets realistic in a complex and dynamic environment?• Beyond Budgeting – decreasing complexity in formal model

• What for and how can accounting information be used?• The case of incomplete measures (Jordan & Messner)

Mikael Cäker

Balanced ScoreCard reshaped into Strategy Maps

Mikael Cäker

“Beyond Budgeting”

• A set of ideas with a common denominator in rejecting traditional budgeting

• Some followers…

• But “all” with unique solutions to replace the budget

• Performance evaluation & incentive systems

• Planning & capital budgeting models

• Processes of communication

• Companies mentioned in the literature are LEGO, Arla, Statoil,

Michelin, Maersk, Consilium, Hilti, Coloplast

• Svenska Handelsbanken as the ”blueprint”…

Mikael Cäker

Mikael Cäker

Jordan & Messner (2012): Incompleteness

• Är ”dåliga mått” något problem?

• Fokus har länge legat på design av bra mått…

• … men vad tycker egentligen chefer?o ”A common theme in this literature seems to be that the representational qualities of

performance indicators are not of primary concern for managers” (544)

o Vid beslutsfattande kompletteras med andra informationskällor

o Men mått används också för ge strategisk inriktning och vara grund för utvärderingDå blir det inte lika bra om underordnade chefer väljer själva

Decision facilitating role Instrument of control

Mikael Cäker

The scientific frame of the article

• RQ: How operational managers’ attitudes towards performanceindicators may change over time and in response to a change in topmanagement control

• Purpose: Developing a context rich understanding of managers’ concerns with incomplete performance indicators

• Method: Longitudional, qualitative case study – to achieve ”contextrich”

• Framework: Design/use, theory of enabling control, previousexperiences on incompleteness

Mikael Cäker

Theory: Formalization driving enabling or coercivecontrol?

Formalization Effektivitet?

-

+

Ersätter ansvarstagandeSkapar frustration och stressDöljer ”verklig” komplexitetSkapar tröghet

Stödjer handlandeSkapar engagemang (bekräftelse, stöd)Skapar tydlighetTar bort tråkiga arbetsuppgifter/beslut

Adler & Borys, 1996Administrative Science Quarterly, 41, 61-89

Mikael Cäker

Theory: Formalization driving enabling or coercivecontrol?

Formalization

Design characteristics• Flexibility• Repair• Internal transparency• Global transparency

User involvement in developmentand implementation of formalization

Users experienceFormalization asenabling

High efficiencyyes

No

Users experienceFormalization as coercive

Low efficiency

Adler & Borys, 1996Administrative Science Quarterly, 41, 61-89

Mikael Cäker

Incompleteness, enabling control and two roles of accounting• Decision-facilitating:

• Flexibility – contextualize your analysis to complement

• Repair – incompleteness to disturbing? Change…

• Global & Internal transparency – providing ability to be flexible and initiaterepair

• Instrument of control• Flexibility and repair – moving out of strategic direction, undermining ”control

at a distance”

• Transparency – ability to question requests for accountability

Mikael Cäker

Mikael Cäker

Mikael Cäker

Discussion

• Flexibility is key to see incomplete measures a enabling• Targets är ”visions”

• Fit with history

• Increased evaluation pressure turn formalization into coercive

• Teorin utvecklas till att påvisa att ”design characteristics” som inte bara en fråga om design• ”Use” har en avgörande betydelse för om flexibilitet kan föreligga

Mikael Cäker

How and for what can accounting information be used?

• ”Dåliga” mått kan användas som beslutsstöd, även om de inte representerar allt• Men funkar sämre för ”control-at-a-distance”

• Work-in-progress: Hur kan då enabling pms ha en framträdande roll vid ”high evaluation pressure”?• ”Alla” mått är incomplete – to some degree…• I Jordan & Messner förändras målens betydelse utan att den formella

organisatoriska kontexten förändras – bara användningen• Måttens kvalitet behöver balanseras av dialog för att möjliggöra ”enabling

control” i relation till ”high evaluation pressure”• Jfr Balanced ScoreCard – Strategy Map…