Accounting for Managers: Interpreting accounting information for decision-making

(Sean Pound) #1

60 ACCOUNTING FOR MANAGERS


Culture, control and accounting.............................


Allaire and Firsirotu (1984) contrasted asociostructuralsystem based on formal
structures, strategies, policies and management processes with aculturalsystem
based on myths, ideology, values and artefacts and shaped by society, the history
of the organization and the contingency factors affecting it. Sociostructural and
cultural systems were in a complex relationship, with potential for stress when an
organization is subject to sudden pressures for change.
The review of research on organizational culture undertaken by Smircich (1983)
reflected a convergence of views around culture as ‘shared key values and beliefs’
(p. 345). These values and beliefs convey a sense of identity, generate commitment,
enhance social system stability, and serve as a sense-making device to guide and
shape behaviour. Smircich also identified the existence of multiple organization
subcultures – a multiplicity of cultures within an organization, rather than one
pervading culture.
Handy (1978) described four different organizational cultures: club, based on
informal relationships; role, based on tightly defined jobs; task, a focus on solving
problems; and existential, an orientation to individual purpose. Deal and Kennedy
(1982) also identified four types of cultures: tough guy/macho (individualists
who take high risks); work hard/play hard (fun and action with low risk);
bet-your-company (big stakes decisions); and process (bureaucratic emphasis).
As we saw in Chapter 4, Ouchi (1979) identified three mechanisms for con-
trol: market (based on prices); bureaucracy (based on rules); and clan (based
on tradition). Clan mechanisms are represented in professions, where different
organizations have the same values. Ouchi used the example of a hospital, where
a highly formalized and lengthy period of socialization leads to both skill and
value training.
Schein (1988/1968) described the process that brings about change in the values
and attitudes of different groups of people throughout their career as ‘organi-
zational socialization’. It occurs whenever an individual enters an organization,
changes departments or is promoted. Socialization determines employee loyalty,
commitment, productivity and turnover. It is the process whereby a new mem-
ber learns the values, norms and behaviour patterns – the ‘price of membership’
(p. 54). These norms, values and behaviours are learned from organizational
publications, from training, line managers, peers and role models, and from the
rewards and punishments that exist. Where the values of the immediate group
that the individual joins are out of line with the value system of the organization
as a whole, the individual learns the values of the immediate group more quickly
than those of the organization. The essence of management, according to Schein,
is that managers must understand organizations as social systems that socialize
their members, and then gain control over those forces.
Accounting can be one such element of control. Scott (1998) described accounting
systems as ‘one of the most important conventions connecting institutionally
defined belief systems with technical activities’ (p. 137). Scott argued that some
organizations rely less on formal controls and more on developing a set of beliefs
and norms to guide behaviour.

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