The paradox of management control and employee empowerment
by Rachael Nash, David A. Brown and Nicole Sutton
Discussant: Albrecht Becker
The paper deals with the "organizing paradox" between the opposing pressures for employee
empowerment and for management's accountability and the role management control systems
(MCS) play in creating and mitigating these paradoxical tensions. Nash, Brown and Sutton
develop a typology of forms of empowerment and discuss the role MCS and accountability
play in creating, enhancing, and mitigating the paradoxical tensions related to each type of
empowerment.
Summary of the argument
Organizations face two opposing pressures: On the one hand, empowerment, understood as
granting individuals discretion on decisions and/or action is seen today as prerequisite for
developing organizational capabilities and thus securing long-term success of organizations.
On the other hand, increased pressures for corporate accountability translates into increased
management control thus restricting individual organizational members' discretion. Referring
to a recent Academy of Management Review paper by Smith and Lewis (2011), Nash et al.
characterize these opposing forces as "organizing paradox". An organizing paradox is defined
as "contradictory yet interrelated elements that exist simultaneously and persist over time"
(Smith & Lewis, 2011, p. 386). Nash et al. argue that: "It is in the design and use of
management control systems (MCS) that the organising paradox is manifest" (p. 3) because in
defining the level of autonomy and discretion of employees they accommodate both (the level
of) employee empowerment and (the level of) restrictions on empowerment. In trying to
implement MCS that facilitate both employee empowerment and management control this
organizing paradox is both created and mitigated.
Smith and Lewis' (2011) "dynamic equilibrium model of organizing" postulates that it
is necessary for an organization's long-term survival to create a virtuous circle of dealing with
paradoxical tensions. This virtuous circle comprises four stages: (i) Paradoxical tensions
normally exist as latent tensions; (ii) to be dealt with fruitfully they have to be transformed
into salient tensions. (iii) These salient tensions must not only be perceived but also accepted;
management has to embrace them by defining them as opportunities for creativity and change.
(iv) A sustainable solution for handling these paradoxical tensions is a strategy of attending to
both sides of the tensions in an iterative way, attending one side without forgetting the other
and keeping open to switch to a mode of attending to the other side of the tension.
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The paper by Nash et al. applies this model to the paradox of empowerment and
control. For analyzing this paradox further they distinguish two "dimensions" of
empowerment: Structural empowerment refers to the formal decentralization of authority as
instantiated in organization structure. The second dimension of empowerment is
psychological empowerment comprising four cognitions of individual employees – the
cognitions of meaning, competence, self-determination, and impact – which taken together
will give them a feeling of empowerment and is manifested in increased intrinsic motivation
and self-efficacy. Forms of accountability relations that are embedded in MCS mediate
between structural and psychological empowerment.
Figure 1: Alternative forms of empowerment (p. 14)
These two dimensions of empowerment may be distinguished analytically and may be related
in a 2 x 2 matrix to identify four distinct "alternative forms of empowerment" (see figure).
Each of these four configurations provides specific conditions for applying the idea of
creating a dynamic equilibrium though initiating virtuous circles.

In low empowerment (the "iron cage") management control is instantiated in the
hierarchical organization structure and in MCS which hold employees individually
accountable through calculative practices thus establishing an individualizing form
accountability (Roberts, 1991). The paradoxical tension remains latent and may therefore
not be managed positively.

Illusionary empowerment (the "glass cage", Yannis Gabriel) is characterized by
management's attempt to psychologically empower the employees without granting
structural empowerment. In this situation there is a certain amount of acknowledgment of
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the paradoxical tension, but this is restrained by the impossibility to discuss the
contradiction between lack of structural empowerment and proclamation of psychological
empowerment. This "undiscussability" is fostered through the interplay of individualizing
accountability (lack of structural empowerment) and socializing accountability (Roberts,
1991) introduced through measures of lateral accountability in team structures.

The authors speak of obstructed empowerment when employees are structurally
empowered but psychologically disempowered. In situations where empowerment is not
wished by management but rather a necessity due to, for example, special qualifications of
employees, structural empowerment may at the same time be accompanied by measures to
frustrate employees' sense of meaning, competence, self-determination, and impact
through the design of MCS. Then, lateral and socializing forms of accountability resulting
from structural empowerment may get in conflict with individualizing forms resulting
from psychological disempowerment. The paradoxical tension of empowerment and
control may then be salient but it is not possible to enter a virtuous circle of creating a
dynamic equilibrium.

In authentic empowerment management both structurally and psychologically empowers
employees. Authentic empowerment unfolds the potential of lateral/socializing
accountability. This helps members of the organization to accept the tension of discretion
and control and thus provides the ground to enter a virtuous circle of iterative attention to
both sides of the tension.
Summarizing the argument in a somewhat over-simplified and probably also polemic manner,
we see that in the case of low empowerment, there is no problem with the paradox of
empowerment of control because the structure of the situation is harmonious. Authentic
empowerment represents the enlightened and democratic organization where conflict and
paradox may be discussed openly and everyone trusts management to do the right thing at the
right time. Both illusory and obstructed empowerment represent inharmonious configurations
and therefore paradoxical tensions may not be transformed from latent to salient, or from
salient to accepted tensions.
Issues for discussion
The "tensions" or contradictions between control/power/domination on the one hand and
discretion/scope for action/freedom on the other are a real classic, and it is no wonder that we
find Talcott Parsons' term of the iron cage, which is his translation of Weber's notion
"stahlhartes Gehäuse", the shell as hard as steel, which has originally been published in 1904.
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And I think we do not need to debate the relevance of this tension for MCS in principle; it is
obvious. However, I think it is worth looking at the way this paradox is theorized in the paper.
It is not clear to me what Nash, Brown and Sutton see as the cause or origin of the
paradox. In the introduction they state that this paradox originates from contradictory external
pressures: on the one hand, from "demands to facilitate the empowerment of employees" (p.
1) or "calls for greater empowerment" (ibid.) which originate in the "needs for creativity and
flexibility" (p. 2) and, on the other hand, "pressure" for increased corporate accountability
originating from shareholders, company boards etc. (p. 2). Both types of pressures seem to be
associated with "contemporary business environments" (p. 1) and should, thus, be historically
contingent. But at the same time, the underlying "dynamic equilibrium model of organizing"
(Smith & Lewis, 2011) seems to clearly speak a functionalist language. The idea of an
organizational equilibrium – be it static or dynamic – implies objective functional
requirements of organizational survival – in this case, inherently contradictory functional
requirements. If these paradoxical tensions are resolved "via iterating responses of splitting
and integration" (Smith & Lewis, p 389, fig. 3) sustainability and long-term success of the
organization will be achieved.
Why is the question of functionalism vs. institutionalized pressures important? If we
follow the functionalist reasoning, only organizations should survive in the long term that
exhibit authentic empowerment. If we observe bureaucracies, glass cage organizations or
obstructed empowerment the respective organizations should cease to exist in the long term.
But what is the appropriate time-frame?
A second issue I am struggling with is the relation between structural and
psychological empowerment and how both are mobilized to distinguish four forms of
empowerment. Structural empowerment has been defined as formal decentralization of
authority, whereas psychological empowerment means the feeling/experience of being
empowered. In this way, structural empowerment might be seen as antecedent of
psychological empowerment, but the authors seem reluctant to say so when discussing this
relation (p. 9); I have not really understood why. In their implications section they then
provide a somewhat different story: Structural empowerment refers to the design of MCS
while psychological empowerment is seen as the outcome of MCS use (p. 35). Therefore, in
the cases where there is consistency between design and use – low empowerment and
authentic empowerment – the paradoxical tension is either happily ignored or competently
resolved. In the other cases with inconsistency between design and use – illusory and
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obstructed empowerment – the paradoxical tensions should unfold their dysfunctional
potential.
However, I really have problems to understand this – besides the issue that it is
inconsistent with the functionalist perspective behind the equilibrium model. Take the
example of illusory empowerment. The MCS in this context is depicted as exhibiting tight
administrative controls and the managerial discourse is characterized by the pretense of
empowerment. But is this creating a false impression of empowerment adequately described
by the notion of MCS use? I think not. In this case we would probably better speak about an
ideological discourse.
I also see problems in the construction of the 2 x 2 table of forms of empowerment.
What do the two dimensions really comprise? While I can see that the y-axis depicts a high or
low amount of formal delegation I did not really understand what the x-axis stands for. If we
refer to the design/use dichotomy, this would imply a use of MCS (or other organizational
measures) as if it would exhibit a high or low amount of structural empowerment – no matter
how the MCS is designed. However, if we take the original definition of psychological
empowerment, there are two possibilities: An observed/measured high or low cognition of
meaning, competence, self-determination, and impact by the employees. This interpretation is
probably not what the authors have in mind as they seem to assume that the value on the xaxis may be directly influenced by management's efforts. Then this dimension would
comprise management's efforts at indoctrination to let the employees believe that there is a
high/low amount of empowerment. I am not really satisfied with all these possibilities.
Summing up my comments, maybe the paper is not at all about the paradoxical tension
between management control and employee empowerment. Probably, it is rather about
configurations of MCS and the organizational discourse about/around control? Or to frame it
in the terminology of Malmi and Brown (2008), it is about the internal tensions between
cultural controls, planning, cybernetic controls, reward and compensation systems, and
administrative controls, that is the concrete forms of MCS packages and the organizational
discourses about/around them.
References
Malmi, T. & Brown, D.A. (2008). Management control systems as a package: Opportunities,
challenges and research directions. Management Accounting Research, 19, 287-300.
Roberts, J. (1991). The possibilities of accountability. Accounting, Organizations and Society,
16, 355-68.
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Smith, W.K. & Lewis, M.W. (2011). Toward a theory of paradox: A dynamic equilibrium
model of organizing. Academy of Management Review, 36, 381-403.
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