Barriers To Change: A Study Of Cross-Border Cash …gsblibrary.uct.ac.za/ResearchReports/EMBA 13/Snyman… · · 2013-06-27researcher negotiated involvement on a small project team

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BARRIERS TO CHANGE: CROSS-BORDER CASH MANAGEMENT i

SNYHEN004 - Executive MBA 13

Barriers to change: a study of cross-border cash management at

AngloGold Ashanti

Johan Snyman

SNYHEN004

March 2013

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BARRIERS TO CHANGE: CROSS-BORDER CASH MANAGEMENT ii


Plagiarism declaration

I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is

your own.

I have used the APA referencing convention for citation and referencing. Each significant

contribution and quotation from the works of other people has been attributed, cited and

referenced.

I certify that this submission is all my own work.

I have not allowed and will not allow anyone to copy this essay with the intention of passing

it off as his or her own work.

I have run my assignment through a plagiarism check.

Signature:

Date: 14 March 2013

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BARRIERS TO CHANGE: CROSS-BORDER CASH MANAGEMENT iii


Abstract

Situation: The world economy is fragile with uncertain times ahead. The head of the

International Monetary Fund, Christine Lagarde, warned “Do not relax; there’s still a risk of

relapse”. Everywhere global treasury operations feel the pressure to optimise their liquidity

by increasing cash visibility and deploying optimised cash mobilisation structures (either

through notional or physical cash pools).

The situation is not different for AngloGold Ashanti, a global gold miner with its

headquarters in South Africa. Even though its South African operations still account for

about 34% of its global operations, the declining South African gold sector output (with

current output levels last seen in 1922) is eroding its cash generation capabilities. In the latter

part of 2012 the situation was further worsened when strikes in South Africa forced the

company to halt operations at all its South African mines for an extended period of time. The

company has consequently had to manage declining cash generation while at the same time

paying dividends to its shareholders, servicing expensive debt facilities and investing cash to

retain and build its resource base.

Concern / Purpose of this paper: The purpose of this paper is two-fold. Firstly, through

the action research component of the paper the researcher explores a possible process for

cross-border cash management. If AngloGold Ashanti can improve its liquidity management,

significant savings can be achieved. Expensive debt facilities are in place which are

effectively used to fund the working capital requirements of subsidiary companies. The

researcher negotiated involvement on a small project team to look at the impact of exchange

controls, operational requirements, Companies Act requirements and banking regulations on

the organisation’s ability to implement an effective solution.

The second, and more important, purpose of the paper was to look at the finance

department’s ability to be innovative and implement change initiatives. From past

observations working for AngloGold Ashanti, the researcher was concerned that the cross-

border cash management project would end up like numerous other initiatives: great

opportunities for savings and process improvements are identified, but the company is unable

to design more effective processes and struggles to execute the changes. The finance team

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BARRIERS TO CHANGE: CROSS-BORDER CASH MANAGEMENT iv


plays an important role in supporting the business and contributing to process improvements

and the organisation cannot afford not to execute changes in strategy.

If the finance department continues on this path and does not learn to be innovative, the other

departments and business units (which rely on change and business improvement to reduce

and manage unit costs) will feel unsupported by the finance function. This will create tension

with the finance function and the business will implement changes without the input and

support of the finance team. Ultimately this may lead to a high turnover of staff and a

possible restructuring within the department.

Question: At the level of the action research component of the project, the researcher

formulated the question as: “How can AngloGold Ashanti optimise their liquidity position

and how do they manage the legal and regulatory barriers that may prevent them from

achieving this objective?” At the level of the change management project, the researcher

formulated the key question as: “What causal mechanism is at play in the department and/or

company that prevents it from successfully implementing change initiatives, including the

cross-border cash management project?”

Answer: An effective cash management strategy consists of two main components: first to

get visibility of the cash balances (currently cash balances are manually reported with a seven

day lag-time). Secondly, different options for aggregating cash in a central location must be

investigated. This aggregation can take one of two forms: physical pooling (also called cash

sweeping) and notional pooling.

A couple of weeks after the internal project began, the strikes at AngloGold Ashanti’s South

African operations took place. This was soon followed by a downgrade of South Africa’s

sovereign rating by rating agencies with a knock-on effect on the rating of AngloGold

Ashanti. Much of the corporate office management attention was consumed by these

developments and the cross-border cash management initiative was placed on hold.

The remainder of the research project focussed on creating a theory about the mechanism at

play that prevents the organisation from making progress with the implementation of key

change initiatives. The core variables driving the behaviour are: the existence of pluralistic

ignorance (an inability to manage agreement); a lack of trust between managers and

departments; a silo mentality; change fatigue resulting from negative past experiences; and a

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lack of commonality of purpose. The model provides a starting point from where one can

consider possible interventions. Even though some of the areas look like they may require

macro-level interventions (e.g. due to the silo mentality across the business), interventions

can be put in place at a project level. While this research was performed in the context of the

finance department, the model can also be applied across departments and business units.

Rationale for validity: Based on the claims around the three types of validity, the researcher

is satisfied that the inferences drawn in the project were warranted after taking into account

the study methods and the representativeness of the study sample (the research results are

therefore valid). Descriptive validity was addressed by expanding the research to fields

beyond the scope of the company’s cross-border cash management function, to interviews

with other employees and data gathered from practitioner blogs. Interpretive validity was

improved by using member checking and providing verbatim quotes of the researcher’s

observations, thereby increasing the transparency of the conclusions. Lastly, the researcher

improved the theoretical validity by following scientific models (Maxwell’s research design

process, Grounded Theory and Stafford Beer’s Yo-Yo model) throughout the research

process.

Evaluation of ethical considerations: The researcher used Velasquez’s four questions to

test for compliance with the standards of utilitarianism, rights, justice and care, in order to

establish the ethics of the paper and concluded that the proposed theory provided an ethical

answer to the concern.

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Table of Contents

Plagiarism declaration ................................................................................................................ ii

Abstract .................................................................................................................................... iii

Table of Contents ...................................................................................................................... vi

Lists of figures and tables ......................................................................................................... ix

Glossary of terms ...................................................................................................................... xi

Acknowledgements .................................................................................................................. xii

Barriers to change: a study of cross-border cash management at AngloGold Ashanti ............. 1

Chapter 1: Research Design ....................................................................................................... 2

1.1 Research Goals ............................................................................................................ 2

1.1.1 Strategy execution as the parent discipline of the project.................................... 2

1.1.2 Barriers to change within a particular context ..................................................... 4

1.1.3 Personal Goals ..................................................................................................... 6

1.1.4 Practical Goals ..................................................................................................... 6

1.1.5 Professional Goals ............................................................................................... 7

1.1.6 Evaluation ............................................................................................................ 7

1.2 The Abilene Paradox as the Conceptual Framework .................................................. 7

1.3 Research Questions ................................................................................................... 12

1.4 Research Methods ..................................................................................................... 12

1.5 Threats to validity...................................................................................................... 13

1.6 Evaluation.................................................................................................................. 13

Chapter 2: Research Methodology........................................................................................... 14

2.1 Critical Realism as the ontological position .............................................................. 14

2.2 Grounded Theory as the epistemology...................................................................... 15

2.3 Action Research ........................................................................................................ 17

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2.4 Data collection methods ............................................................................................ 17

2.4.1 Participant observation....................................................................................... 18

2.4.2 Interviews ........................................................................................................... 19

2.4.3 Documentary sources ......................................................................................... 19

2.5 The process of theory building .................................................................................. 20

2.6 Evaluation.................................................................................................................. 21

Chapter 3: Research Results .................................................................................................... 22

3.1 Making use of research software – Atlas.ti ............................................................... 22

3.2 Grounded theory cycle 1 – action research and initial coding .................................. 23

3.2.1 Action research results ....................................................................................... 23

3.2.2 Initial coding ...................................................................................................... 26

3.3 Grounded theory cycle 2 – theoretical sampling ....................................................... 27

3.4 Grounded theory cycle 3 – saturation ....................................................................... 29

3.5 Memo-ing .................................................................................................................. 29

3.6 Core variables ............................................................................................................ 30

3.7 Evaluation.................................................................................................................. 30

Chapter 4: Literature Review ................................................................................................... 31

4.1 Parent discipline – the finance department’s role in strategy execution ................... 31

4.2 Key Concern – the finance department’s slow response to change .......................... 33

4.3 First core variable – pluralistic ignorance observed in meetings .............................. 37

4.4 Second core variable – trust between managers and departments ............................ 40

4.5 Third core variable – silos within the finance department and across disciplines .... 42

4.6 Fourth core variable – developments in accounting and the mining industry leading

to change fatigue .................................................................................................................. 44

4.7 Fifth core variable – purpose for finance managers not aligned across the group .... 46

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4.8 Evaluation.................................................................................................................. 47

Chapter 5: Theory Building and Modelling ............................................................................. 48

Chapter 6: Evaluation and Conclusion .................................................................................... 58

6.1 Implications and significance of the research results ................................................ 59

6.2 Relevance of the research .......................................................................................... 60

6.3 Utility of the research ................................................................................................ 61

6.4 Validity of the research ............................................................................................. 62

6.5 Ethical considerations ............................................................................................... 64

6.6 Proposals for future research ..................................................................................... 66

References ................................................................................................................................ 67

Appendix A: Register of data sources ..................................................................................... 74

Appendix B: Harvey’s Diagnostic Survey ............................................................................... 77

Appendix C: Codes and Families ............................................................................................ 78

Appendix D: Examples of observations supporting core variables ......................................... 84

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Lists of figures and tables

Figure 1 Rising gold price and industry cash cost ..................................................................... 4

Figure 2 Historic gold price ....................................................................................................... 5

Figure 3 Cash locked up at mines (excluding SA) .................................................................... 5

Figure 4 A concept map of the Abilene Paradox ....................................................................... 9

Figure 5 Barriers to cross-border cash movement ................................................................... 24

Figure 6 Cash balances Aug - Dec '12 ..................................................................................... 25

Figure 7 Three levels of abstraction......................................................................................... 31

Figure 8 The Three Levels of Strategy .................................................................................... 32

Figure 9 Lewin's 3-stage change process ................................................................................. 34

Figure 10 Evolving interpretations as a change unfolds .......................................................... 35

Figure 11 Antecedents and consequences of pluralistic ignorance ......................................... 40

Figure 12 Dissent strategies in the decision-making phase of change..................................... 41

Figure 13 Antecedents and consequences of trust ................................................................... 41

Figure 14 Antecedents and consequences of silo management ............................................... 44

Figure 15 Antecedents and consequences of change fatigue ................................................... 45

Figure 16 Why Aren't Our Middle Managers Leading? .......................................................... 46

Figure 17 Antecedents and consequences of a common purpose ............................................ 47

Figure 18 Adapted Yo-Yo Model ............................................................................................ 48

Figure 19 Causal Loop Diagram - Impact of pluralistic ignorance on change model ............. 50

Figure 20 Causal Loop Diagram - Impact of trust on the change model ................................. 51

Figure 21 Causal Loop Diagram - Impact of silo management on change model .................. 53

Figure 22 Causal Loop Diagram - Impact of change fatigue on change model ...................... 55

Figure 23 Causal Loop Diagram - Impact of a common purpose on change model ............... 57

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Table 1 A possible Abilene bypass .......................................................................................... 10

Table 2 Examples of codes generated from data ..................................................................... 26

Table 3 Initial and final categories........................................................................................... 28

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Glossary of terms

The following terms and abbreviations have been used in this research paper:

$bn Billion United States Dollars

$m Million United States Dollars

AGA AngloGold Ashanti

CEO Chief Executive Officer

CFO Chief Financial Officer

CLD Causal Loop Diagram

IFRS International Financial Reporting Standards

kg Kilograms

MBO Management by Objective

SOX Act Sarbanes-Oxley Act

SP Systems for People

SWIFT Society for the Worldwide Interbank Financial Telecommunication

US$ United States Dollars

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Acknowledgements

I would like to take this opportunity to thank all those who have contributed in any way,

shape or form to the completion of this research report. Specifically:

• AngloGold Ashanti for supporting me through the process and tolerating my

experimentation and critique;

• Tom Ryan, Sherry Walklett and Trish Steyn from the UCT Graduate School of Business

for their support and guidance;

• Jennifer Renton for editing the paper;

• Robert de Rooy, a fellow student and friend, for co-editing while having to finish his

own report; and

• Rita and Hazel for their patience, support and encouragement throughout the two years.

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BARRIERS TO CHANGE: CROSS-BORDER CASH MANAGEMENT 1


Barriers to change: a study of cross-border cash management at

AngloGold Ashanti

Management research deals fundamentally with the production and legitimation of the

various forms of knowledge associated with the practices of management (Partington, 2002).

This research paper demonstrates how the researcher used cross-border cash management as

the context to gain knowledge about the barriers that prevent / slow down the ability of the

finance department within AngloGold Ashanti to be innovative and implement change. The

paper is divided into six chapters. Chapter 1 sets out the situation (context), the problem

(concern) and the question that will ultimately provide an answer to the concern. It includes

the research design phase of the project. Chapter 2 documents the research methodology

while Chapter 3 gives the research results. In Chapter 4, the research results are placed in a

wider body of knowledge through a literature review. Chapter 5 builds the theory through

Stafford Beer’s Yo-Yo model. Chapter 6 concludes with the relevance, utility, validity and

ethical implication of the research results and theory.

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Chapter 1: Research Design

Research design is a non-linear process to understand the structure of a study as well as a

plan to carry the study forward (Maxwell, 2005). Chapter 1 explores this process whereby the

researcher’s goals (personal, practical and professional) in the context of cross-border cash

management were transformed into the purpose of the research, leading to a key concern and

question. A solid research design is necessary for a thorough understanding of the research

area and an integration of practical issues with relevant concepts and theories. Maxwell’s

(2005) research design process was used to describe the phenomena to be studied. The

process deals with five elements: research goals; the conceptual framework; research

questions; research methods; and threats to validity.

1.1 Research Goals

The purpose of this paper is not to solve a problem, but to study a problem that is part of a

bigger category or class of problems (the parent discipline) with a view to gaining some

insight into the parent discipline. The researcher identified strategy execution as the parent

discipline that was studied within the context of barriers to change while implementing a

cross-border cash management solution. This sections starts by reviewing the parent

discipline and then drills down to a particular problem in the field and concludes with the

goals of the paper.

1.1.1 Strategy execution as the parent discipline of the project

The researcher aimed through this paper to gain insights into the parent discipline of strategy

execution. An understanding of strategy execution, together with the particular problem-

context within AngloGold Ashanti, clarifies the purpose of the study. In the following

paragraphs, the researcher identifies some of the key thinkers, disciplines, theories and

concepts in the field; discusses the field in terms of current, past and future states and the key

challenges it is facing; and identifies some of the practical issues that are dominating

conversations and debates in the field.

The study of strategy dates back more than 2,500 years and was first attributed to the Chinese

general and theorist Sun Tzu, author of The Art of War (Kane & Londale, 2011). Even

though this is a very old field of study, literature on business strategy still seems fractious,

fragmented and in need of a common framework (Chamberlain, 2006). Michael Porter,

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according to his Harvard Business School profile, is generally recognised as the father of the

modern strategy field. Among his many contributions are his five forces that shape strategy:

the threat of new competition, the threat of substitute products or services, the bargaining

power of customers and buyers, the bargaining power of suppliers, and the intensity of

competitive rivalry (Narayanan & Fahey, 2005). Porter’s work has often been criticised as

focusing too much on the content side of strategy rather than on the process aspects (Foss,

1996).

The division in the field was further demonstrated when Mintzberg, Ahlstrand and Lampel

(2005) categorised the body of literature on strategy formulation into ten schools of thought:

design, planning, positioning, entrepreneurial, cognitive, learning, power, cultural,

environmental and configuration. They argued that none of these schools of thought were

sufficient on their own to describe strategy (as each is too narrow and overstated), but they all

brought something interesting and insightful to the debate. To simplify the ten schools of

thought, Lauriol (as cited in Mintzberg et al, 2005) abstracted these into four fields of study:

teleological, sociological, ideological and ecological.

Mintzberg believed that the concept of strategy has become too complicated and can be

clarified if it is described as a process of synthesising new markets and new products

(McCarthy, 2000). A process of strategic planning desensitises people to strategic change

and people should rather always be sensitive to important change events. Strategy is seldom

created through a formal process (e.g. planning or trial and error), but rather by stumbling

onto it (McCarthy, 2000). Although strategy execution has in the past taken a back seat to

strategy formulation, major forces in the world economy mandate that every strategy must be

executed with speed, at the lowest cost, and with little or no rework (Bigler, 2001).

According to Bigler, strategy execution will emerge as one of the critical sources of

sustainable advantage in the future (2001).

The body of knowledge on the various aspects of strategy is vast and cannot be justifiably

synthesised in a couple of paragraphs, however, the importance for AngloGold Ashanti to

execute change initiatives in order to remain viable is highlighted in this section. It is

necessary to study the underlying mechanism that enables (or hinders) the company to

identify new strategies and implement them within a short period. The next section drills

down to a specific strategy execution problem experienced by the researcher in his work

context.

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Figure 1 Rising gold price and industry cash cost (Mountifield, 2012)

1.1.2 Barriers to change within a particular context

AngloGold Ashanti (AGA) has 20 operations in 10 countries on four continents.

Management of the operations are mostly decentralised, with country, regional and corporate

offices supporting them. Similarly, cash management is largely decentralised where the

operations manage their own bank accounts (and very often numerous bank accounts), which

are held with over thirty banks.

In the late 1990s gold was at a very

low price of approximately $300

per ounce and production costs

were increasing at a faster rate than

production. Today this trend is still

continuing and across the gold

industry, cash cost exceeds the price

of gold (see Figure 1). Systems

were put in place to cope with the

economic environment of that time.

In order to protect the revenue streams of the mines, a decision was taken to hedge a major

portion of the gold production of AGA’s operations. At the end of 2005 the company had

outstanding forward sales contracts totalling 159,783kg with a maturity over 10 years (with

annual production for the same year of approximately 190,000 kg). The mines would sell

their gold production to the hedging companies, which in turn (with back-to-back

transactions) would deliver the gold either into the hedging agreements or sell the gold as

stand-alone sale transactions. The flow of cash was centrally controlled by the hedging

companies. The group had significant borrowing facilities and a lot of effort went into

ensuring that the company stayed within its borrowing limits. Any excess cash funds were

only available on a very short term before they were applied to reduce the borrowing

facilities. It was not unusual for the CFO to intervene in the cash management of the mines

in order to squeeze cash out of them to build group cash positions.

Things started to change in 2006 when the gold price steadily increased to approximately

$700 per ounce (Figure 2).

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Figure 2 Historic gold price

Significant losses were made on the hedging instruments, most of which would only mature

in 2014. The company realised that this would critically damage the viability of the company

and in September 2010 the entire hedge book was closed out at an after tax cost of $2.63bn,

representing an average buy-back price of US$1,300.

Since the change in the economic environment, there has been a steady increase in the

available cash balances and the focus has shifted from managing borrowing facilities to

managing cash funds. Unfortunately the cash management system did not adapt to the

change in the environment. Cash is physically dispersed throughout the group and the CFO

must frequently intervene to get the funds into a centrally managed location from where the

resources can be managed. As can be seen from Figure 3, cash balances locked up at the

operating mines (excluding South Africa) have steadily increased since 2006, with a trend

line nearing an average of US$300m.

This cash generation is a problem as a lot of cash funds are locked up at the operating

entities. On average, approximately $300m (excluding the South African mines) is locked up

(Kitco, 2010)

Figure 3 Cash locked up at mines (excluding SA)

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as working capital at the operations. The CFO is actively involved in pressuring the financial

controllers at the mines to release cash to the corporate office.

If systems can be implemented to reduce the mine cash balances to zero and use the cash

funds to reduce debt levels, there is a potential annual interest saving of US$10 million. The

CFO has given instructions to the Group Treasury department to find a solution and to the

regional offices to provide their support to the efforts. The status of the issue has been raised

up to Group Audit Committee level.

Although this project was very important for the group, the researcher was concerned that

nothing would change. From past experience the researcher was mindful that important

initiatives are often not executed and the same themes would surface every couple of years.

There seemed to be something at play that prevented the finance department from executing

new strategic initiatives. This research paper was an ideal opportunity to study the cross-

border cash management project (as the context) from where new insights into strategy

execution within the finance department of AngloGold Ashanti could be gained. The specific

research goals following from strategy execution and the particular problem relating to cross-

border cash management is discussed in the next sections.

1.1.3 Personal Goals

The researcher has been working as a finance manager in the Isle of Man office of

AngloGold Ashanti for the past five years. Within the next eighteen months following the

conclusion of the research he will have to move to a different division in order to grow in the

role. This project was an opportunity to get involved with a group-wide project, interact with

other managers throughout the group and build an internal network. The researcher could

also demonstrate his abilities, build a reputation and brand, and work directly with the CFO.

As a result, the researcher’s personal and professional exposure on this project was

significant.

1.1.4 Practical Goals

Practical goals are focused on accomplishing something – meeting some need, changing

some situation, or achieving some objective (Maxwell, 2005). It was important for

AngloGold Ashanti to improve its cash management function as there was a potential cash

savings of US$10 million per annum. Through an action research component (further

described in the research methodology chapter) the researcher aimed to positively impact the

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project and influence the causal model that prevented changes to its cash flow management

practices.

1.1.5 Professional Goals

Professional goals are focused on understanding something – gaining insight into what is

going on and why this is happening, or answering some question that previous research has

not adequately addressed (Maxwell, 2005). Resistance to change has been a problem for the

finance department in AngloGold Ashanti in the past, therefore this project was an ideal

opportunity to identify the main drivers of change in the organisation and to test change

management techniques.

1.1.6 Evaluation

Goals for the research project were informed by the researcher’s desire to gain new insights

into strategy execution in the context of a cross-border cash management project for

AngloGold Ashanti. As the specific research problem was playing out in the daily work

environment of the researcher, the research could be conducted very practically with the

advantage of concrete benefits for the company. This demonstrated that the study was worth

undertaking. The following section explores the researcher’s preliminary understanding of

the mechanism at play that could have prevented the cross-border cash management project

from being successfully executed.

1.2 The Abilene Paradox as the Conceptual Framework

In the previous section the researcher identified a desire to gain new insights into strategy

execution within the finance department of AngloGold Ashanti. The risk that the cross-

border cash management function would not make sufficient progress was identified as a

specific problem area within which strategy execution could be studied. The risks relating to

strategy execution raised a number of questions. What is going on with the issues? What is

causing the resistance to change? Why has this not already been addressed? The conceptual

framework is primarily a conception or model of what the researcher will study, and of what

is going on with these things and why – a tentative theory of the phenomena that are

investigated (Maxwell, 2005). This tentative theory informs the rest of the research design

and helps to refine and assess the research goals, develops realistic and relevant research

questions, selects appropriate methods, and identifies potential validity threats to conclusions

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(Maxwell, 2005). The conceptual framework draws from experiential knowledge and prior

research.

Through reflection, the researcher recalled that managers seldom disagree with each other in

a meeting environment. When three or more managers meet (either in a physical meeting or

over a teleconference) they tend to discuss current issues and possible solutions to the issues

in a very civil manner. All the “right” answers are given and everyone seems to agree on

what would be the best course of action for the company and / or department. However,

when the meeting closes, the complaining starts. Views and decisions are criticised among

individuals. Reasons why the agreed-upon action is unrealistic, impractical or even

undesirable are discussed amongst each other. Typically “better” solutions are proposed and

managers would agree to canvass other managers to support and influence the decisions. In

the process nothing gets done, nobody cooperates and nobody takes ownership. The original

strategic discussion disappears from agendas until the next crisis hits the department.

The situation raises many questions. Why does this happen? Why don’t managers challenge

concepts and proposals in a meeting context? Why does the researcher display these same

behaviours? Are managers afraid to come across as constantly disagreeable? Are there

dominant parties in the meetings? Can and should differences be resolved one-on-one rather

than in a meeting? Is the behaviour generalisable across most managers?

The researcher came across the Abilene Paradox, developed by Jerry Harvey in 1974, as a

possible theory of the mechanism at play in the organisation. According to the paradox,

“people in committees will agree on decisions which individually they know to be stupid”

(Dumville, 1999, p. 6). Simply stated, the Abilene Paradox occurs when a group of

individuals collectively make a decision that no individual thinks is correct. Thus, in Harvey's

(1974) article and essay, the road to Abilene was a miserable, hot journey made by Harvey

and his relatives one Sunday afternoon — a journey that none of the group wanted to make

but agreed to because they felt the others wanted to go. The Abilene Paradox captures how

intelligent individuals can collectively pursue a stupid, unwanted action (Kirchner, 1989).

The following concept map displays the antecedents and consequences of the Abilene

Paradox as well as a possible “bypass” to the phenomena (Harvey, 1974).

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Figure 4 A concept map of the Abilene Paradox

Symptoms: the symptoms of the Abilene Paradox (or the inability of management to reach

agreement) have been recognised by the researcher in his work context. Managers privately

agree on the nature of the problem / concern and also on a possible solution and the steps

required to implement the solution. However, these desires and belief are not communicated

to one another. As all the information is not shared between the members, they make

collective decisions that are not in the best interest of the organisation. Managers become

frustrated, angry and irritated with the situation and form subgroups where other subgroups

are blamed for the poor decisions. Typically managers do not deal with the situation and the

cycle repeats itself with greater intensity.

Psychological themes: certain landmarks (psychological themes) indicate when

organisations are at risk of experiencing the Abilene Paradox. Action Anxiety is the fear of

acting in accordance with what one believes needs to be done. Negative Fantasies supports

Action Anxiety in that managers fear the consequences of their actions. Although this fear is

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often unfounded, it can be caused by Real Risk. Real Risk refers to risks that are likely to

happen (someone could be fired, managers can be ostracised, etc.). People fear being

separated from others (Fear of Separation) and therefore do not make decisions that could

alienate them from colleagues and line managers. In their attempt to avoid this separation,

managers peculiarly do exactly the opposite (Psychological Reversal of Risk and Certainty).

They fail to take action because they fear separation and consequently the inaction virtually

ensures separation and aloneness.

Interpretations of psychological themes: the Abilene Paradox is caused by existential risk

inherent in being alive. These existential risks (psychological themes) cannot be changed,

but the way in which individuals interpret the risks can be influenced. By positively

influencing these interpretations, managers can bypass the Abilene Paradox. The ways in

which the concepts can be interpreted are shown in Table 1.

Table 1 A possible Abilene bypass

Concept Negative interpretation Positively redefined

Victim and victimiser Blaming and fault-finding Everybody is a victim

Collusion Everyone colludes to maintain the

status quo

Anybody can change the situation

Responsibility for problem-solving Who is responsible to fix the

problem?

Everybody has the responsibility to

change the situation

Reality, knowledge, confrontation Someone else knows better I know more than I think I do

Thirty years after Harvey published his work on the Abilene Paradox, Harvey, Novicevic,

Buckley and Halbesleben (2004) evaluated the relevance of the Abilene Paradox in their

current business environment and concluded that globalisation and the knowledge era created

an ideal environment where the Abilene Paradox could manifest. Harvey et al. (2004)

identified a number of changes in the business environment that increased the importance of

the Abilene Paradox for managers. The speed of business increased significantly since the

1970s and many managers were unable to adapt to this change and were consequently not

able to make non-programmed decisions. This increased complexity often resulted in loosely

coupled inter-organisational relationships with a low level of cooperation and managers

struggled to manage these global networks. Globalisation furthermore forced managers to

commit to continued funding of projects much sooner than was required in domestic markets

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leading to insecurity of managers and the need for group support. Virtual workplaces also

increased with globalisation and the resulting reduction in social knowledge of people eroded

managers confidence even further. This perceived chaos in the business environment

diminished the capacity of managers to persist and plan for the future and made them risk-

averse.

Harvey et al. (2004) proposed a systematic approach to break free from the Abilene Paradox.

The approach centred on a carefully selected and diverse assessment team that should

perform a formal assessment of the organisational culture and sub-cultures, evaluate the flow

of information (in order to identify bottlenecks) and to identify groups and group membership

(to find relational and political centrality of key individuals). This information should then

be used to reframe the reality within the organisation thereby identifying the individuals who

could bring changes about and those individuals who would be most likely to resist change.

Throughout the process senior management should take responsibility to increase

transparency in the organisation through greater participation in decision-making.

The existence of the Abilene Paradox does not only affect decision-making in an

organisation, but also the effectiveness of organisational learning (McAvoy & Butler, 2007).

While learning is a process of acquiring new skills, it also involves a change in behaviour and

beliefs. The authors argue that all organisations should learn from project post-mortems and

should question not only the facts, but also the logic behind the facts (double-loop learning).

This learning should furthermore be elevated to a level where managers question whether the

process of decision-making is correct (triple-loop learning). It is during the process of triple-

loop learning where managers reflect on their ability to correctly examine scenarios and to

make decisions based on these scenarios. Power relationships within teams, as manifested

through the Abilene Paradox, have the potential to negatively affect the reflection process.

The authors propose that a degree of separation between project managers and team members

could help to discover latent power-related factors and mitigate the effects of the Abilene

Paradox.

In this section the researcher used his experience and prior theory as sources for the

conceptual framework. The conceptual framework followed the Abilene Paradox quite

closely as it seemed very relevant in the problem context and matched the behaviours

displayed by managers. This conceptual framework supported the research goals at it

explained, as a tentative and incomplete theory, why the cross-border cash management

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project could have ended in a failure. The Abilene Paradox also provided a “coat closet”

where data could be stored and analysed as well as a “spotlight” to focus and illuminate

findings. In the next section the connections between the conceptual framework and the

research question are discussed.

1.3 Research Questions

The research question is the heart of the research design and frames the study in important

ways, guides decisions about methods, and influences (and are influenced by) the conceptual

framework, preliminary results, and potential validity problems (Maxwell, 2005). It takes

into account the goals of the research, the connections to the research paradigm and what is

already known about the research field (the conceptual framework).

The researcher defined the research question as follows:

If it is true that the Abilene Paradox is at work in AngloGold Ashanti, what

causal mechanism explains the behaviour and how does it impact strategy

execution? How would the researcher be able to intervene to make sure the

organisation successfully addresses the concern of underutilised cash

balances?

1.4 Research Methods

The research methods deal with the way in which data was gathered. What were the sources

of information and who was interviewed? In this process the researcher had to negotiate

research relationships. It was important to get the approval of the Chief Financial Officer as

primary sponsor of the project, as well as the researcher’s direct line manager. The people

responsible for the treasury department also had to be informed that the project would be

used as the context for the research.

Participant observation and interviews were going to be mostly held by telephone conference,

however, the researcher also had to use email communication extensively to gather data. A

research software package called Atlas.ti was used to capture the research results and code

the observations.

The research methods are further expanded on in chapter 2: research methodology.

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1.5 Threats to validity

In the design phase of the project there was a risk that the Abilene Paradox was not at play in

the organisation, which could have made the entire project invalid. The grounded theory

process helped the researcher to understand the actual causal mechanism that then informed

the literature review for the isomorphic mapping. As long as the researcher did not force the

Abilene Paradox on the project but remained aware that another mechanism could be at play,

the results of the research would still be valid and rich.

The researcher furthermore had the risk that the data collection would not be sufficient to

reach saturation during the grounded theory process. As the researcher is geographically

removed from the departments and people that interact with the process on a day-to-day

basis, it was important to ensure that the data collection was very carefully planned in order

to ensure that enough and relevant data was collected. The researcher remained open for

additional sources of data (interviews and practitioner blogs) to reduce this threat to validity.

1.6 Evaluation

In chapter 1 the researcher described a concern relating to cross-border cash management at

AngloGold Ashanti and it was demonstrated how the project could deliver benefits to the

company. There was a threat that the company would not make sufficient progress with the

project as it seemed as if the Abilene Paradox (the inability to manage agreement) was at play

in the finance department. The goal of the research was to gain an understanding of the

causal mechanism at play that prevents the department from successfully implementing new

innovation. This plays off within the parent discipline of strategy execution and the research

ultimately aimed to gain new insights into this discipline. The research project was therefore

relevant for the researcher and the company.

The researcher formulated the research design according to Maxwell’s (2005) research design

concepts. The research goals were formulated and informed the conceptual framework.

These led to the research question and the basic research methods were identified. Threats to

validity were identified and plans to reduce the risks were discussed. The research design

helped the researcher to effectively and efficiently execute the research work. The next

chapter provides detail about the research methodology used in the paper.

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Chapter 2: Research Methodology

Management research is the desire for new and better insights for new knowledge

(Partington, 2002). In this search for new knowledge, managers form their own theories

about what is happening and why. Good theories serve two purposes (Christensen, 2003):

• They help managers to predict, with some confidence, what will happen under certain

conditions (causality); and

• They help managers to interpret the current situation – how did the situation arise and

what is happening?

In the first chapter the research design was introduced through the situation, concern and

question. This chapter explains the research methodology followed by the researcher. The

research methodology builds on the research framework and is used to get the research results

and during theory building. The chapter starts at the broadest level (critical realism as

ontology) and then explains how grounded theory is used as the epistemology and links the

two concepts. The research project contains a component of action research and its

relationship with grounded theory is explained. The chapter concludes with a description of

the data collection methods used to get the research results.

2.1 Critical Realism as the ontological position

“The general obsession with observing only historical or sociological movements, and not a

particular human being (which is considered such righteousness here [in America]) is as

mistaken as a doctor who does not take an interest in a particular case. Every particular case

is an experience that can be valuable to the understanding of the illness” (Nin, 1969, p. 44)

One of the most critical decisions a researcher makes is the paradigm within which the

research is situated. The paradigm refers to a set of very general philosophical assumptions

about the nature of the world (ontology) and how the researcher understands it

(epistemology) (Maxwell, 2005). A clear understanding of the paradigm informs and

justifies the research design and builds a coherent and well-developed research approach. In

this paper the researcher uses critical realism as his ontology, which is further explained in

this section.

Critical realism is the theory that we observe the world and make our own mental models of

it. These mental models are often inaccurate and do not represent the real world; our mental

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models are influenced by our perceptions and past experiences (Marobela, 2006). The

researcher’s initial conclusions (as stated by the concern of this paper) about our inability to

adapt to changes are therefore based on his past experiences at AngloGold Ashanti and

previous employment. Critical realism postulates that these mental models do not necessarily

represent the real world and are possibly not the truth (Mearns, 2011).

The task of the researcher was more about constructing a narrative about AngloGold

Ashanti’s management practice rather than discovering the truth. This means that qualitative

research was used (as opposed to quantitative research) to understand the reality constructed

by the management team, rather than claiming to discover the truth about the group

(Cruickshank, 2003).

Critical realism works in three domains: the domain of the empirical, actual and real. The

empirical domain consists of what one experiences - directly or indirectly. These are from

the researcher’s own observations and interactions with colleagues and stakeholders, which

are separated from the actual domain where events happen whether they are experienced or

not. What actually happens in the AngloGold Ashanti office is not the same as that which the

researcher observes. This domain is in turn separate from the real domain. In this domain

there are also mechanisms at play that can produce events in the world (Danermark, Ekstrom,

Jakobsen, & Karlsson, 2002).

In this paper the researcher sought to understand each of the three domains at play in the

office: what are the things he observes (the empirical); what are the things happening which

he does not personally observe (the actual); and what are the causal mechanisms at work (the

real)?

2.2 Grounded Theory as the epistemology

If ontology is the view of the world, then the epistemology is the process of understanding

the world. In the previous section the researcher explained that the world exists independent

of his experiences and own mental models of the world. The researcher can experience the

world (the empirical) and gather data about things that happen that he does not personally

experience (the actual). His experiences and data gathered can then inform him of the real

mechanisms at play that produces the empirical and actual world. The process where a

researcher moves from the world of the empirical and the actual to understand the real

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mechanisms is called the epistemology. The researcher chose grounded theory as his

epistemology.

Grounded theory is the roadmap that takes one from the domain of the empirical (personal

observations and experiences) to the domain of the real (which includes the causal

mechanisms at play). Grounded theory methods consist of systematic, yet flexible,

guidelines for collecting and analysing qualitative data to construct theories “grounded” in

the data themselves (Charmaz, 2006).

After defining the research question, concern, design and methodology, the researcher is in a

position to start his data gathering process. Data for this research project was gathered from

actual observations in meetings, previous minutes of meetings, interviews and practitioner

blogs. Data is examined line-by-line and defined by codes (initial coding). The purpose of

the constructed codes is to link the data gathering process to an emergent theory (Charmaz,

2006). At this stage the researcher explicitly aims not to apply preconceived ideas or

categories to the codes. Any preconceptions could lead the researcher into missing new

insights and events.

Throughout the coding process (and during all subsequent processes) constant comparison is

applied. Each new code is compared to previous codes to identify similarities and differences,

and emerging categories are compared to the codes and to other categories. Events are

compared to each other; even interviews are compared over time. This constant comparison

helps the researcher to study the emerging data and identify trends and attributes.

As new data is gathered, codes are sorted and categorised into categories that describe their

attributes. These are the initial, tentative categories from the initial coding phase. The

categories may be intriguing, but would tend to be very thin. All the attributes have not yet

been explored with too many assumptions and questions left outstanding. Theoretical

sampling is a technique to advance the analytical process at this stage of the research.

Theoretical sampling is a further data gathering process, but with the specific goal of adding

properties to the initial categories already identified. New data is selected with the specific

purpose of gaining new insights in existing categories and directs the researcher where to go.

This data collection method continues until no new properties emerge; at this point the

categories are saturated. Categories are saturated when gathering fresh data no longer sparks

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new theoretical insights, nor reveals new properties of these core theoretical categories

(Charmaz, 2006).

Once the core categories are saturated, the researcher reworks the final categories to get his

core variables on which a literature review is performed.

2.3 Action Research

Grounded theory is the methodology that takes data and helps a researcher theorise the

underlying causal mechanisms, while action research is a process to learn through action

which immerses the researcher into a situation where a phenomenon can be observed that

produces the data for the grounded theory methodology. Action research creates new

knowledge based on enquiries conducted within specific and often practical contexts. The

purpose of action research is to learn through action, leading to personal or professional

development (Koshy, 2005).

Action research in this paper is achieved through linking the cross-border cash management

project with the grounded theory research performed on the Abilene Paradox. It is a

reflection of AngloGold Ashanti’s management practice while studying people at work.

There are five iterative steps in the process (Koshy, 2005):

• Planning a change;

• Acting and observing the process and consequences of the change;

• Reflecting on these processes and consequences and then replanning;

• Acting and observing; and

• Reflecting.

Action research was selected as part of the methodology as the research could be done within

the context of the finance function of AngloGold Ashanti. The methodology also allowed the

researcher to be a participant in the process, instead of being an objective researcher. Finally,

it integrates with grounded theory in that the theory emerges from the research rather than

through a deductive process where the theory is pre-formulated.

2.4 Data collection methods

Data collection was the first phase of the grounded theory process, with the system-in-focus

being AngloGold Ashanti’s cross-border management intervention. The purpose of the data

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collection was to surface trends and to explore these through further data collection. As these

trends emerged, the focus shifted to the specific question of the research project and the

topics that emerged from the data – this process is called convergent data collection and falls

within the sphere of theoretical sampling (Charmaz, 2006).

The data was obtained through three data collection methods: participant observation,

interviews and documentation.

2.4.1 Participant observation

Participant observation describes the process whereby the researcher observes the world as an

active participant in that world (Laurier, n.d.). The researcher gains much more information

and a greater depth of knowledge than would be possible if he did not immerse himself in the

events (Vinten, 1994). The researcher’s participation as a finance manager in the chosen

process improvement project gave him access to resources that he would not have had if he

was an outsider observing the process. He also understood the language that is spoken, both

from a technical perspective (accounting and treasury) as well as the cultural language of

AngloGold Ashanti. He could make sense of the data collected and was able to pick up on

the finer nuances of the discussions.

This participation in the process impacted on the data collected. The researcher’s social role

within AngloGold Ashanti, his position as researcher and the social role of the people

observed (whether it was a line manager, subordinate or colleague), influenced the character

of the data collected (Vidich, 1955). Because data collection does not happen in a vacuum,

respondents reply differently depending on the interviewer’s social status. The researcher

therefore had to be conscious of potential bias in the data and how he would respond to that.

To confirm the validity of the data the researcher had to employ a number of different

approaches. Firstly, during entry into the research project, he had to negotiate his role as

researcher with the Chief Financial Officer as his formal accountabilities did not include cash

management functions. Through this sponsorship, awareness and importance of the concern

being addressed was raised. This also formalised the researcher’s placement within the

management team. To retain some objectivity in the process, however, the researcher

decided to employ “covert” observation techniques in the process. Although all participants

were initially made aware of his role as researcher, he did not publicise this relationship

during each meeting or conversation, as if participants were continuously being made aware

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of his role they could filter their responses in order to prevent future retribution or other

negative consequences. The ethical concern around covert research was addressed through

withholding names and identities from the research results. This ensured that none of the

respondents were any worse off as a result of their participation.

Another method whereby the validity of the data was improved was through the application

of triangulation techniques. The data gathered during participant observation was supported

by other data sources, specifically convergent interviews (to a limited extent) and

documentation. Member-checking was also applied, whereby the researcher’s understanding

of the data was “checked” with the respondents.

Participant observation was extensively used as the primary data source, as it resonated most

with the action research approach.

2.4.2 Interviews

An interview is a conversation between two or more people where one or more of the

participants takes the responsibility for reporting the substance of what is said (Powney &

Watts, 1984). In qualitative interviewing there is an attempt to standardise the interview

techniques (Conrad & Schober, 1999), but in practice they range from an informal

conversation to a highly structured one.

Although the primary data collection method was participant observation, some of the

categories that emerged from the grounded theory process required clarification and

expansion. The researcher used conversational (unstructured) interviews to ask colleagues

about their understanding and interpretation of the phenomena. The results of the interviews

were coded and included in the data collection process.

During conversational interviews the wording of the questions is less important than the

meaning of the questions. This has the benefit of reducing the cost associated with

structuring the interviews and it also increases the accuracy of the answers and

interpretations.

2.4.3 Documentary sources

The third data collection method was documentary evidence. The researcher obtained data

from minutes of board and other meetings, email correspondence and other miscellaneous

records. The documents were read in their context and did not stand on their own. The

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documents were not only about recording facts, but were part of a reflective process in which

the researcher aimed to understand the underlying intentions and “moral underpinnings” of

the participants in the action research project and the employees interviewed in the process.

Because the documents were susceptible to alternative interpretations, the information was

validated through conversation interviews and “member-checking”. The following criteria

were used to evaluate the credibility of information (Johnson, 1997):

• Credibility: was the evidence free of error and distortion?

• Authenticity: was the evidence genuine and from an impeccable source?

• Representativeness: was the evidence typical of its kind or not?

• Meaning: was the evidence clear and comprehensible?

2.5 The process of theory building

Theory building describes how a researcher moves from data collection through to a theory

resulting from the research. It consists of two main stages: the descriptive stage and the

normative stage (Carlile & Christensen, 2004).

The descriptive stage is an initial stage whereby the researcher obtains theoretical sensitivity

about the subject. In this paper the researcher observed barriers that prevented the business

from swiftly making progress with its cross-border cash management function. The initial

hypothesis was that the Abilene Paradox was at play in the finance department, therefore the

researcher used the main empirical indicators of the Abilene Paradox (action anxiety,

negative fantasies, real risk, separation anxiety and psychological reversal of risk and

certainty) to form an initial understanding of the mechanism at play. This understanding

guided the data collection activities.

The normative stage of theory building starts with the raw data collected during the research

process. It follows the iterative grounded theory process of observation, categorisation and a

statement of causality. The process is both inductive (making statements of causality from

the underlying data) and deductive (predicting observations based on existing statements of

causality). Anomalies arising from this prediction are investigated further.

Once the categories and statements of causality have been surfaced, the model is compared /

mapped to existing models. The purpose of this mapping activity is to transfer the properties

of the existing model into the model the researcher is busy studying. The mapping happens

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at two levels: homomorphic mapping and isomorphic mapping (Beer & Physick, 1994).

Homomorphic mapping is a many-to-one mapping and refers to the process whereby

observations are categorised (lower order properties are dropped for higher order relations);

this is analogous to the inductive process of normative theory development. Isomorphic

mapping is a one-to-one mapping of the two models and flows from the literature review

performed by the researcher. Beer (1994) described this process as the Nature of a Scientific

Model.

2.6 Evaluation

Chapter 2 documented the research methodology. It described the view of the world through

critical realism and grounded theory as the method to understand this view. The cross-border

cash management project was identified as an action research project that would support the

grounded theory process. The data collection methods were identified and the theory

building process was briefly described.

The research design from chapter 1 together with the research methodology in this chapter,

provides an integrated research framework that guides the research activities. Chapter 3

applies this framework to get the research results.

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Chapter 3: Research Results

As described in the research design chapter, the key concern was that AngloGold Ashanti

would not be able to implement new processes for cross-border cash management. The goal

was to get an understanding of the mechanism that prevents the organisation from

implementing change successfully. This chapter shows how the research framework was

applied to get from the data sources to core variables. Each stage of the process is reported

with milestones using examples and summaries. The researcher explains how qualitative

data analysis software helped in the management of the research process, he demonstrates the

three grounded theory data cycles of the project (covering initial coding, theoretical sampling

and saturation) and presents the core categories that emerged from the data.

3.1 Making use of research software – Atlas.ti

The software package, Atlas.ti, was used to help capture and analyse the research results.

The motivation to use specialised software came mainly from the need to keep a close link

between the raw data, codes generated from the data and the categories developed from the

codes. Atlas.ti builds a database where raw data is stored. From the raw data codes were

generated and grouped into “families”. Throughout the process Atlas.ti kept links between

the various components, making it easy to move from families back to the source data.

Another significant benefit of using the software, which the researcher only discovered after

using the software for a while, was that there was no need to transcribe the research

interviews. Interview recordings were imported into the software database and coding took

place directly from the recordings. It was therefore also very easy to retrieve the sound files

from the database of codes, which helped when comparing different interviews linked to the

same codes. It is estimated that the research analysis time would have at least doubled if

software assistance was not used.

This specific software application also supports the grounded theory process. Raw data is

converted into “quotes” (i.e. observations), which are then coded and the codes grouped into

“families”. The elements of grounded theory are mirrored by Atlas.ti: concepts are similar to

“codes” and categories are similar to “families”.

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3.2 Grounded theory cycle 1 – action research and initial coding

Observations from the action research project formed the basis for the first cycle of the

grounded theory process. The objective of this cycle was to gather data that would establish

the initial categories. The process of abstracting ideas and interpretations from raw data is

called coding (Charmaz, 2006). The codes show how data is selected, separated and sorted; it

is the link between the data and the emergent theory. Because codes show actions, they are

often worded as gerunds – words that reflect action. Rather than labelling something as

“trust”, the label would be worded as “trusting others”.

3.2.1 Action research results

AngloGold Ashanti’s Chief Financial Officer and a subsidiary board of directors (the holding

company for all the non-South African operations) created a burning platform in August 2012

when the importance of group-wide cash management processes was stressed. Significant

benefits would be achieved if the group could use cash locked up in the regions to service

debt facilities and reduce interest charges. From an action research perspective, the aim was

to find a mechanism that would concentrate cash balances in a central location. Concurrent

with this goal, the aim was to address the key concern of this research paper. From past

experience the researcher was mindful that the company might not make progress with

researching and implementing a solution. If this concern was valid, he would aim to get an

understanding of the mechanism at play that prevents the organisation from making progress.

This mechanism would then also explain the behaviour in other innovation environments.

It was decided to implement a two-stage approach to the solution. Firstly, a short-term

initiative to pull cash from the regions into a central bank account was implemented. Cash

balances were monitored on a weekly basis by the local treasury manager and reported to the

CFO and group treasury manager. This report was followed up by newly implemented

weekly meetings with the heads of finance of the two most cash-locked regions: Continental

Africa and the Americas. The purpose of the meetings was to “chase” the regions for cash

and understand the barriers that prevented cash from being up-streamed through the corporate

structures. It was a typical “carrot-and-stick” approach, but it was hoped that immediate

results would be achieved from these meetings.

The second initiative revolved around finding a technological and systemic solution. Three

of AGA’s high profile bankers were approached for advice on best practice treasury

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management systems. The bankers advised similar strategies: firstly bank balances would

have to be made visible. While there is currently a manual process in place to report bank

balances (with a one week lag time), a technological solution could be put in place to ensure

balances are available in real-time. Various options are available to achieve this (online

banking channels, host-to-host services and SWIFT), with SWIFT being the most preferred,

but also the most expensive, option (Jansen, 2011). SWIFT is a common platform from

which financial institutions can send and receive information.

Once the bank balances become visible, the company could work on a strategy to concentrate

cash funds in a central location (e.g. a cross-border sweeping facility). This would involve

working on a country-by-country basis to investigate possible regulatory barriers. The

countries AGA operates in typically restrict the flow of cash through a combination of

exchange controls, banking regulations, companies’ law requirements and tax legislation. A

high level overview of the in-country requirements indicated that a solution would be very

complex, if at all possible. The chart below demonstrates the possible barriers to cross-

border cash movements that could be expected in each of the main countries AGA operates in

(no or few barriers (green), moderate barriers (yellow), and stringent barriers (red)):

Figure 5 Barriers to cross-border cash movement

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As Argentina was the most pressing concern, the CFO and his head of finance in the

Americas got involved in order to work with the government in obtaining approval to move

cash out of the country. Since 2011 the country has tightened regulation of the movement of

Argentinian pesos in and out of the country to prevent a flight of cash. This resulted in a

“foreign exchange trap”, where the movement of money was just short of impossible. As a

result, AngloGold Ashanti accumulated cash balances in the country that could not be used

outside of Argentina. This is a typical demonstration of the resistance that could be expected

from the “red-listed” countries shown in Figure 5.

On 20 September 2012, employees at the South African operations embarked on an

unprotected strike. This followed wildcat strikes at Lonmin’s operations in the Marikana area

the previous month. Production was impacted for an extended period with the last employees

returning to work on 16 November 2012. The often-violent labour unrest in South Africa

prompted rating agencies to downgrade South Africa’s sovereign ratings, with a threat that all

major companies would also be impacted

by adverse rating reviews. This crisis in

South Africa consumed much of AGA’s

management resources and also impacted

the pace of the cross-border cash

management project. Resources were

prioritised and little progress was made on

this project during the timeframe this

research paper covers. Figure 10 shows

cash balances held by the mines from the

start of this project until the end of December 2012 (the end of the financial year).

This unfortunate turn of events was initially seen as a possible barrier to completing the

research, however after careful consideration, the researcher realised that this added empirical

evidence in support of the initial concern that the organisation generally struggles to

implement change initiatives. Although the data could not be explored from an action

research perspective, the researcher could still get an understanding of the mechanism at play.

The revised approach is explained in the remainder of this chapter.

Figure 6 Cash balances Aug - Dec '12

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3.2.2 Initial coding

During the six weeks of this grounded theory cycle, data gathered from one-on-one

discussions, meetings, email communications and board minutes was captured. The people

involved during this cycle are listed in Appendix A.

Notes about the various discussions, decisions and outcomes of the meetings were made,

however while coding and comparing the data between the sources, the researcher realised

that his notes during the initial stages of the project were often very cryptic and factual and

did not convey meaning or interpretations as they were verbalised by the participants. For

example, the notes would document that it was agreed not to involve the regional office or

mine financial controllers in the cross-border cash management discussions, but the

comments about the perceptions that regional offices are conflicted between the AGA group-

wide initiatives and protecting the autonomy of the operating mines were not documented.

This made comparison of meeting contents from the one meeting to the next very difficult. It

was also difficult to code these meetings as the researcher had to rely on memory. During

subsequent phases of the data gathering process, it was decided to record (tape) all

conversations (as far as was practical), which made the analysis process much easier.

Charmaz (2006) called the first phase in the data gathering process “initial coding”. The

researcher’s objective was to look for meaning and sense from the observations. Why were

stakeholders from the regional offices and mine locations not involved? Why did Tanzania

avoid telephone conversations and insisted everything should be dealt with by email? What

do people mean when they say the business is too complex to find a solution? Each line of

information (or segments of data) were examined and labelled (coded) with a short name that

explained the nature of the data (qualitative coding). Table 2 shows examples of the

observations and how the observations were coded.

Table 2 Examples of codes generated from data

Observation / segment of data Code “We need to strangle the flow of cash to the mines by controlling the gold proceeds they receive.”

Managing through command and control

“…(the information) illustrates the fact quite clearly that we have been managing our cash balances and is evidenced by the fact that the balances in all instances have been reduced.”

Defending the status quo

“…failing which it will end up like the previous McKinsey initiatives in this area, which we will try and avoid as far as possible.”

Failing in project execution

“[this REGION] has an Empire-ish attitude.” Working in silos “…he is busy digging his own grave.” Colluding to solve the problem

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Although the categories at the end of this first cycle were still thin, certain concepts started to

take shape. These concepts were categorised as:

• A tendency to manage through command and control;

• People do not disagree with each other, although their actions show disagreement;

• People do thing to please others;

• Advocating on behalf of others and defending them;

• Deflecting responsibility;

• A lack of trust among managers and departments; and

• Failure to execute projects and new initiatives.

Throughout the process the observations and codes were compared with each other with the

purpose of identifying similarities and differences. How does manager A’s view of trust

differ from that of manager B? How is trust different to a deflection of responsibility? How

do the responses received during the start of the project differ to what was experienced at the

end of cycle 1? The process of constant comparison was followed through all cycles of data

gathering up to the final building of the theory.

Cycle 2 of the process explores the initial categories and findings.

3.3 Grounded theory cycle 2 – theoretical sampling

As the researcher worked through cycle 1 of the grounded theory process, questions about the

codes and observations started to emerge. Why do senior managers not challenge the status

quo and each other? Are people who show initiative supported? Are decisions made in

group settings or between individuals in-between meetings? Are the Executives and Senior

Vice Presidents approachable? These questions informed the data collection of cycle 2,

where the purpose was to explore the initial codes and the questions (theoretical sampling).

Were the initial codes and categories accurately described? Are they representative of the

processes observed? Do they have further implications? Does the researcher understand

what is happening?

As the original cross-border cash management project was indefinitely placed on hold, other

sources of data had to be examined. The researcher requested permission to interview a

couple of the Executive team members in order to get a better triangulation of the results, but

was politely advised that they would not have time to discuss the project (this was included as

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an observation about AGA’s inability to implement change). The alternative was to

interview people working within and on the fringes of the finance department. The following

people were therefore interviewed (see Appendix A): Chief Accounting Officer; Vice

President – Group Management Accounting; Vice President – Taxation; Senior Vice

President – Group Internal Audit; and a consultant with a long history working with the

company.

The researcher’s aim with the interviews was to expand his knowledge about initial

categories (theoretical sampling). As a guideline in the interviews the questions from

Harvey’s diagnostic survey (see Appendix B) were used, but the conversation was allowed to

be fluent throughout as new areas and ideas were explored. One of the questions would, for

instance, be “Is there conflict in the organisation?”, but the discussion led to cultural

differences in the group and how there is a need for tolerance. This comment was explored to

gain a better understanding of what is seen as cultural differences (e.g. language, motivation,

respect), and in the end it was concluded, through discussion and exploration of the topic, that

the cultural differences were a red herring. When this specific manager referred to cultural

differences he was talking about people in certain business units who are not willing to raise

concerns. This observation in turn linked closely to Harvey’s Abilene Paradox.

As new knowledge and insights were gained, the codes and categories were changed and re-

labelled. When the researcher now looked at ‘advocating on behalf of others’ he realised that

it would be better to collapse it into a bigger category of ‘pluralistic ignorance’. Table 3

outlines the initial and final categories used to frame coding of the data:

Table 3 Initial and final categories

Initial categories Example codes Final categories Command and control Pulling rank

Management by consensus Structural problems

Corporate and work structures

Not disagreeing Small subgroups discuss problems Private agendas Sarcastic comments in meetings Afraid to speak up Talking on behalf of others

Pluralistic ignorance Pleasing others Advocacy for others

Deflection of responsibility No functional accountability Not enough questioning Lack of unity Lack of cross-pollination

Silo Management

Lack of trust Blaming the boss Political power It is not ok to question

Corporate trust

Failure to execute projects (eliminated)

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Initial categories Example codes Final categories

Too much change Continuous crisis management Time pressure

Change fatigue (new)

3.4 Grounded theory cycle 3 – saturation

A key question throughout data gathering is “when do I stop gathering data?” Charmaz

(2006) said that this happens when all the categories are saturated. Saturation is achieved

when new data does not generate new theoretical insights and no new properties of the core

variables emerge. It is not necessary that the same themes and patterns are repeated, but no

new information about the repetitive concepts emerges. The researcher aimed to achieve

saturation during cycle 3 of the data gathering process.

Up to this point in the research project, most of the data was gathered from people and events

very closely related to the finance function of AngloGold Ashanti. There was thus a risk that

the results were going to be one-sided and that there was insufficient data to inform different

perspectives. To address this concern it was decided to include data from internet blogs (see

Appendix A). These blogs were selected from a variety of sources to triangulate the results:

social psychology; information technology; colleges; and even parenthood. The

unanticipated consequence of this approach is that the ultimate theory will transcend the

borders of AngloGold Ashanti.

Achieving full saturation of the categories within the timeframe of a minor dissertation was

always a risk of the project. Although some new insights were gathered from the practitioner

blogs, the researcher was satisfied that he achieved saturation, i.e. a point was reached where

no new information came to light.

3.5 Memo-ing

Throughout the research process memo-writing played a vital part. According to

Charmaz (2006), memos chart, record, and detail a major analytic phase of the journey.

Whenever new ideas came up or an interesting question or concern was researched, the

researcher documented his thoughts, ideas, questions and further areas for discovery. These

were mostly used to reflect on the process, data and possible links to other theories. Memos

were an important link between the data and the ultimate theory and made the data relevant

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and interesting. Big parts of the memos are incorporated throughout the paper and helped to

increase the level of abstraction.

3.6 Core variables

The final five core variables were defined as: pluralistic ignorance; corporate and work

structures; silo management; corporate trust; and change fatigue. Examples of observations

supporting the categories are provided in Appendix D.

Pluralistic ignorance: This variable links to the original theoretical sensitivity where it was

proposed that the Abilene Paradox was at work. However, pluralistic ignorance is more than

just the Abilene Paradox: it includes any situation where people are reluctant to voice their

views.

Commonality of purpose: The ways in which the reporting lines are set up are often

questioned and the roles and boundaries of line managers and regional offices are blamed for

inaction. As there is a feeling that finance managers do not always serve a common purpose,

functions are often duplicated (especially at corporate, regional and country office level).

Silo management: The company does not share best practice and each region fights to

protect its existence.

Corporate trust: People do not seem to trust each other and the different regions do not

trust across regional boundaries.

Change fatigue: Over the past 15 years AngloGold Ashanti has gone through numerous

changes from mergers, restructurings and legislative compliance. This trend has followed the

mining industry in general, as well as the current economic environment. There is a

perception that employees are unable to cope with this continuous change.

3.7 Evaluation

The key output of this chapter is the core variables. Every step in the research methodology

contributed to generating the core variables and this chapter demonstrated how the researcher

applied the methodology to get from the data sources to the core variables. In chapter 4 the

researcher looks at existing literature to establish a body of knowledge that is relevant to the

dissertation topic and locates the core variables within this body of knowledge.

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Chapter 4: Literature Review

The purpose of a literature review is three-fold: it positions the research project within a

greater body of research (the parent discipline); it increases the theoretical sensitivity of the

key concern and question; and it provides an evaluation of the core variables. These three

purposes reflect the three levels of abstraction of the project, where the core variables are

consumed by the field of the key concern, which in

turn gets consumed by the parent discipline (see

Figure 7). The parent discipline was labelled

“strategy execution”, the key concern and question

were labelled “inability to innovate and effect change”

and the core variables were labelled as they were

defined in the previous chapter (being pluralistic

ignorance, change fatigue, commonality of purpose,

silo management and corporate trust).

4.1 Parent discipline – the finance department’s role in strategy execution

The purpose of this section is to explain why effective innovation and change management is

important for AngloGold Ashanti by looking at it from a strategy execution point of view.

From the research material the researcher briefly touches on the important difference between

strategy formulation and strategy execution and then explores the attributes of effective

strategy execution.

There are many schools of thought on organisational strategy (Valmra, Metsla, & Rannus,

2006). Approximately half are concerned with strategy processes (the design, planning,

positioning, learning and the configuration school), while the other half are concerned with

strategy content (the entrepreneurial, cognitive, cultural, environmental and the power

school). Valmra, Metsla and Rannus (2006) proposed that strategy-as-practice could be

added as another dimension that studies the social life of strategy. According to this school

of thought, strategy happens at three levels in an organisation (Johnson, Melin, &

Whittington, 2004) (see Figure 8): the supra-organisational level, the organisational level,

and the micro level. At the supra-organisational level, strategy focusses on external factors

that shape both strategy content and strategy processes. The majority of traditional strategy

literature focusses on the organisational level of strategy. Lastly, the micro level looks at

Core Variables

Strategy Execution

Change Management

Figure 7 Three levels of abstraction

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how strategy is executed within an organisation (actions of the employees). Middle managers

must be involved in strategy for them to become committed to the process (Parnell, 2008).

There should be continuous interaction between the levels of strategy, which is where the

research project focusses. The concern is situated within the interaction between strategy at

the organisational level and the micro level, and how the stated strategy is executed into daily

content and routines.

Figure 8 The Three Levels of Strategy

External forces demand that companies must execute strategy with speed, at the lowest cost,

and with little or no rework (Bigler, 2001). To do this, five capabilities must be developed

within an organisation:

• Speed in everything that a company does;

• High-yield processes that fit the rhythms of the marketplace;

• Lean systems that remove subject matter, process and culture barriers;

• A sense of urgency; and

• Results.

These capabilities can be built using three important drivers that are required for effective

strategy execution (Cocks, 2010): (1) focussed leadership of the right people; (2)

communication through visible management systems; and (3) the use of project management

techniques. Focussed leadership is about realism, simplicity and clarity. Managers must

translate high level strategy into something that is meaningful to everyone (Getz & Lee,

2011). This ensures that the strategy is disseminated throughout the organisation and it

(Johnson, Melin & Whittington, 2004)

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becomes a self-organising system. Khadem (2008) proposed that an organisation can create a

centre of focus or a frame of reference for all employees by breaking down the vision,

mission and strategy into smaller components (Khadem, 2008). Some research goes as far as

to propose that a clear and simple strategy could be manifested in a physical prototype by

using design thinking (Holloway, 2009). The purpose of the prototype is to show the

organisation what success would look like.

The right people must also be engaged appropriately. It is not all about skills and technical

capability, but people must also fit the organisational culture and values and must display the

appropriate attitude. Studies have proven that culture is critical to a company’s ability to

execute strategy successfully (Allard & Barber, 2003).

Furthermore, management systems must ensure that open and direct feedback is deployed

which addresses people individually, as poor communication will create perception gaps and

ineffective strategy execution. Poor strategy execution is often related to ineffective decision

rights and/or information flow (Article, 2009).

Lastly, project management techniques must be deployed. Cocks (2010) saw organisational

strategy as a programme made up of a series of related projects, each requiring planning and

allocation of resources to deliver results. This argument links with Khadem’s (2008)

proposition that strategy must be broken down into smaller components with specific

objectives, resources and timelines.

Successful strategy execution through the three drivers discussed above ultimately leads to

change within an organisation. Resistance to change was identified as the key concern of this

paper. In the next section an overview of the literature on change management and its

antecedents and consequences is provided.

4.2 Key Concern – the finance department’s slow response to change

Kurt Lewin is described as the father of contemporary theories of applied behavioural

science, action research and planned change (Schein, 1988). Among many of his theories he

designed a 3-stage model of change: unfreezing, moving, and refreezing (Lewin, 1947)

(Figure 8). Unfreezing creates conditions where existing systems and processes (current

mind sets) are de-confirmed – equilibrium is broken and uncertain conditions (confusion) are

created (Burnes, 2004a). Moving is the process whereby existing behaviours are changed to

conform to the desired state. This period of transition is typically associated with confusion

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and uncertainty. The final step in the process refreezes the new behaviours to reach a new

equilibrium. Burnes (2004a) emphasised that in order to prevent employees from going back

to their previous behaviours, the new behaviour must resonate with the organisational

environment, personalities and remaining behaviours.

Figure 9 Lewin's 3-stage change process

Other popular models of change can often be mapped to Lewin’s 3-stage process. In The

Heart of Change (Kotter & Cohen, 2002), eight steps are necessary for successful change: (1)

create a sense of commitment, shared needs and urgency; (2) create and be part of a guiding

coalition; (3) develop a vision and strategy; (4) communicate the change vision and mobilise

commitment; (5) enable employees to make the change; (6) generate and celebrate short term

wins; (7) consolidate gains and build on successes; and (8) make it sustainable. Steps 1 to 3

are similar to Lewin’s unfreezing stage, steps 4 to 6 are similar to moving, and steps 7 and 8

are similar to the refreezing stage. Following the same approach, one can look at Burnes and

James’ factors that impact on a change process (Burnes & James, 1995): cognitive dissonance

must be appropriately managed (where beliefs and actions are aligned to existing beliefs and

actions) and is analogous to unfreezing; change and movement is similar to moving; and

employee commitment and culture maps are aligned to refreezing. Because many change

models are in ways aligned to Lewin’s 3-stage model, his work was used as a focal point in

this research.

Even though Lewin’s work is highly regarded, many researchers have questioned the validity

of his seemingly simplified approach to change management as it is deemed too simplistic to

deal with more complex environments (Burnes, 2004a). Criticism relates mostly to Lewin’s

assumption that business operates in equilibrium; a claim that the model only works for

smaller projects; the apparent ignorance of politics and power in organisations; and the top-

down approach of the model. Burnes studied the work of Lewin and concluded that it was

never the intention of Lewin that his 3-stage model should be looked at in isolation. Three

other research fields are important components of change management and are necessary for

a holistic approach to change. Burnes (2004) claimed that the 3-step model, together with the

other fields, formed an inter-linked, elaborate and robust approach to planned change.

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Lewin’s other works were in Field Theory (mapping the totality and complexity of the field

in which the behaviour takes place), Group Dynamics (looking at forces working in groups)

and Action Research (where managers are both practitioners and researchers in their field).

While Lewin approached change as a process, Isabella (1990) researched the cognitive

changes managers undergo through the process. Her argument was that the views of

managers (as they relate to unfolding change) are closely linked to the change process itself.

When one understands the cognitive stages of managers, one is able to improve responses to

organisational change. Each of the cognitive changes is triggered by actions and events and

these triggers can be used to facilitate the change process. The four stages of cognition

(Figure 10) are: anticipation, confirmation, culmination and aftermath.

Figure 10 Evolving interpretations as a change unfolds

Isabella (1990) explained that change is generally preceded by many rumours and uncertainty

about the current environment. Established routines and behaviours crumble and the status

quo is no longer viable (Burnes, 2004b). The rumours are not necessarily malicious, but

merely disconnected pieces of information over which people may speculate. During this

period, managers collect information to help them confirm or disconfirm the rumours. She

called this stage of cognition ‘anticipation’. Managers anticipate change and try to build a

frame of reference, with the aim of reducing the level of uncertainty surrounding them; they

are trying to assemble the pieces of a puzzle. How well managers make sense of the

information is very much impacted by the communication and feedback systems of an

organisation. The quality of information is improved when managers communicate

effectively throughout the organisations and are consequently better able to make sense of the

“mess”.

In Lewin’s 3-stage model, the unfreezing of a system is initiated with an announcement of the

planned change. This announcement is the trigger that moves a manager’s frame of reference

from anticipation to confirmation. During this stage managers draw on past experiences,

conventional explanations and stereotypes to create a model of what a reasonable course of

action would be. Their expectations of how the change will unfold are formed by their

experiences during past change processes: a typical thought from a manager could be that

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“the size of our department was halved when we had a restructure 10 years ago – I can expect

the same will happen with the currently planned restructure”. Isabella (1990) felt that if these

mental models are well-framed, this stage will generally reduce fear and anxiety. This idea

was supported by Polley and Ribbens (1998), who proposed that teams which experience

negative events become worse for their efforts to make dramatic change, whereas teams that

do well gain experience and continue progressing.

Confirmation shifts to culmination when the change event is experienced (moving in Lewin’s

model) by managers. Managers experiment with and test the changes until they can

reconstruct their environment. During this process organisational artefacts are very

important. Artefacts are tangible objects that provide evidence for symbolic meaning, for

example the cancellation of annual departmental functions during times of austerity.

However, managers notice exceptions to this rule where many departments are allowed to

continue holding these parties. This indicates to managers that the austerity measures are not

working. Through their interaction with the environment and the changed values, managers

experience that the measures are not valued and this can restrict the success of similar

changes. Symbolic interactions and forces (collectively known as group behaviour) change

and affect both group structures and individual behaviours (Burnes, 2004b). According to

Isabella (1990), these symbols bring double exposures into focus.

The last cognitive stage is aftermath. Culmination shifts to aftermath following a series of

smaller events over time. Managers evaluate the consequences of the change events and

form new stereotypes and conventional explanations that will be used in the next change

event. Winners and losers are identified and a sense of closure is created. If it is not properly

managed, survivors could become self-absorbed, risk averse and narrow-minded

(Appelbaum, Henson, & Knee, 1999).

In this section Lewin’s change model was examined and compared with other popular

models. Some researchers criticised the relevance of the model and the work of Burnes had

to be considered to confirm that the model was appropriate and robust enough to use in the

research. Isabella (1990) expanded on the work of Lewin and the researcher concluded that

her behavioural model was appropriate to use as the main framework for theory building and

modelling. In the next sections the antecedents and consequences of the core variables are

explored; in the theory building chapter these are used to identify the potential impact the

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core variables have on Isabella’s (1990) model and consequently AGA’s ability to implement

change.

4.3 First core variable – pluralistic ignorance observed in meetings

The term ‘pluralistic ignorance’ is used in this research to cover a range of similar topics

involving the management of agreement as it relates to defective decision-making, including

the “pure” form of pluralistic ignorance (further described below), the Abilene Paradox,

Diffusion of Responsibility and, to a lesser extent, Shadow Groups.

In the chapter on research design, the Abilene Paradox is used as the conceptual framework

from where the reasons why the researcher’s department apparently struggles to implement

change initiatives was explored. The Abilene Paradox happens when organisations frequently

take actions in contradiction to what they really want to do and therefore defeat the very

purposes they are trying to achieve (Harvey, 1977 as cited by Kim, 2001). The inability to

manage this apparent agreement among managers has six consequences (Harvey, 1974) (my

own labels for these consequences, framed as variables, are labelled in italic text):

• Managers discuss the situation and problems privately, but are not willing to raise

concerns in a group [organisational rumbling];

• Managers discuss solutions to the problems privately, but again are not willing to make

proposals in a group [organisational rumbling];

• Managers do not communicate to each other effectively [effectiveness of

communication];

• Because of defective communication, decisions are taken that are contrary to what the

intent of the organisation is (collusion) [effectiveness of decisions];

• Managers become frustrated, angry, irritated and dissatisfied with the organisation. It

could also happen that attempts to resolve conflict may increase tension rather than

reduce it (Polley & Ribbens, 1998). People with authority are blamed for the situation

(victim and victimiser) [dissent]; and

• The cycle repeats with greater intensity.

Pluralistic ignorance is defined as a situation in which an individual holds an opinion, but

mistakenly believes that the majority of his or her peers hold the opposite opinion

(Halbesleben, Wheeler, & Buckley, 2007). Managers fear rejection from the group and are

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therefore not willing to voice concerns (Chao, 2011). Halbesleben et al. proposed eight

consequences of pluralistic ignorance:

• It increases employees’ perceptions of difference from others in the organisation and

employees feel that their views are too far removed from the views of the group.

Managers experience the greatest anxiety or dissonance when their behaviour is counter-

normative, voluntary, and public (Volkema & Fleck, 2012) [dissent].

• This increased perception of difference prevents employees from voicing their opinions.

This creates single outcome calculation bias: solutions to problems are focussed on a

local search only, with sub-optimal solutions (Chao, 2011) [efficiency of

communication].

• Consequently employees adopt the perceived opinions of others in the group

[organisational rumbling].

• The impact of negative experiences (such as stress and burnout) is increased [dissent].

• The above all lead, indirectly, to higher stress levels and lower commitment levels

[dissent].

• An organisational culture develops that employees do not support [cultural strength].

• Voluntary employee turnover increases [dissent].

• The quality of group decisions is weakened [effectiveness of decisions].

Other fields of study also explain the symptoms of poor management of agreement.

Diffusion of Responsibility is the failure to act in situations where others are involved and

where they might also take similar action (Polley & Ribbens, 1998) (“I don’t have to do this;

somebody else will do it”). Polley and Ribbens (1998) stressed that managers must preserve

and nurture underlying differences to create an environment where “cognitive conflict”

(positive conflict) is encouraged. Conflict should be task-oriented as opposed to emotionally-

motivated. The Shadow Group is the collective name of all the alter egos present in a group

(Hede, 2007); people react from their emotions when the Shadow Group consumes their overt

self. Pluralistic ignorance is one of the symptoms when emotional reactivity is triggered.

People project their own negative qualities on others and the others then become the focus

point of attention and criticism.

Why does pluralistic ignorance happen? Harvey (1974) defined five causes resulting in the

Abilene Paradox: Action Anxiety; Negative Fantasies; Real Risk; Separation Anxiety; and

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the Psychological Reversal of Risk and Uncertainty. Action Anxiety happens when

managers fear the consequences of acting on what they believe needs to be done. This fear is

so great that they would rather do unworkable or even illegal actions. Managers anticipate

that their disagreement will be seen as negative actions and possibly result in criticism (and

even dismissal) from others. These anticipated consequences are often false and are referred

to as Negative Fantasies. If these fears are likely to happen (as may have been proven to a

manager from past experience), the antecedent is called Real Risk. Both Negative Fantasies

and Real Risk pose a threat that a manager will be ostracised and rejected by his group or

supervisor. This risk is called Separation Anxiety. The last antecedent (the Psychological

Reversal of Risk and Certainty) is the observation that managers guarantee separation from

the group by not taking action and therefore ensure failure.

Halbesleben et al. (2007) added three causes of pluralistic ignorance that precede the

antecedents from Harvey (1974). Firstly, a vocal minority member may have a significant

(but incorrect) influence on the views of the majority. Majority members develop “espoused

opinions” of representatives and assume the majority will agree with the viewpoints.

Secondly, a desire to maintain group identity can prevent members from voicing concerns.

This tendency is especially strong in certain cultures (Volkema & Fleck, 2012). The last

cause is relational demography, where an employee perceives that he or she is different from

another focal employee, and is consequently less likely to identify with the employee and

then also the group that includes that different employee.

Figure 11 is the researcher’s representation of the antecedents and consequences of pluralistic

ignorance. During theory building this model was synthesised and linked to Isabella’s (1990)

model to explain how pluralistic ignorance impacts on the effectiveness of change

management.

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Figure 11 Antecedents and consequences of pluralistic ignorance

4.4 Second core variable – trust between managers and departments

During the data collection process there were numerous instances where people commented

on perceived problems with trust. Trust is a willingness to be vulnerable to others based on

the prior belief that those others are trustworthy (Mishra & Spreitzer, 1998), but to be

vulnerable is to accept a significant real risk of loss resulting from the trust placed in others.

Trust is demonstrated (as artefacts in an organisation) when managers continuously listen to

employees, address their concerns and when they do not retaliate when the concerns are

raised (Edmondson & Munchus, 2007).

Mishra and Spreitzer (1998) stated that trustworthiness is built when people show a concern

for others’ interests, when they are competent, open and reliable. Trust can even be built

when negative consequences are present (e.g. a corporate downsizing) if the rationale for the

negative consequence is seen as justifiable in the circumstances. This sense of justice can

strengthen trust levels over time. Culture can also play a role in the trust perceived by

managers (Schermerhorn & Bond, 1997). People living in certain cultures display a high

level of collectivism (preference for a tightly-knit social framework) which can create the

impression that people not within that social framework are not trusted equally. Although

AngloGold Ashanti operates in multiple jurisdictions, these cultural differences have not been

considered in the scope of this research project, therefore it creates an opportunity for further

research.

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Edmondson and Munchus (2007) argued that trust, combined with the sense of urgency

related to a concern, determines the way

employees choose to express dissent

(Figure 12). When trust is low but a

matter is not urgent, employees complain

between individuals but are not willing to

share the complaints in a group setting

(organisational rumbling). When the

matter becomes urgent, employees revert

to organisational blasting, where the issue

is escalated to a person who has the necessary authority to resolve the problem (this is

considered a form of whistle-blowing). With high levels of trust and issues that are not

urgent, employees feel that the potential problem is not serious enough and a widespread

withholding of information takes place (organisational silence). The ideal form of

communication, where employees openly share information within group settings, happens

when levels of trust are high and urgent action is required (organisational communication).

When people open up and share information, talking about issues impacting their lives, they

“stop beating about the bush, they stop playing politics, and they start to support each other”

(De Vries, 2005, p.71).

Figure 13 is the researcher’s representation of the antecedents and consequences of trust

levels. During theory building this model was synthesised and linked to Isabella’s (1990)

model to explain how trust impacts on the effectiveness of change management.

Figure 13 Antecedents and consequences of trust

Figure 12 Dissent strategies in the decision-making phase of change (Edmondson & Munchus, 2007)

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4.5 Third core variable – silos within the finance department and across

disciplines

Silos are tall, self-contained cylinders, which are usually sealed and used to store

commodities (Aaker, 2008). It is also a metaphor to describe management teams which are

unable or unwilling to cooperate and talk across organisational units. Some silos happen

naturally and are often developed with a purpose, e.g. product lines like gold and platinum or

geographic regions like the Americas and Africa. Aaker (2008) explained that silos are often

the result of decentralisation, but he was of the opinion that such a model is not viable in

today’s global world, where markets, customers and products are dynamic and in constant

flux. Many organisations today are working towards linking their silos (Lank, Randell-Khan,

Rosenbaum, & Tate, 2008), thereby ensuring the participation of key stakeholders (Boxelaar,

Paine, & Beilin, 2006).

Silos hamper the flow of knowledge and experience required to maximise organisational

capabilities. Aaker (2008) listed a number of consequences of silo management, which

although they were conceptualised very specifically to marketing management, can span all

disciplines in an organisation. (1) Organisational resources are misallocated as each silo

fights to retain control, power and cash flows. The manager with the most political power

usually wins the battle. There is a high cost of duplication of effort, inconsistencies and

inefficiencies (Lank et al., 2008). (2) Group wide initiatives lack clarity and linkage to the

overall company strategy. The initiatives are optimised for the silo-managed business unit, or

important group-wide activities are neglected because the benefit for the affected business

unit cannot be seen. (3) Group-wide opportunities are missed because managers are unable

to see potential synergies. This happens because managers do not feel accountable to each

other (De Vries, 2005). (4) Competencies are weak because the scale of silos often does not

foster the depth and breadth required from managers. (5) Successes in one silo are not

shared with others. (6) Communication and cooperation is weak or non-existent. In one

case study the researcher noticed that participation in meetings was very uneven because of

block voting resulting from protected territories (De Vries, 2005). These causes are often

seen as the “real causes of poor organisational performance” (Article, 2009, p.19).

De Vries (2005) built an interesting link between trust and silo mentality. He stated that trust

can only be built by putting in lots of effort in relationship building and relationships can only

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be effective through personal face-to-face interaction. He doubted if relationships can even

exist through email or other electronic communication only. However, many managers are

knowledge managers who operate in the cyber world. It is here where they do not realise the

importance of face-to-face relationship building, and they mistakenly assume (according to

De Vries) that they can share knowledge and information without having strong relationships.

According to him, true knowledge management is all about team creation, trust and spreading

knowledge between everybody. Relationships also help build effective organisational

structures as people as more likely to collaborate with each other (Sy & D’Annunzio, 2005).

Without strong relationships you cannot build trust; without trust you cannot share

knowledge; and without knowledge sharing, you create silos.

Breaking the power of organisational silos takes a significant investment in financial

resources and a lot of effort in changing culture (Aaker, 2008). Senior management buy-in

and motivation is required, especially as the silo managers are not able to see the solutions

from their bounded rationality. Top management often reverts to some form of restructuring

to break this power (Lank et al., 2008). Aaker (2008) identified four causes of a silo

mentality which make group-wide cooperation even more difficult: too much decentralisation

with little or no coordination of group-wide activities; performance systems and reporting

structures that do not promote collaboration across silos; lack of top management

involvement and insufficient resource allocation; and regional complexities.

Figure 14 is the researcher’s representation of the antecedents and consequences of a silo

mentality. During theory building this model was synthesised and linked to Isabella’s (1990)

model to explain how silo mentality impacts on the effectiveness of change management.

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Figure 14 Antecedents and consequences of silo management

4.6 Fourth core variable – developments in accounting and the mining

industry leading to change fatigue

Conventional research shows that employees become cynical and suffer from burn-out and

change fatigue when they are subjected to continuous periods of change (Stensaker & Meyer,

2012). Although there is limited evidence for it, Stensaker and Meyer (2012) highlighted

opposing views of students who were of the opinion that multiple change initiatives can also

enhance the learning experience, with performance improvements displayed during

subsequent change events. Consecutive change initiatives therefore do not automatically lead

to change fatigue; only when change is not appropriately managed does it become an

antecedent of change fatigue.

Stensaker and Meyer (2012) suggested that employees become cynical of change and lose

trust in managers when they experience failed change attempts. Change attempts are often

unsuccessful because of a failure to keep people informed, not caring about employees and a

failure of managers to understand the points of view of employees. Consequently employees

become less committed and loyal to the organisation (MacDonald, 2002), learning to keep

quiet about concerns and problems and not speaking up as they fear punishment. Target

fatigue (a situation where targets are continuously changed or are unattainable, also known as

Management By Objective) is a slight variation on the topic, where employees become

frustrated, fatigued and less effective (Dahlsten, Styhre, & Williander, 2005).

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When employees experience positive change events, they develop and enhance three

capabilities for dealing with change: coping with uncertainty; maintaining control; and

increasing their own market value. MacDonald (2002) stressed that the reaction of an

organisation to negative change experiences can turn the negative experiences into positive

ones. Corporate leaders must in these circumstances create a sense of community and

purpose for employees. They can do this by listening to employees and creating a cause that

the employees can support; aligning resources around the cause; creating a vision and

demonstrating results; and ensuring the results are viable and sustainable.

A study conducted at Glasgow’s National Health Service found that speed of change is not a

good indicator of change fatigue as speed is relative (MacIntosh, Beech, McQueen, & Reid,

2007). Management teams become exhausted by the communication and consultation burden

rather than the perceived pace of change. Another important observation was that people

responsible for change initiatives must be separated from day-to-day operational

responsibilities, as operational pressures often detract from project-related tasks. External

resources can often be very useful in filling operational gaps.

Figure 15 is the researcher’s representation of the antecedents and consequences of change

fatigue. During theory building he synthesised this model and linked it to Isabella’s (1990)

model to explain how change fatigue impacts on the effectiveness of change management.

Figure 15 Antecedents and consequences of change fatigue

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4.7 Fifth core variable – purpose for finance managers not aligned across

the group

“The only way a manager can do a good job is by being aware that he/she is in the centre of various networks of relations and that the only thing he/she can manage is his/her side of the relationships, being sensitive and perceptive as an observer and listener to his/her environment. And last but not least, a good manager never

forgets that he/she is part of self-regulating nets and not outside them” (Hoebeke, 2000, p. ii)

Corporate structures and work systems in the finance department are not aligned to give

finance managers a common purpose. While organisational hierarchies are still very much

embedded in organisations throughout the world, they have become less relevant and

managers should rather focus on work systems (Hoebeke, 2000). Work systems, per

Hoebeke (2000), are the same as human activity systems as defined by Peter Checkland and

both provide a description of organisations. Work systems refer to a system of meaningful

activities which transcend traditional organisational boundaries. A work system is a

purposeful definition of the real world in which people spend effort in more or less coherent

activities for mutually influencing each other and their environment.

Scholtes (1998) proposed that many problems with work systems / organisational structures

start with a lack of purpose. Managers do not take action or try to blindly implement the

latest management fad because they do not have a clear purpose for what they are doing. A

lack of purpose is caused by: (1) a lack of vision from top management; (2) poor

Figure 16 Why Aren't Our Middle Managers Leading? (Scholtes, 2008)

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communication of the vision; or (3) too many directions and different change programmes. In

Figure 20 Scholtes (1998) demonstrates why there is often a lack of leadership initiative from

middle managers. Employees will gain a clearer personal purpose when their roles are well-

defined (King & Nicol, 1999). Managers can facilitate this clarity by supporting the staffing

of positions with people who possess the required mental complexity to perform such roles.

Hoebeke (2000) claimed that well-defined work systems (through the study of transformation

processes) focus on the contributions people make to a process and not on hierarchical

positions and authority. A mind-set that focuses on hierarchies often creates organisations

that are bureaucratic, in constant conflict and are not transparent. Organisations reach their

optimal potential when sub-systems interact more efficiently and effectively with each other

in order to accomplish their work (Draman, 2004).

Figure 17 is the researcher’s representation of the antecedents and consequences of effective

organisational structures. During theory building he synthesised this model and linked it to

Isabella’s (1990) model to explain how organisational and work structures impact on the

effectiveness of change management.

Figure 17 Antecedents and consequences of a common purpose

4.8 Evaluation

The literature review provides a body of knowledge, which is relevant to the research topic

and current thinking, from where the core variables can be mapped to a scientific model. The

next chapter demonstrates the process of comparing the research data to this body of

knowledge.

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Chapter 5: Theory Building and Modelling

In this chapter a theory is built that explains the mechanism that hinders AGA from

implementing change initiatives. The researcher did a literature review on each variable and

mapped the antecedents and consequences of the variables onto Isabella’s (1990) model to

establish the relevant relationship between the variable and the relevant variable of Isabella’s

model. During theory building the researcher linked the relationships together to build the

Causal Loop Diagram. The core variables from the research results were used extensively in

the process. Figure 18 depicts how the researcher adapted Beer’s model for this research

project (Beer, 1994).

Figure 18 Adapted Yo-Yo Model

The left leg of the model relates to the specific managerial situation and is based on the

research problem (resistance to change) formulated in chapter 1. The research design,

methodology and results chapters moved the model down to the core variables. The right leg

of the model starts with the selected scientific model (a model of evolving managerial

interpretations of change) and provided insight into the research problem. Through the

literature review the model was developed to a conceptual model analogous to the core

variables. Chapter 5 completes this model by mapping the modified scientific model to the

core variables and develops a theory of the causal model at play.

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Pluralistic ignorance was the main thread running through this entire research paper (or the

Abilene Paradox, as per the initial research to gain a theoretical sensitivity). The research

data indicated that pluralistic ignorance (or one of its variants) was at play in parts of the

business and the following antecedents and consequences were identified from the data:

• The concern that insufficient progress would be made with AGA’s cross-border cash

management strategy was found to be valid, as the project stalled and was indefinitely

put on the backburner;

• Evidence of organisational rumbling was found. Employees seldom disagreed about

solutions and problems in a meeting context, but individually they would complain to

each other.

“…in finance the guys don’t ask enough questions – they would talk amongst each other, but not challenge within a group…”

• Communication did not happen or was often ineffectual.

“… everybody agreed that they were aware [of the problems], but they had various excuses [for not communicating it]”

“..bad news is only reported up to a certain [reporting] level…”

• Employees had negative fantasies.

“… I can either say ‘Yes, I’ll go along with it’, and resent it, or say ‘No’ and try to pull rank on him with my boss. I will never be forgiven; or I might not be allowed back in the organisation…”

“…it’s as if there is a fear [of retribution] in the [AGA] group…”

• People did not take accountability and action (action anxiety).

“…people try to avoid conflict as long as possible. Something that looks like it can become a conflict situation… it feels to me almost that the attitude in the [AGA] group is … let’s rather leave it and see if it isn’t

fixed by itself…”

• People were reluctant to do things that may separate them from the group.

“…I think it has to do with people who are tremendously insecure…”

“…I can’t do it at the expense of me spending my political capital…”

“… I think our company, over the past 5 years, has become very political…”

Pluralistic ignorance results in poor decisions (Harvey, 1974; Halbesleben et al, 2007) and

hampers employees’ abilities to see a reasonable course of action during confirmation of

change (Isabella, 1990). Bad past experiences lead to negative fantasies and increase fear and

anxiety, which ultimately slows down employees’ abilities to shift their cognitive experience

of change from “confirmation” to “culmination” and consequently slows down change. This

mechanism is depicted through the causal loop diagram (CLD) in Figure 19.

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Figure 19 Causal Loop Diagram - Impact of pluralistic ignorance on change model

P1: Pluralistic ignorance is at play in certain departments of AngloGold Ashanti,

caused by negative past experiences and resulting in poor communication. This

prohibits the organisation from making sense of changing circumstances and

consequently implementing change initiatives.

Corporate trust: there is a lack of trust amongst managers and departments within the

company. This is most apparent through the high occurrence of organisational rumbling.

“It’s maybe a little around corporate culture and that people still are almost not quite, uhm, trustworthy of actual management in general.”

“There is still a fair amount of distrust in terms of ‘go ahead: say whatever you think’.”

The current Chief Executive Officer (CEO) was appointed in 2007 and was seen by many as

a change agent. Shortly after his appointment almost all of the executive management team

was replaced, a new vision and set of values for the company were rolled out and business

improvement processes were implemented. Many Australians were appointed since then,

which raised many eyebrows as the CEO himself is Australian. Irrespective of the validity

and consequences of the changes, many people felt insecure as a result of this. Whatever

decisions were made, one of two comments was generally heard: either “another privileged

employee is favoured” or “he is doing this to protect his job”. It is not uncommon to hear

people talk about “political agendas” and “spending political capital”. Trust within the

organisation is at a very low point.

This situation is worsened by an apparent lack of trust between different departments and

operating units. Many conversations held with people (especially after meetings or when

email communications were sent out) went around the speculated reasons why departments

apparently decided to do (or not do) certain things. One comment from the researcher’s

colleague was that it feels like a constant battle to get cooperation between the departments.

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Employees look at artefacts in the business to evaluate intentions and because they receive

mixed signals, their distrust in the process is deepened.

“..the guys see what is going to happen, and they see what management is doing and the type of money they are spending on themselves…”

“…again we are starting to ride a wave of people battling to read the corporate signals. So, we’re stopping Christmas parties in corporate office, but a couple of days later out comes job postings for 7 VPs in group

purchasing. At the same time people here are retrenched…”

Trust is a necessary antecedent of open communication as employees are reluctant to voice

their opinions when they fear negative consequences. Communication is important to reduce

the number of rumours in a company and ensure that the information that managers work

from is accurate. This, in turn, allows managers to build an accurate frame of reference from

where they can create a reasonable course of action when faced with change. In the

researcher’s Causal Loop Diagram, trust is a key component that creates a reinforcing loop

(Figure 20): TRUST reduces PLURILISTIC IGNORANCE reduces QUALITY OF

INFORMATION increases EFFECTIVENESS OF ANTICIPATION increases

EFFECTIVENESS OF CONFIRMATION increases TRUST.

Figure 20 Causal Loop Diagram - Impact of trust on the change model

P2: There are low trust levels between managers and departments within AngloGold

Ashanti. This increases the occurrence of pluralistic ignorance and prohibits the

business from implementing change initiatives.

Silo management: AngloGold Ashanti often operates in silos and does not share learning

experiences between divisions and departments (especially as they relate to support services).

The following antecedents and consequences of silo management were identified:

• Management teams are unwilling to cooperate and talk across organisational units.

“I do not want to involve the operations yet as we need to design a solution ourselves and present it to them for implementation.”

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“…how much influence does [the finance discipline] have? I would say limited.”

“I would never walk into a meeting... and make comments about things the other departments can do differently.”

“Unfortunately there aren’t any management meetings [below regional meetings].”

• Communication and cooperation is weak or non-existent.

“We are only now starting to bring people together to collaborate cross-functionally on a single project.”

“The forums where things are discussed, does not exist within finance.”

“The environmental guy, the community guy, the finance guy, and the security guy, did not know what each other were doing.”

• Too much decentralisation with little or no coordination of group-wide activities.

“…local priorities are not always aligned with corporate goals…”

“…group goals are not enforced on a country or operational level. As soon as you try to do this, there is division in the camp...”

• Low levels of accountability.

“It is sort of a culture here. There is hesitance to hold people accountable.”

“What we found is no-one stands up and takes ownership.”

“It is easier not to do it because afterwards [he is] not going to get into trouble. Nobody is going to ask why [he] did not do it.”

The finance function, as well as many other support functions (human resources, information

technology, legal, etc.) consists mainly of knowledge managers. We live in a cyber-world

where data is gathered, analysed, interpreted and then disseminated through electronic

medium. Trust cannot be effectively built in this cyber-world; it needs face-to-face

communication, and without trust it is impossible to share information freely with other

people. Support functions with knowledge managers are therefore notorious for building

silos as the managers forget that the maintenance of relationships is very important. With a

silo mentality managers restrict the flow of information, which increases the occurrence of

pluralistic ignorance (Figure 21). Poor knowledge management is analogous to silo mentality

management.

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Figure 21 Causal Loop Diagram - Impact of silo management on change model

P3: The finance function of AngloGold Ashanti often does not work across silos.

This is a result of low trust levels and it increases the occurrence of pluralistic

ignorance and prohibits the business from implementing change initiatives.

Change fatigue: Over the past 15 years, AngloGold Ashanti went through continuous waves

of significant change. In 1998 AngloGold split (as the former gold division) from Anglo

American and listed its shares on the New York Stock Exchange. This brought with it

numerous legal and regulatory requirements which were especially relevant to the finance

function, and a management team had to be built that could cope with the strategic decisions

of the stand-alone business. In 2004 it merged with Ashanti Goldfields Corporation, based in

Ghana. The merger had its usual challenges and some employees experienced negative

consequences when the operations did not integrate as smoothly as was anticipated. Cultural

differences were blamed for disagreement and employees generally struggled to work

together. This was most directly felt when the miners in Obuasi Mine (Ghana) went on a

slow strike and production levels declined significantly. The consequences of the

disagreement are still felt today. In 2007 Mark Cutifani took over from Bobby Godsell as

CEO. Some believed that Mark’s role was primarily as a change agent and senior managers

left the employment of AngloGold Ashanti. Mark implemented significant operational

changes in order to turn the poor performance of the group around.

As was seen in the literature review, continuous change is not necessarily a negative

situation, however it becomes negative when employees experience the change as failed and

it is not appropriately managed. Employees lose trust in the process and future change events

are viewed with cynicism (change fatigue).

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“…I think the guys suffer from consulting fatigue and change fatigue at this stage…”

“…some of the current business issues are related to almost initiative overload…”

“…there is just too much of it. The operations cannot focus on the core function of production…”

The following observations indicate that the finance department at AngloGold Ashanti

suffers from change fatigue:

• Low levels of commitment and loyalty

“People are not willing to stick their neck out and take responsibility.”

“…just keep your head below the parapet and dodge the bullets…”

• Low levels of trust – see previous sections that deal with trust specifically

• Low level of individual capabilities

“…it almost speaks a little bit to a capacity shortage…”

“…I think in general the hands are possibly enough for a fairly routine set of operating environments…”

• Pluralistic ignorance (see previous sections that deal with pluralistic ignorance

specifically)

Change fatigue is reduced through effective communication from top management, openness

in communication and demonstrating a real concern for others’ needs. As has already been

demonstrated, there is poor communication between managers at AGA. Change fatigue in

the finance department is therefore most obviously attributed to poor communication. The

causal model is adapted in Figure 22 to present the impact of change fatigue. If management

can, through experimentation and testing, reconstruct their environment and experience a

positive change event (as described through the culmination phase), then change fatigue will

not set in, however, if the experience is bad and change fatigues sets in, it will impact

negatively on future change initiatives through the confirmation phase.

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Figure 22 Causal Loop Diagram - Impact of change fatigue on change model

P4: The finance function of AngloGold Ashanti suffers from change fatigue as a

consequence of previous change events that were not managed effectively. This

reduces the effectiveness of current change initiatives.

Commonality of purpose: During the research process the researcher struggled to make

sense of this variable, as the research field is vast and the researcher did not have enough

knowledge or data to provide a critique of AngloGold Ashanti’s corporate structures or work

systems. This could be a research project in its own right and it had to be scaled down

appropriately for this project.

The variable touches on two levels of structures. Firstly, the researcher observed a tension

between corporate, regional and operating structures. Talk in the corridors was that the

regional and country offices are duplicating functions that already exist at the corporate or

operational levels. However, nobody seemed to be willing to openly discuss the problem and

challenge the way the structures are set up, and the silo mentality also did not help. Policy set

at corporate level (the boundaries within which regional and operating structures should do

business) also does not seem to be monitored and enforced, and there appears to be a

reluctance to set the boundaries. Business units are seen as fully autonomous and nobody

dares to interfere, which creates further tension when managers try to innovate; change and

innovation can only be rolled out and encouraged through policy change. The corporate

policy function (as it relates to support functions) seems, at face value, to prohibit effective

innovation and change because regional autonomy is too great. Is regional autonomy good

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for strategy execution and maintenance, but when it comes to strategy development and

business planning should it be centrally coordinated?

The second level of tension exists in work systems, which relates to direct reporting lines. In

2007 AngloGold Ashanti rolled out the Systems for People Model (SP Model). The SP

Model was designed as a means to integrate activities necessary to enable AngloGold Ashanti

to ensure the right organisational design, with the right people in the right roles. It also

defines effective working relationships which allow each and every employee to work to their

full potential. The SP Model is very closely aligned to Elliott Jaques’ (1996) theory of the

Requisite Organisation. As with any human resource model, this model has been applied by

managers with varied success. The model is especially closely followed in the production

environment, however often other managers are not willing to try this. As the model has

been described as one of AngloGold Ashanti’s “sacred cows”, the researcher was advised not

to be critical about it if he wants to make progress in the company, however many interviews

were held where managers complained about the lack of accountability, the lack of access to

people and ineffective reporting lines.

Whether or not the design of AGA’s corporate and work structures is effective is not

important for the key concern; there is enough evidence that the existing structures are

creating problems and consequently they are impacting on the organisation’s ability to

implement changes. According to Isabella’s (1990) model, during culmination managers

compare the past and present and through experimentation (changing behaviours, new

relationships, etc.) they reconstruct their environment. During this process they look for

symbolic meaning (actions of managers, policies, work methods, etc.) which confirms or

disconfirms the new cognitive model of the environment they constructed. Symbols are

conceptual models of the real world, therefore when the symbols show bureaucracy, a lack of

transparency and conflict (or the inability to manage agreement), managers struggle to make

sense of the change initiatives. Furthermore, during the “aftermath” phase managers evaluate

and review the consequences of change initiatives; these consequences become past

experiences which are used as a frame of reference for future change initiatives. If structures

are not effective because communication channels do not work properly, then managers are

unable to efficiently reflect on their experiences.

This mechanism is depicted through the causal loop diagram (CLD) in Figure 23.

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Figure 23 Causal Loop Diagram - Impact of a common purpose on change model

P5: A common purpose amongst finance managers is absent as a result of poor

corporate structures and work systems. Employees are therefore less able to make

sense of the present situation and evaluate the effectiveness and consequences of

past change projects. This reduces the effectiveness of current change initiatives.

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Chapter 6: Evaluation and Conclusion

During the course of this research paper AngloGold Ashanti’s initiative to improve its cross-

border cash management processes was briefly discussed. It has been demonstrated why

there was a particular concern that although it was an important project and it could deliver

real and significant financial returns for the group, the company was at risk of not making

sufficient progress through investigation of the best solution, involving all stakeholders and

implementing new policies. This concern was largely based on previous experiences within

the group and the researcher wanted to get an understanding of the mechanism that drives this

behaviour in the organisation. If it could be understood why the company is slow at bringing

on board new innovation, the group can learn from these findings and address the causes.

The research project was designed using Maxwell’s research design process and underpinned

with the grounded theory methodology and critical realism. Through a 12-week data

gathering process, interviews, board minutes, observations during meetings (both physical

meetings and conference calls), email correspondence and informal conversations were coded

and categorised. The resulting core variables of pluralistic ignorance, corporate trust, silo

management, change fatigue and corporate structures were studied in the literature review

and the attributes, consequences and antecedents of the concepts were referenced to Isabella’s

(1990) scientific model of how managerial interpretations evolve as key events unfold. The

research work was concluded by hypothesising the isomorphic relationships between the

findings in the literature review and the core variables, and the key and relevant relationships

were captured in five propositions about the causal model. This causal model could be used

to design interventions that will help the finance team of AngloGold Ashanti be more

innovative and efficient at supporting key group strategic initiatives.

The remaining sections of this chapter explore the relevance of change management (and the

need to gain an understanding of the causal model) to the organisation’s slow response time

when addressing key strategic issues (is the research question relevant to the concern and

situation?). The researcher considers the utility of the research, and whether the causal model

and theory about change provides an answer that will make the business more responsive in

future. The validity of the research results is assessed and supported by finding that the

research methodology was sound and robust. Lastly, the ethical implications of the research

are examined and proposals for future research are presented.

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6.1 Implications and significance of the research results

The researcher followed the research methodology to build a causal model that explains the

research question formulated in chapter 1 and demonstrates the mechanism responsible for

resistance to change in the finance department of AngloGold Ashanti. This resistance to

change negatively impacts the department in successful strategy execution. The researcher

also provides practical ways in which interventions can be applied to the situation.

From a critical realist perspective, this causal model represents the real domain and provides

a plausible explanation for observations from the actual and empirical domains. The model

explains why there is no apparent conflict within the department while projects / innovations

are often not executed or experience significant time delays.

The backbone of the model is based on managerial interpretations of change as events unfold,

as managers interpret events differently in each stage of a change process. Change

management will be more effective if these experiences are managed from stage-to-stage to

ensure a fluid transition. The model furthermore identifies five barriers (variables) that

prevent managers from making a successful transition from one stage to the next. These

barriers are specific within the context of the finance department within AngloGold Ashanti.

With the exception of commonality of purpose, the researcher identified that all the variables

are related to each other within reinforcing loops. This means that an improvement in one

variable will inevitably lead to improvements in all the other variables. An improvement of

trust between managers would therefore lead to fewer instances of silo management, less

change fatigue and less instances of pluralistic ignorance. Interventions can therefore be

implemented at any of the variables with a positive impact on the entire model.

The researcher did not identify any immediately obvious relationships between the

commonality of purpose and the other variables. Structures in a big corporate environment

are often a result of bureaucracy and any influence on it is very difficult or is preceded with a

significant time delay. Specific interventions will therefore have to be considered at the level

of corporate structures in order to positively impact the model.

The researcher concluded that the model can be applied at any level within the organisation

as it is scalable for the organisation. Silo management can be addressed at a macro level

(group wide) by implementing new policies and changing the way in which the group

executive team operates across departments. It can also be addressed at a regional level when

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managers set up working groups on specific projects. Even at the operational level each

individual can consciously work across departments and obtain individual input from outside

their unit in order to make a positive contribution. The same logic can be applied to the other

variables. Each intervention will impact the overall effectiveness of the department.

The finance department of AngloGold Ashanti can use this model to anticipate areas where

resistance to change is a threat to successful strategy execution. Regional offices can also use

the model to understand the underlying dynamics when they interact with the bigger group.

There is even a possibility to use the model in other departments (especially departments

responsible for knowledge management activities) as its applicability transcends departments.

6.2 Relevance of the research

The research concern was initially triggered when the Chief Financial Officer sent an email to

all his heads of finance explaining that there is an undesirable build-up of cash at the

operating mines. He urged his team to immediately look at ways to upstream cash to the

corporate level and work on a longer-term initiative where cash management processes could

be improved. The potential financial benefit of improving the processes was estimated at

US$10 million per year.

Even though the researcher is not involved in the group cash management processes and has

little influence, he recognised the ideal opportunity to attach to the project and use it as an

action research component of this research project. From past observations working for

AngloGold Ashanti, he was concerned that the cross-border cash management project would

end up like numerous other initiatives, where great opportunities for savings and process

improvements are identified, but the team is unable to design more effective processes and

struggles to execute the changes. The finance team plays an important role in supporting the

business and contributing to process improvements and AGA cannot afford not to execute

changes in strategy.

If the company continues on this path and does not learn to be innovative, the other

departments and business units (who rely on change and business improvement to reduce and

manage unit costs) will feel unsupported by the finance function. This will create tension

with the finance function and business will implement changes without the input and support

of the finance team. Ultimately this can lead to a high turnover of staff and a real threat of a

restructuring within the department.

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It is therefore relevant for AngloGold Ashanti to understand the mechanism preventing

pockets of the finance team from innovating and implementing change initiatives: the

question is therefore relevant to the concern. There is a possible counter-argument that

accountants are conformists and should not be innovative and apply “creative accounting”,

i.e. their focus should be on good governance and strong financial control. The researcher

agrees that the finance team should always have a good compliance function, but space

should be created for people who can identify opportunities for improvement. It is the same

principle throughout the entire business: one needs people who can embed and support

existing strategy, but one also needs people who monitor the external environment and shape

the business for the future.

6.3 Utility of the research

The researcher developed a theory that says that pockets of the finance team are often unable

to implement change initiatives because of the existence of pluralistic ignorance (an inability

to manage agreement); a lack of trust between managers and departments; a silo mentality;

change fatigue resulting from negative past experiences; and problems with corporate

structures and work systems.

The model provides a starting point from where possible interventions can be considered, as

although some of the areas look like they may require macro-level interventions (e.g. a silo

mentality across the business), interventions can be put in place at a project level. With this

knowledge available, it would, for example, be useful to invite colleagues from asset

integrity, risk management or procurement when future discussions around cross-border cash

management are held, as they will be able to contribute, not necessarily from a technical

treasury perspective, but from a practical process point of view. This will have the potential

to turn around the silo mentality. Similarly, the business could look for someone that could

act as a devil’s advocate in meetings, thereby reducing the occurrence of pluralistic

ignorance. All these interventions would have a positive impact on the change the

organisation needs to implement.

Another useful application of the model is the functioning of balancing loops. Interventions

that are designed to improve one of the causal drivers (e.g. to involve outside parties in

meetings in order to reduce a silo mentality) will impact and positively influence the other

variables. A reduction in silo mentality reduces pluralistic ignorance because people share

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relevant information more freely. A reduction in pluralistic ignorance then improves

communication and consequently trust between managers is restored. This creates positive

change experiences for managers and the effects of change fatigue are reduced. Small but

focussed changes in a department can therefore exponentially improve performance.

Even though this research was performed in the context of the finance department, the model

can also be applied across departments and business units. The researcher obtained data from

practitioner blogs which, combined with the literature review and scientific model, helped to

formulate a generic model that transcends the finance function in its relevance.

This model is therefore useful to remove the barriers in change management initiatives (the

answer is useful to the concern).

6.4 Validity of the research

The validity of this research refers to the degree to which it is defendable by ensuring it is

plausible, credible and trustworthy (Johnson, 1997). It includes an explanation of the

fundamental reasons and logic underpinning the research methodology used in the project.

Three types of validity are addressed below: descriptive validity, interpretive validity and

theoretical validity.

Descriptive validity refers to the factual accuracy of the situation presented. It is concerned

with the “World of the Problem”, the data sources and the methods of collecting and

recording the data (codes and categories). This is possibly also the area where the biggest

threat to the validity of the research results lies. The researcher works in a highly specialised

department of the AngloGold Ashanti group and is physically isolated from the corporate

office, other regional offices and the operating mines. Daily interaction with other colleagues

in the group is mostly restricted to email communication and the odd phone call, and

meetings in a group setup do not happen often. The risk of researcher bias was therefore very

high. When the research methodology was designed, the researcher negotiated a position as a

team member on a project that looked at AGA’s cross-border cash management strategy to

ensure that he had frequent interaction with people from other offices. During the later stages

when the project was put on hold, the researcher expanded his data collection efforts to

include interviews with key people working within or with the finance team. Lastly, he also

resorted to practitioner blogs to ensure the research results would have a wider application

than only to the people interviewed. Throughout the project the researcher was aware of the

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potential biases and tried to validate the findings by comparing the data between the different

sources. He was therefore satisfied that researcher bias was addressed and that the research

results are descriptively valid.

Interpretive validity is concerned with the perspectives and interpretations of the stakeholders

involved in the research process. To what degree were the perspectives, thoughts, intentions

and experiences of the stakeholders included and were their perspectives accurately

understood and reported? The primary approach to improve the understanding of the

participants’ inner worlds, specifically during participant observation and interviews, was to

check with the participants that the researcher understood what they were saying. This was

done through first repeating what he thought they said (at which point they would correct him

if he understood something incorrectly) and secondly he would explore the concepts with

them.

In one interview the participant mentioned that cultural differences are a major stumbling

block in working with the non-South African mines. The researcher’s immediate thought

was that he was talking about language, work methods and attitudes, but after asking further

questions, the researcher realised it had to do with a corporate culture (of acceptance,

tolerance and support) that applied equally across all jurisdictions. Another strategy applied

when writing the research report was to provide direct quotes from the interviews in support

of the core variables. This was done in order to have the readers experience some of the

perspectives themselves. This creates a risk that readers may draw different conclusions to

the researcher’s, but it does increase the transparency of the process. The researcher is

therefore satisfied that the perspectives of the participants are accurately portrayed and that

the research results are interpretively valid.

Theoretical validity is concerned with the methods used to get from the data to the final

causal model. This research project followed five interdependent steps: research design,

research methodology, data collection, a literature review and theory building. During

research design, Maxwell’s model was used to plan the approach to the research. It included

a consideration of the research goals, the identification of a conceptual framework, defining

the research question, identifying research questions and considering any potential threat to

the validity of the research results. The researcher chose critical realism as the ontological

position and grounded theory as the epistemology. These underpin a robust research

methodology which was applied throughout the project. During data collection the grounded

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theory process was followed and research software was used to help code and categorise the

research data. The process was concluded with a literature review and theory building

process that followed Stafford Beer’s Yo-Yo model in order to get to a new theory of the

causal model at play in the organisation.

There was a risk that the researcher, as a novice, would not apply the methods with the

necessary rigour and that an appropriate synthesis from the data would not be extracted.

Unfortunately the only way to deal with this risk was to trust the process as it emerged. The

risk that the data was not sufficient to support the theory also had to be addressed. For this

project there were two weeks to gather data, therefore there was a risk that the categories

would not be saturated. To reduce this risk the researcher attempted to saturate categories as

far as possible by using practitioner blogs in addition to data collected internally, therefore

the entire process was supported by data triangulation and scientific models and the research

results are therefore theoretically valid.

Based on the claims around the three types of validity above, the researcher is satisfied that

the inferences drawn in the project are warranted after taking into account the study methods

and the representativeness of the study sample. The research results are therefore valid.

6.5 Ethical considerations

In this section the ethical implications of the research report in general and the research

results specifically are evaluated. Velasquez’ (2006) four concepts were used to support the

ethics of this paper.

Utilitarianism is a general term for any view that holds that actions and policies should be

evaluated on the basis of the benefits and costs they will impose on society. In an argument

for utilitarianism, this paper must demonstrate that interventions in the causal model will

improve the effectiveness with which change is implemented, and that the improvements are

feasible and do not come at a cost to managers, other departments, business units, other

companies or society. During the research process the researcher did not come across any

view or perspective that indicated improvements in the core variables would lead to negative

consequences or externalities – they are generally seen as necessary and important

interventions. The researcher is satisfied that improvements in the causal model will provide

utility to the department, the company and greater society.

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The cross-border cash management project poses some ethical dilemmas. One of the

purposes of effective cash management is to pool cash balances in a central location, which

could mean that cash balances are reduced in Australia and pooled in South Africa (or any

combination of countries). This could pose a threat to the Australian government and society

as this would mean there was less cash in the Australian economy, which could restrain

growth and other initiatives. Although cash balances are material for the AngloGold Ashanti

group of companies, they are insignificant in the Australian context as well as all the other

countries they operate in, therefore the researcher is satisfied that a cross-border cash

management strategy will not impact adversely on the societies AGA operates in. It is,

however, something that will have to be taken into consideration when the project is revived.

On this measure, the researcher is satisfied that this project meets utilitarian measurement.

Rights: Human beings of every nationality possess rights to an equal extent simply by virtue

of being human beings. This paper must demonstrate that the views of all stakeholders were

taken into account and that it did not violate any human rights. The most significant threat to

the rights of others was the possible implication of managers and departments as being

“ineffective”, with possible sanctions against them (or the researcher) if the information is not

read within context. Throughout the paper the researcher describes his involvement in the

cross-border cash management function and how this impacts on the performance of the

finance department. The intention of the research is to find the causal model underlying the

company’s behaviour and not to implicate or blame any individual or department. The

problem is systemic and independent of any single person’s input. To protect the individuals,

no names, departments or job titles are mentioned when observations and comments are

quoted. As far as possible the researcher tried not to portray blame in any sort or manner.

Data was also obtained from external sources to make the research findings valid outside the

finance department of the company and give them general application. The researcher is

satisfied that his actions ensured that this paper meets the measurement of “rights”.

Justice: Justice has three components: distributing society’s benefits and burdens fairly;

blaming or punishing persons fairly for doing wrong; and restoring to a person what the

person lost when he or she was wronged by someone. The causal model puts management in

a position to identify interventions that will help the company be more innovative and

execute change projects more effectively. This will improve processes and help employees

do their work more efficiently. It will also get rid of unnecessary and burdensome

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workloads. The researcher is satisfied that the benefits from the causal model will distribute

benefits and burdens fairly and that this paper therefore meets the measure of “justice”.

Care: Care is an ethic that emphasises caring for the concrete wellbeing of those near to

us. The research must demonstrate that care is given to those people most closely associated

with the department the researcher works in. As the entire focus of the project was on the

finance department, the researcher is satisfied that the paper meets the measurement of

“care”.

Conclusion: This research paper demonstrates utilitarianism, rights, justice and care and

meets all the requirements to be considered ethical.

6.6 Proposals for future research

As mentioned in the theory building stage of the project, one of the participants observed that

accountants are conformists and generally do not tend to get into arguments with other

managers or departments. The bulk of accountants are employed to ensure that reporting

practices are sound, robust and are supported by good governance structures and internal

controls. Accounting training focusses on commercial law, accounting standards, auditing

practices and compliance with professional ethical standards. There is an opportunity to do

research on the greater accounting profession to validate this claim. Research can be

extended to propose changes to academic programmes in order to develop accountants that

can question, probe and play an active role in setting the strategy of companies.

This research paper ended with a causal model that drives certain aspects of poor strategy

execution within the finance team. Further research within the company can be performed to

identify interventions for each of the core variables. Progress over time can be observed and

the impact on company performance measured. Similar projects can be applied to other

support functions within the company.

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Appendix A: Register of data sources

During the investigation of a cross-border cash management programme for the group,

numerous people contributed thoughts, ideas, criticism and advice. The data from the input

was obtained through email correspondence, phone calls, meetings, board minutes and

conversations.

Entity Position Name

AngloGold Ashanti Limited Executive Director - Chief

Financial Officer

Senior Vice-President: Finance

Treasury Manager

Vice-President: Finance

Vice-President: Taxation

Srinivasan

Venkatakrishnan

Mark Lynam

Rob Hayes

Himesh Persotam

Owen Murphy

AngloGold Ashanti

Holdings plc

Managing Director

Chairman of the Board

Finance Manager: Treasury

Lloyd McGlew

Don Lindsay

Celia Redwood-Sawyerr

Geita Gold Mining Limited Finance Manager Andrew Schanknecht

AngloGold Ashanti

Americas

Senior Vice-President: Finance Marcelo Ortiz de Zarate

Following the initial data gathering process from the above participants, interviews with the

following people were scheduled and held:

Entity Position Name

AngloGold Ashanti Limited Chief Accounting Officer

Vice President – Group

Management Accounting

Vice-President: Taxation

Senior Vice President – Group

Internal Audit

John Staples

Mark Pringle

.

Owen Murphy

Thienus Coetzee

……….

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Taxation Consultant Chris Coetzee

The final round of data gathering was from the following practitioner blogs on the internet:

Blog Title URL Author

Abilene Paradox -

Why Do We Say Yes

When We Mean No

http://drbj.hubpages.com/hub/Abilene-Paradox-

Why-Do-We-Say-Yes-When-We-Mean-No

B J Rakow

Apple Victimized by

the Abilene Paradox

http://drbj.hubpages.com/hub/Abilene-Paradox-

Why-Do-We-Say-Yes-When-We-Mean-No

John Martellaro

Change fatigue http://4realleaders.com/2011/10/change-

fatigue/

Doug Blackie

Change fatigue: myth

or reality?

www.crelos.com Elizabeth

Ferguson

College, Fun, and

Pluralistic Ignorance

http://thesocietypages.org/socimages/2012/09/0

6/college-fun-and-pluralistic-ignorance/

Lisa Wade

Diagnosis - Change

Fatigue!

http://nextlevel.gehealthcare.com/capacity/facil

ity-planning-design/diagnosis---change-fatigue-

part-3-of-a-3-part-ed-series.php

Tammy Merisotis

Managing change

fatigue

Diagnosis - Change Fatigue! Donal de Paor

Organization

Structure Change

Doesn't Solve

Leadership Issues

http://www.evolvingexcellence.com/blog/2012/

08/organization-structure-changes-wont-

change-organizations.html

Kevin Meyer

Organizational

Structure & Controls

http://www.albany.edu/faculty/ja0754/bmgt481

/lecture7.html

Corporate Author

Organizational

structure can be

underlying cause of

http://www.jobdig.com/articles/439/Organizati

onal_structure_can_be_underlying_cause_of_w

orkplace_issues.html

Joan Lloyd

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Blog Title URL Author

workplace issues

Problems Within an

Organizational

Structure

http://smallbusiness.chron.com/problems-

within-organizational-structure-3828.html

Arnold Anderson

Re-igniting change

leadership at a fortune

50 company to save

millions

www.lastwordonchange.com Corporate Author

The Abilene Paradox http://freekvermeulen.blogspot.com/2008/10/ab

ilene-paradox-it-is-well-known.html

Professor Freek

Vermeulen

What Is Pluralistic

Ignorance?

http://www.wisegeek.com/what-is-pluralistic-

ignorance.htm

Corporate Author

http://freekvermeulen.blogspot.com/2008/10/abilene-paradox-it-is-well-known.html

http://freekvermeulen.blogspot.com/2008/10/abilene-paradox-it-is-well-known.html

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Appendix B: Harvey’s Diagnostic Survey

ORGANIZATION DIAGNOSTIC SURVEY

Instructions: For each of the following statements please indicate whether it IS or IS NOT

characteristic of your organization.

1. There is conflict in the organization.

2. Organization members feel frustrated, impotent, and unhappy when trying to deal with it. Many are looking for ways to escape. They may avoid meetings at which the conflict is discussed, they may be looking for other jobs, or they may spend as much time away from the office as possible by taking unneeded trips or vacation or sick leave.

3. Organization members place much of the blame for the dilemma on the boss or other groups. In "back room" conversations among friends the boss is termed incompetent, ineffective, "out of touch”, or a candidate for early retirement. To his face, nothing is said, or at best, only oblique references are made concerning his role in the organization's problems. If the boss isn't blamed, some other group, division, or unit IS seen as the cause of the trouble: "We would do fine if it were not for the damn fools in Division X." 4. Small subgroups of trusted friends and associates meet informally over coffee, lunch, and so on to discuss organizational problems. There is a lot of agreement among the members of these subgroups as to the cause of the troubles and the solutions that would be effective in solving them. Such conversations are frequently punctuated with statements beginning with, "We should do ..."

5. In meetings where those same people meet with members from other subgroups to discuss the problem they "soften their positions," state them in ambiguous language, or even reverse them to suit the apparent positions taken by others.

6. After such meetings, members complain to trusted associates that they really didn't say what they wanted to say, but also provide a list of convincing reasons why the comments, suggestions, and reactions they wanted to make would have been impossible. Trusted associates commiserate and say the same was true for them.

7. Attempts to solve the problem do not seem to work. In fact, such attempts seem to add to the problem or make it worse.

8. Outside the organization individuals seem to get along better, be happier, and operate more effectively than they do within it.

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Appendix C: Codes and Families

The list of codes and families from Atlas.ti are reproduced below: Code Families ______________________________________________________________________ HU: Abilene Paradox File: [C:\Users\jsnyman\Documents\Scientific Software\ATLASti\TextBank\Dissertation\Abilene Paradox.hpr7] Edited by: Super Date/Time: 2013-02-04 17:09:54 ______________________________________________________________________ Code Family: 1 PLURALISTIC IGNORANCE Created: 2012-12-29 08:59:58 (Super) Codes (84): [abdicating from problem-solving action] [action anxiety] [Advocating active contributions] [Advocating full ownership] [Agreeing on action] [Agreeing to maintain peace] [agreeing with others] [Agreeing without taking action] [arrogance] [avoiding blame] [avoiding conflict] [Avoiding telephone conversations] [bad news are not communicated] [canvassing] [certain high profile people are seen as untouchable] [Claiming progress in contradiction to original request] [Co-dependence on operations] [Colluding to solve the problem] [collusion] [Committing to action with no ACTUAL action] [Complexity adding to constraints] [Confirming progress while data does not support it] [conflict] [conforming to established norms] [contextual obstacles] [corporate culture not promoting efficiencies] [defending status quo] [defending turf] [Deflecting responsibility] [Disagreeing] [Disagreeing outside meeting context] [disagreement at corporate level] [Disagreement not pursued] [EVPs don't like to disagree with each other in company of juniors] [failure to act] [failure to communicate] [failure to communicate bad news] [failure to communicate to senior employees] [fear based on past experiences] [fears at SVP, VP level] [finance has limited influence] [finance makes life easier] [Government regulations preventing us from achieving goals] [information shows weaknesses] [it is not ok to question] [its a no brainer] [language barriers] [local context] [managing by consensus] [negative fantasies] [no accountability] [no challenges at regional level] [no conflict in meetings] [not enough questioning] [not exposing themselves] [not getting the basics right] [Not openly disagreeing] [not pulling rank] [Over-emphasising to show progress] [ownership issues] [people are expected to sing from the company's hymn sheet] [people are not allowed to question "sacred cows"] [people do not allow being challenged] [people do not contribute in meetings] [people don't often say what they want to say] [people have agendas] [people not acting on warning signs] [person thinking he is better than others] [Poor at managing change] [poor dialectic capabilities] [Pre-empting excuses on behalf of others] [private agendas] [refusal to be controversial] [Reluctantly accepting change] [resistance to change] [Resisting involvement from other stakeholders] [sarcastic comments in meetings about people who disagree] [senior managers do not like giving bad news] [Slow progress] [small subgroups discuss problems] [softening positions] [Talking on behalf of others] [the value "dignity and respect" is taken too far] [visitors not welcomed at sites] Quotation(s): 109

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______________________________________________________________________ Code Family: 11 collusion between managers Created: 2012-12-29 08:58:03 (Super) Codes (8): [canvassing] [Colluding to solve the problem] [collusion] [Disagreeing outside meeting context] [not getting the basics right] [private agendas] [sarcastic comments in meetings about people who disagree] [small subgroups discuss problems] Quotation(s): 8 ______________________________________________________________________ Code Family: 11 negative fantasies Created: 2012-12-29 07:58:02 (Super) Codes (29): [Agreeing to maintain peace] [arrogance] [certain high profile people are seen as untouchable] [Co-dependence on operations] [Colluding to solve the problem] [Complexity adding to constraints] [contextual obstacles] [defending turf] [failure to communicate to senior employees] [fear based on past experiences] [fears at SVP, VP level] [finance has limited influence] [Government regulations preventing us from achieving goals] [it is not ok to question] [its a no brainer] [language barriers] [local context] [negative fantasies] [not enough questioning] [not exposing themselves] [not pulling rank] [Over-emphasising to show progress] [people are expected to sing from the company's hymn sheet] [person thinking he is better than others] [Pre-empting excuses on behalf of others] [Resisting involvement from other stakeholders] [Talking on behalf of others] [the value "dignity and respect" is taken too far] [visitors not welcomed at sites] Quotation(s): 47 ______________________________________________________________________ Code Family: 11 reluctance to take action Created: 2012-12-27 05:20:49 (Super) Codes (29): [abdicating from problem-solving action] [action anxiety] [Advocating active contributions] [Advocating full ownership] [Agreeing on action] [Agreeing without taking action] [avoiding blame] [bad news are not communicated] [Claiming progress in contradiction to original request] [Committing to action with no ACTUAL action] [Complexity adding to constraints] [Confirming progress while data does not support it] [defending status quo] [Deflecting responsibility] [failure to act] [failure to communicate to senior employees] [finance makes life easier] [information shows weaknesses] [no accountability] [not enough questioning] [not exposing themselves] [not getting the basics right] [not pulling rank] [ownership issues] [people not acting on warning signs] [Poor at managing change] [resistance to change] [Resisting involvement from other stakeholders] [Slow progress] Quotation(s): 37 ______________________________________________________________________ Code Family: 11 separation anxiety Created: 2012-12-29 11:19:24 (Super) Codes (13): [CEO supports only certain people] [certain high profile people are seen as untouchable] [Defending actions] [defending turf] [Doing to please others] [fear based on past experiences] [it is not ok to question] [managers are wise enough, politically, to make the right noises] [people are expected to sing from the company's hymn sheet] [people are insecure] [separation anxiety] [sunflower management] [SVP is buffer between EVP and senior managers]

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Quotation(s): 14 ______________________________________________________________________ Code Family: 11 tendency to avoid conflict Created: 2012-12-27 05:36:40 (Super) Codes (36): [Agreeing on action] [Agreeing to maintain peace] [agreeing with others] [avoiding blame] [avoiding conflict] [Avoiding telephone conversations] [bad news are not communicated] [Claiming progress in contradiction to original request] [Co-dependence on operations] [conflict] [conforming to established norms] [corporate culture not promoting efficiencies] [Disagreeing] [disagreement at corporate level] [Disagreement not pursued] [EVPs don't like to disagree with each other in company of juniors] [failure to communicate] [failure to communicate bad news] [managing by consensus] [no challenges at regional level] [no conflict in meetings] [not enough questioning] [not exposing themselves] [Not openly disagreeing] [people are not allowed to question "sacred cows"] [people do not allow being challenged] [people do not contribute in meetings] [people don't often say what they want to say] [people have agendas] [poor dialectic capabilities] [refusal to be controversial] [Reluctantly accepting change] [Resisting involvement from other stakeholders] [senior managers do not like giving bad news] [softening positions] [the value "dignity and respect" is taken too far] Quotation(s): 55 ______________________________________________________________________ Code Family: 2 EFFICIENT CORPORATE STRUCTURES Created: 2012-12-30 09:04:40 (Super) Codes (85): [AGA is very transparent] [alignment not successful] [authoritarian management] [avoiding blame] [Avoiding telephone conversations] [bad news are not communicated] [believe that Australians receive privileges] [benefits of finance actions come through spin-offs] [Blaming culture differences for poor cooperation] [blaming the boss] [building empires] [bureaucracy] [carrot and stick] [Claiming incompetence] [class differences] [Co-dependence on operations] [compensating for operational failures] [continuous communication is important] [current EVPs are the best ever] [everything happens through a process] [EVPs are accessible] [Failing in project execution] [failure to communicate to senior employees] [feedback systems] [feedback systems must be important] [finance is reporting (statutory)] [Finance providing information] [finance resources are flexible] [focus on immediate needs rather than future needs] [focussing on compliance] [functional interaction and relationships] [higher VSM recursion not working] [ignoring efficiencies] [independence] [indirect spin-offs] [information is backward looking] [lack of authority] [lack of common purpose] [lack of coordination] [lack of cross-pollination] [lack of experience] [lack of operational coordination] [lack of policy] [lack of unity] [leading by example] [limited resources] [limited skill set] [local context] [local requirements not aligned with group purpose] [Management reporting shows how company is run] [management style] [managing by consensus] [Managing through command and control] [no common role of finance] [no functional accountability to corporate office] [no lack of competent staff] [not pulling rank] [not the way we do things] [operations dependent on information] [out of touch with operations] [people are expected to sing from the company's hymn sheet] [people rewarded for sub-optimisation] [political power] [poor communication] [poor

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communication between departments] [poor project management] [poor relationships with EPA] [Poor relationships with joint venture partners] [power base in regional offices] [processes must be dynamic] [Providing shareholder information] [relationships] [Relying on Excom support] [self reflection must happen] [selling ideas] [sidelining finance] [some problems in access to EVPs] [structural problem] [SVPs are accessible] [tax dept is good source of information] [time pressure] [too many initiatives taking focus from GEMBA] [tying up resources due to inefficiencies] [unnecessary duplication of support functions] [working in silos] Quotation(s): 106 ______________________________________________________________________ Code Family: 22 corporate bureaucracy Created: 2012-12-29 11:20:07 (Super) Codes (19): [avoiding blame] [bad news are not communicated] [bureaucracy] [everything happens through a process] [ignoring efficiencies] [information is backward looking] [lack of operational coordination] [local context] [management style] [not the way we do things] [people are expected to sing from the company's hymn sheet] [people rewarded for sub-optimisation] [poor relationships with EPA] [Poor relationships with joint venture partners] [processes must be dynamic] [Relying on Excom support] [selling ideas] [structural problem] [too many initiatives taking focus from GEMBA] Quotation(s): 20 ______________________________________________________________________ Code Family: 22 effectiveness of corporate structures Created: 2012-12-29 07:55:44 (Super) Codes (57): [AGA is very transparent] [alignment not successful] [authoritarian management] [believe that Australians receive privileges] [Blaming culture differences for poor cooperation] [building empires] [carrot and stick] [Co-dependence on operations] [compensating for operational failures] [current EVPs are the best ever] [everything happens through a process] [EVPs are accessible] [Failing in project execution] [failure to communicate to senior employees] [feedback systems] [feedback systems must be important] [finance is reporting (statutory)] [Finance providing information] [focus on immediate needs rather than future needs] [focussing on compliance] [functional interaction and relationships] [higher VSM recursion not working] [ignoring efficiencies] [independence] [indirect spin-offs] [lack of authority] [lack of common purpose] [lack of coordination] [lack of cross-pollination] [lack of operational coordination] [lack of policy] [lack of unity] [local requirements not aligned with group purpose] [Management reporting shows how company is run] [management style] [managing by consensus] [Managing through command and control] [no common role of finance] [no functional accountability to corporate office] [not pulling rank] [not the way we do things] [out of touch with operations] [people are expected to sing from the company's hymn sheet] [people rewarded for sub-optimisation] [poor communication between departments] [poor project management] [poor relationships with EPA] [Poor relationships with joint venture partners] [power base in regional offices] [processes must be dynamic] [Relying on Excom support] [self reflection must happen] [sidelining finance] [structural problem] [too many initiatives taking focus from GEMBA] [unnecessary duplication of support functions] [working in silos]

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Quotation(s): 76 ______________________________________________________________________ Code Family: 22 effectiveness of work levels Created: 2012-12-29 08:51:05 (Super) Codes (41): [AGA is very transparent] [avoiding blame] [Avoiding telephone conversations] [benefits of finance actions come through spin-offs] [Blaming culture differences for poor cooperation] [blaming the boss] [building empires] [carrot and stick] [Claiming incompetence] [class differences] [continuous communication is important] [failure to communicate to senior employees] [Finance providing information] [finance resources are flexible] [focus on immediate needs rather than future needs] [functional interaction and relationships] [independence] [lack of authority] [lack of experience] [leading by example] [limited resources] [limited skill set] [no common role of finance] [no lack of competent staff] [operations dependent on information] [people rewarded for sub-optimisation] [political power] [poor communication] [poor project management] [poor relationships with EPA] [Poor relationships with joint venture partners] [processes must be dynamic] [Providing shareholder information] [relationships] [self reflection must happen] [some problems in access to EVPs] [SVPs are accessible] [tax dept is good source of information] [time pressure] [too many initiatives taking focus from GEMBA] [tying up resources due to inefficiencies] Quotation(s): 44 ______________________________________________________________________ Code Family: 33 levels of corporate trust Created: 2012-12-29 07:40:53 (Super) Codes (46): [AGA is very transparent] [arrogance] [authoritarian management] [believe that Australians receive privileges] [blaming self] [blaming the boss] [building empires] [carrot and stick] [CEO supports only certain people] [certain high profile people are seen as untouchable] [class differences] [Colluding to solve the problem] [corporate culture breaks down trust] [corporate culture not promoting efficiencies] [culture of tolerance] [employees are scared to approach managers] [EVPs don't like to disagree with each other in company of juniors] [expat employees] [fair amount of distrust among managers] [fears at SVP, VP level] [independence] [it is not ok to question] [lack of communication] [lack of discipline] [management does not set good examples] [management style] [mixed messages break down trust] [not enough questioning] [Not trusting] [people don't often say what they want to say] [people have agendas] [political power] [political agendas] [poor communication between departments] [poor relationships within operations] [power base in regional offices] [Preventing involvement from other stakeholders] [private agendas] [Resisting involvement from other stakeholders] [sarcastic comments in meetings about people who disagree] [seeing improvements in situation] [seniors managers not touchable] [some problems in access to EVPs] [spending political capital] [SVPs are most unsecure] [thought to myself] Quotation(s): 67 ______________________________________________________________________ Code Family: 44 silo management Created: 2012-12-27 05:35:09 (Super) Codes (35): [Avoiding cross-disciplinary involvement] [benefits of finance actions come through spin-offs] [Co-dependence on operations] [communication leads to better information] [failure to communicate to

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senior employees] [finance has limited influence] [finance is reporting (statutory)] [finance team not involved in understanding important matters] [functional interaction and relationships] [lack of communication] [lack of cross-pollination] [lack of management meetings] [lack of operational coordination] [lack of unity] [management meetings not happening at middle to lower management level] [no common role of finance] [not asking for ideas] [not enough questioning] [not getting people in same room] [not supporting others] [not working together] [Optimising silos] [placing importance on budgets] [poor communication between departments] [Preventing involvement in other stakeholders] [Providing shareholder information] [questioning AGA willingness to use finance information] [questioning role of finance in AGA] [shareholder information leads to more financing] [sidelining finance] [silo management] [stating value proposition of finance] [tax dept is good source of information] [working for own gain] [working in silos] Quotation(s): 45 ______________________________________________________________________ Code Family: 55 change fatigue Created: 2012-12-29 07:41:36 (Super) Codes (14): [capacity shortage] [Complexity adding to constraints] [crisis management] [finance is innovative] [operating in perpetual crisis mode] [people do not have time to do anything other than immediate focus] [Resisting involvement from other stakeholders] [suffering change fatigue] [time pressure] [timing of projects / activities prohibit change] [too many change initiatives happing at once] [too many initiatives taking focus from GEMBA] [too much change] [visitors not welcomed at sites] Quotation(s): 19 ______________________________________________________________________

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Appendix D: Examples of observations supporting core variables

Pluralistic ignorance: This variable links to the original theoretical sensitivity where it was

proposed that the Abilene Paradox was at work. However, pluralistic ignorance is more than

just the Abilene Paradox: it includes any situation where people are reluctant to voice their

views.

“It would be too difficult for managers to expose themselves.”

“The concept “it is ok to question” has disappeared from our way of working.”

“I don’t think people actually always say what they want to say.”

“I think as long as you’re not questioning any of the sacred cows the views are tolerated.”

Commonality of purpose: The ways in which the reporting lines are set up are often

questioned. The roles and boundaries of line managers and regional offices are blamed for

inaction.

“AngloGold is government bureaucracy.”

“There were people who could not believe their reports would go to the General Manager of the mine.”

“The power base resides within the regions.“

Silo management: The company does not share best practice and each region is fighting to

protect its existence.

“In the past you did not have a case of I can’t have input into “this and that”- you did not have horse-trading with business plan cuts. There was a lot more unity.”

“The problem at AngloGold is that people work in silos. In the process Finance gets side-lined.”

“The different departments don’t know what each other are doing.”

Corporate trust: People do not seem to trust each other and the different regions do not

trust across regional boundaries.

“He knows what is good and sets his own private agenda.”

“Sarcastic remarks are made in meetings about [DEPARTMENT X]”

“When [EMPLOYEE X] was appointed, nobody was willing to go to [COUNTRY X]”

“There is still a fair amount of distrust.”

Change fatigue: Over the past 15 years AngloGold Ashanti has gone through numerous

changes from mergers, restructurings and legislative compliance. This trend has followed the

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mining industry in general and also the current economic environment. There is a perception

that employees are unable to cope with this continuous change.

“The operations cannot focus on the core function of production.”

“In general the hands are enough for a routine operating environment.”

“There are too many initiatives running at the same time.”

“It is one of our classic problems: we operate in perpetual crisis mode.”