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Practices of Managing Performance in a Privatised Organisation

Consistent with the idea of privatisation that is concerned with the transformation of the

public sector organisation into a competitive and financially oriented establishment, the

study of the relationship between accounting and accountability has been one of the

are expected to be clearly specified; most of the time they are measured through the

achievement of a certain set of targets (Hood, 1991; Ogden, 1995).

Managing dual accountability, for example, is one of the common characteristics of the

organisation that has undergone transformation programmes such as privatisation or

regulatory reform. A privatised organisation has to assume its own financial

responsibility while being expected to continuously serve the interest of the general

public. In such a case, accountability and accounting enmesh and redefine the

understandings, rules and ends of the organisational activities. The efficiency and

effectiveness of service delivery, for instance, is often measured in terms of the

organisation’s ability to meet its budgetary targets.

In their study of the emergence of financial discourse of accountability within the

educational setting in the UK, which was experiencing regulatory reform, Ezzamel et al.,

(2007) observe:

“In this sense relations of accountability are embedded in the practical discourses of organizational members as they give accounts of their work and ‘outputs’. Rationalized forms of accountability introduced through regulation may preserve and reproduce organizational or societal myths concerning organizational efficiencies or productions but within everyday operational actions, organizational members are offering accounts that

contain their own norms of justification. Accountability is therefore a major bond in

organizational and social interaction.” (p. 157).

Their study is suggestive of accountability as the practice that arises from the intertwining

of the organisational and social practices; sense is made of the notion of financial

In the study of the practices of accountability in a privatised organisation, we are often

enlightened by the activities introduced by the senior managers in their efforts to manage

dual accountability. For instance, Ogden (1995) reports the attempt made by the senior

management to introduce a corporate culture programme, while Dent (1991) describes

the appointment of the business manager as the agent to diffuse accounting practices in

his organisation. The present study hopes to add to these findings by emphasising how

the members of various organisational hierarchies strategically use accounting

information to deal with the demand of dual accountability as part of their everyday

practices. This prompts the question: in what ways does the relationship between

accounting and strategising contribute to the process of managing dual accountability?

An insight that has usually been noted in prior literature on the relationship between

accounting and the practices of accountability is the support of the former on the

hierarchical practice of the latter (Roberts, 1991, Roberts and Scapens, 1985). While this

remains true, empirical studies also point to the importance of socialising accountability

in helping the organisational members to make sense of the accounting measurement and

to articulate the organisational priorities. The case presented by Roberts (1990) is

illustrative of how the annual conference, as a method of encouraging socialising

accountability, helped to articulate the priorities of the parent company and to enrol the

participants’ intention towards a common goal. The coexistence of hierarchical and

socialising accountability is therefore the key concept in explaining the practices of

“However, even if the relationship between what have been described as socializing and individualizing forms of organizational accountability is often experienced as a conflict or split within the individual, the apparent collision between these ‘competing’ orders masks a variety of subtle interdependencies.”

(p.364)

The present study is motivated by the concept of interdependencies between hierarchical

and socialising accountability and asks: how do hierarchical and socialising forms of

accountability coexist in everyday practices of accountability?

As discussed above, financial accountability is the new dimension of accountability that a

privatised organisation has to assume. This objective places them on a par with other

commercial organisations in meeting the great challenge of aligning the individual and

divisional goals with the goals of the organisation. In the same way as in other

commercial organisations, which tend to turn to the performance management system as

a solution, the senior management in the present study adopted KPIs. Studies conducted

by Miller and O’Leary (1994), Roberts (1990) and Mouritsen (1999) illustrate how

accounting measurements were employed in addressing the issue of goal alignment in a

commercial setting: the process of goal alignment was constructed by mobilising

accounting measurements with other forms of organisational control; for instance, the

conference method is reported by Roberts (1990), while Miller and O’Leary (1994)

observe spatial ordering of the manufacturing floor. Within the context of privatised

organisations, Ogden (1995) describes a similar attempt in which the senior managers

tend to concentrate on tracing the making of accounting as part of the organisation

control mix (e.g Abernethy and Chua, 1996): while the process of how accounting and

non-accounting control systems relate in the practice of goal alignment, still remains a

potential area of investigation. The present study aims to fill this gap by describing the

relationship between accounting and non-accounting control in the process of goal

alignment.

Empirical studies of privatised organisations have reported cases of cultural change (Abu

Kasim Nor Aziah and Scapens, 2007; Dent, 1991; Ogden, 1995) which demonstrate one

of the important effects of meeting the demand to be financially accountable to their

operations. Dent (1991), for instance, illustrates the process of cultural change in a

railway organisation, describing how the business managers persuaded the railway men

to accept the idea of managing the railways on economic and financial terms, and thus

change the railway’s dominant culture, i.e. the cultural practices observed by the majority

of its members (Martin and Siehl, 1983), from an engineering-based culture to a business

culture.

Dent (1991) suggests that an individual may share the cultural practices in an

organisation:

“Communities in organizations have particular codes of communication: behaviour, language, dress, presentation, design, architecture, ceremony… . . The operation of work technologies in organizations is not a purely technical-rational affair. Rather, it is embedded in a cultural system of ideas (beliefs, knowledges) and sentiments (values), in which actions and artifacts are vested with symbolic qualities of meaning.”

In understanding the “symbolic qualities of meaning” (ibid.) of everyday practices of

accounting and the sources of motivations and intentions behind the practices, Ahrens

and Mollona (2007) suggest:

“The task of the study of control as cultural practice lies in exploring the relationships between those and further sources of organisational culture, organisational practices, and organisational control. Conceived as an effect of the symbolic organisation of practices,

control is dependent on, but also influencing, the spectrum of ambitions of organisational

members. The cultural analysis ought to shed light on the sources of those ambitions, the extent to which they are shared or in competition with one another, and, thus, how they contribute to making some practices unremarkable, taken-for-granted, and subject to objective ‘technical’ discussion…..” (p. 306)

The fragmentation of the symbolic organisation of practices, the difference in socio-

economic background and socialisation of the members in the two departments that they

studied, provide the sources of their analysis of organisational control as cultural

practices. They also note that the discussion of the sources of the fragmentation of control

practices extends beyond the boundary of the practices in the departments observed.

Such a conception shows that culture conveys “rupture” and is about “variegations” and

thickness (Comaroff, 2010).

The case presented by Abu Kasim Nor Aziah and Scapens (2007), rather than discussing

the dominant culture in the organisation they examined, gives a view of the ‘government

style culture’ of the operational manager, pointing to the existence of subcultures in the

organisation. The coexistence of subculture with a dominant culture has been

acknowledged by prior accounting literature, including Bhimani (2003), Marcus and

subculture priorities: while the engineering department was receptive of the newly

introduced MAS as it was compatible with their engineering priorities, this was not the

case for the operations department, since the values promoted by MAS were inconsistent

with their underlying beliefs.

Generally, subcultures are formed by a group of people in pursuit of similar interests and

sharing similar problems (Van Maanen and Barley, 1985); in an organisation, a subculture

is often identified through occupational or functional responsibility. For example, the

subcultures in the study by Ahrens and Mollona (2007) “[...] arose from the workers’ tasks and

shop floor practices, skills and occupational histories, the technologies they used, their broader outlooks on work and organisational membership, and, significantly, those aspects of their social backgrounds that

clarified their reasons for seeking out, and acquiescing to, particular organisational subcultures” (p. 328).

A concern about subculture in the study of management accounting practices may

indicate the various ways of organising and highlight the different meanings of the notion

of accounting within an organisation. Motivated by this potential area of further

investigation, and by the lack of efforts thus far in this respect (Ahrens and Mollona,

2007; Dent, 1991), the present study hopes to add to the literature in stability and change

by illustrating that the stability and change of accounting practices is the result of an on-

going relationship between agency and subcultural practices. The next section is devoted

to this aim.