The Complex World of
Control: Integration of
Ethics and Uses of
Control
Sally K. Widener
Professor of Accounting
Clemson University
8th Conference on Performance Measurement, 2015
Agenda
• Coercive Control
-
The need for coercive control
What is coercive control
Preliminary findings from current work-in-progress
• Enabling Control
-
What is enabling control
Findings from current literature
• Integration of Ethical Characteristics
-
Why integrate ethical characteristics with control?
Individual ethical characteristics (‘bad apples’)
Environment ethical characteristics (‘bad barrels’)
Preliminary findings from current work-in-progress
• Future Directions
• Conclusions, Implications, and Takeaways
8th Conference on Performance Measurement, 2015
Houston
Blue Bell, industry, flout listeria guidelines
But guidelines aimed to prevent foodborne
illness ignored by many
By Mark Collette
June 21, 2015 Updated: June 21, 2015 10:48pm
8th Conference on Performance Measurement, 2015
False Affidavits in Foreclosures:
What the Robo-Signing Mess
Means for Homeowners
http://www.nolo.com/legalencyclopedia/false-affidavitsforeclosures-what-robo-34185.html
8th Conference on Performance Measurement, 2015
8th Conference on Performance Measurement, 2015
“The only way to control investment banks,
and to direct their activities in a more
socially useful direction, is to sit on them
hard—with strict limits on leverage, intrusive
regulation, and harsh punishments for selfdealing behavior.”
John Cassidy. April 4, 2014. Why do
Banks go Rogue: Bad Culture or Lax
Regulation? The New Yorker.
8th Conference on Performance Measurement, 2015
Coercive Control
•
Coercive control (Adler & Borys
1996; Ahrens & Chapman 2010)
–
–
–
•
Control is constraining and restrictive
Desires employees to comply;
Not to think, fix, understand, or
questions
Potential benefits (Kirkhaug 2009;
Mundy 2010):
–
–
–
–
Increased efficiency
Clarify expectations
Enhance product and process safety
Curb moral hazard/opportunism
8th Conference on Performance Measurement, 2015
Current Literature
• Ahrens & Chapman 2004
– Field study, restaurant chain
– Translate the Adler & Borys framework to
management control
8th Conference on Performance Measurement, 2015
Especially the introduction of a new control system can
easily create feelings of coercion among middle managers
and employees. This does not mean, however, that it has
to remain being seen as coercive.
(Jordan & Messner 2012, 561)
Those worries fed on a culture of mistrust toward
restaurant managers that was also expressed through
coercive visions of restaurant control.
(Ahrens & Chapman 2004, 287)
8th Conference on Performance Measurement, 2015
Role Conflict
Cynicism
Coercive
Control
Turnover
Intentions
Turnover
Intentions
“Bad Outcomes”
Employee
Performance
Cynicism
Coercive Employee
Control Performance
Preliminary Findings from “A Cautionary Tale of Coercive Control” by L.
Burney, R. Radtke, and S.K. Widener.
8th Conference on Performance Measurement, 2015
Conclusions
• Conceptual – benefits can be had from
coercive control
• Empirically:
– Coercive control can carry costs
– Negatively affects performance
8th Conference on Performance Measurement, 2015
Enabling Control
•
Enabling control (Adler & Borys
1996; Ahrens & Chapman 2010)
–
–
–
•
Control is empowering
Desires employees to be informed and
involved
To understand, think, fix, question
Potential benefits (Adler & Borys
1996):
–
–
–
Empowerment
Autonomy
Engagement
8th Conference on Performance Measurement, 2015
Current Literature
• Wouters & Wildersom 2008
– How is an enabling PMS developed?
– Three year field study with survey data
Experience
Experimental
Enabling PMS
Professionalism
Transparency
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Current Literature
• Chapman & Kihn 2009
Repair
Internal
Transparency
IS Integration
Global
Transparency
Flexibility
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Perceived
System
Success
Jorgensen & Messner (2009)
Enabling control is
useful:
• in NPD
• when there is
organizational
change…to a point
8th Conference on Performance Measurement, 2015
Mundy (2010)
“Balance” the enabling and coercive
(controlling) uses of the LoC levers in
order to achieve dynamic tension.
8th Conference on Performance Measurement, 2015
Jordan & Messner (2012)
Managers perceive that
incomplete performance
measures are:
• not a problem when used
flexibly (enabling)
• a problem when top
managers emphasize in
evaluation process
(coercive)
8th Conference on Performance Measurement, 2015
Coercive
Control
Is it really
this simple?
Enabling
Control
8th Conference on Performance Measurement, 2015
Downside to the Enabling Use of Control?
I want money.
$$$$
Effort
Principal
I want money.
(And I’m lazy.)
Agent
Holmstrom 1979 in pictures –
Slide reproduced from a
plenary talk by Kristy Towry
8th Conference on Performance Measurement, 2015
Ethical Characteristics
Individual
Characteristic
Unethical Choice
Intention
Behavior
Kish-Gephart, J.J., D.A. Harrison, and L.K. Trevino.
2010. Journal of Applied Psychology 95: 1-31.
8th Conference on Performance Measurement, 2015
Machiavellianism
I am willing to be unethical if I believe it will help me succeed.
I am willing to sabotage the efforts of other people if they
threaten my own goals.
I would cheat if there was a low chance of getting caught.
I believe that lying is necessary to maintain a competitive
advantage over others.
Dahling et al. (2009)
http://personality-testing.info/tests/MACH-IV.php
8th Conference on Performance Measurement, 2015
Characteristics of High “Machs”
Charismatic
and adaptable
leaders; yet
unsupportive
and
inconsiderate
Engage in
economic
opportunism
Steal and
violate trust
Low Job
Satisfaction
Exploit and
leave
Don’t engage
in helping
behaviors
Cluster in
legal and
management
careers
Dahling, J.J., B. G. Whitaker, and P. E. Levy. 2009. The development and validation of a
new Machiavellianism scale. Journal of Management 35: 219-257.
8th Conference on Performance Measurement, 2015
8th Conference on Performance Measurement, 2015
Individual Characteristic
• Rutledge & Karim (1999)
Agency Problem
(present/absent)
Continue or
Discontinue
Project
Individual Level
of Moral
Reasoning
8th Conference on Performance Measurement, 2015
Ethical Characteristics
Individual
Characteristic
Unethical Choice
Intention
Behavior
Organizational
Environment
Characteristic
Kish-Gephart, J.J., D.A. Harrison, and L.K. Trevino.
2010. Journal of Applied Psychology 95: 1-31.
8th Conference on Performance Measurement, 2015
Organizational Environment
• Ethical climate
– An organization’s ‘‘shared perceptions of what
is ethically correct behavior and how ethical
issues should be handled.’’
Victor and Cullen, 1987, pp.51-52
8th Conference on Performance Measurement, 2015
Collective Focus on Self
People in my work unit:
• think of their own welfare first when faced with a difficult
decision
• are very concerned about what is best for them
personally
• protect their own interest above other considerations
• are mostly out for themselves
• In my work unit, people’s primary concern is their
personal benefit.
8th Conference on Performance Measurement, 2015
8th Conference on Performance Measurement, 2015
Ethical Environment
• Booth & Schulz (2004)
Agency Problem
Present (Absent)
Ethical
Environment
Weak (Strong)
Continue or
(Discontinue )
Unprofitable
Project
8th Conference on Performance Measurement, 2015
Coercive
Control
Perhaps not
when there are
low levels of
moral reasoning
Isand
it really
this
a weak
simple?
ethical
climate….agency
problems will be
more likely.
Enabling
Control
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Counterproductive Work Behaviors
8th Conference on Performance Measurement, 2015
Counterproductive Work
Behaviors
Purposely wasted my employer’s materials/supplies.
Came to work late without permission.
Stayed home from work and said I was sick when I
wasn’t.
Told people outside the job what a lousy place I work for.
Complained about insignificant things at work
8th Conference on Performance Measurement, 2015
Is this Important?
Occupation
Annual cost of
lost productivity
due to
absenteeism (in
billions)
Professional (excluding nurses, physicians and teachers)
$24.2
Managers/executives
$15.7
Service workers
$8.5
Clerical/office
$8.1
Sales
$6.8
School teachers (K-12)
$5.6
Nurses
$3.6
Other
$11.51
• Copy in chart of costs
2013. The Causes and Costs of Absenteeism in the Workplace. Forbes. Retrieved from:
http://www.forbes.com/sites/investopedia/2013/07/10/the-causes-and-costs-of-absenteeismin-the-workplace/
8th Conference on Performance Measurement, 2015
Ethics and Enabling Use of
Controls
Enabling Use of
Control
Counter
Productive Work
Behaviors
Machavellianism
Preliminary Findings from “Enabling Control Systems: The Good News
and The Bad News” by L. Burney, R. Radtke, and S.K. Widener.
8th Conference on Performance Measurement, 2015
The association between Mach and CWBO is more negative as
enabling control increases (enabling control is “good”)
Preliminary Findings from “Enabling Control Systems: The Good News
and The Bad News” by L. Burney, R. Radtke, and S.K. Widener.
8th Conference on Performance Measurement, 2015
Ethics and Enabling Use of
Controls
Collective Focus on Others
Collective Focus on Self
Counter
Productive Work
Behaviors
Enabling Use of
Control
Machavellianism
Enabling Use of
Control
Machavellianism
Preliminary Findings from “Enabling Control Systems: The Good News
and The Bad News” by L. Burney, R. Radtke, and S.K. Widener.
8th Conference on Performance Measurement, 2015
Preliminary Findings
The association between Mach and CWBO is
more negative as enabling control increases in
the Collective Focus on Others (enabling control
is “good”)
The association between Mach and CWBO is
more positive as enabling control increases in
the Collective Focus on Self (enabling control is
“bad”)
Preliminary Findings from “Enabling Control Systems: The Good News
and The Bad News” by L. Burney, R. Radtke, and S.K. Widener.
8th Conference on Performance Measurement, 2015
Conclusions
• Conceptual
– The story is not so simple
– Benefits can be had from enabling control, but
… so can costs
• Empirically:
– Surprisingly enabling control is beneficial for
‘high machs’, but
• The benefits only arise when the unit has a
collective focus on others
• Costs arise when the unit has a collective focus on
self
8th Conference on Performance Measurement, 2015
Implications
• While certain situations may call for the
use of coercive control, there are costs
• Enabling control is not always “good”
• Ethical characteristics matter
So where do we go from here?
8th Conference on Performance Measurement, 2015
Future Directions (1)
• Are there boundary conditions on the
relationships between uses of controls and
behavioral outcomes?
– Different employees hold different
psychological contracts (Rousseau 2001)
– What types or groups of employees might be
better suited for coercive control?
8th Conference on Performance Measurement, 2015
Future Directions (1 cont.)
Generation Y (1980 – 2000)
Generation X (1962 – 1979)
Baby Boomers (1946 - 1961)
• Freedom-related work values
– Y > X / Boomers
Cennamo & Gardner. 2008. Generational differences
in work values, outcomes and person-organization
values fit. Journal of Managerial Psychology 23: 891906.
8th Conference on Performance Measurement, 2015
Future Directions (2)
• Benefits of coercive control?
– Are there benefits?
• Safety, reliability, efficiency
– When do the benefits occur?
• Certain industries, roles, tasks
– What is the trade-off between benefits and
costs (role conflict, turnover, performance,
cynicism)
8th Conference on Performance Measurement, 2015
Future Directions (3)
• Does content of the control system
matter?
Org.
Processes
Shared
Interpretations
Process
Signals
Moral Climate
Performance
Adapted from Vidaver-Cohen. 1998. Moral climate in business firms: A
conceptual framework for analysis and change. Journal of Business
Ethics 17: 1211-1226.
8th Conference on Performance Measurement, 2015
Future Directions (3 cont.)
• Does content of the control system
matter?
Ethical
Climate
Content of Control Systems
•
Beliefs: mutual respect
and trust
•
Diagnostics: social
goals/multiple
constituents
•
Boundaries: stress that
unethical actions are offlimits
Counterproductive
Work Behaviors
Vidaver-Cohen. 1998. Moral climate in business firms: A conceptual
framework for analysis and change. Journal of Business Ethics 17:
1211-1226.
8th Conference on Performance Measurement, 2015
Future Directions (4)
• Know little about other individual ethical
characteristics and how they affect and
are affected by control choices
– Cognitive moral development, locus of
control, moral philosophy
8th Conference on Performance Measurement, 2015
Level of Moral Reasoning
Level/Stage
What is Considered to be Right
Preconventional Level
Stage 1: Obedience and
punishment
Avoid breaking rules (obedience) in order to avoid punishment or harm.
Stage 2: Individualistic point of
view
Follow rules when they serve one’s immediate interests or the acknowledged
interests of others (“fair” exchange of favours).
Conventional Level
Stage 3: Mutual interpersonal
expectations, relationships and
conformity
Live up to what is expected by others (especially expectations of “close”
others).
Stage 4: Social system and
conscience
Follow rules and laws of society (social, legal, and religious systems) in order
to maintain the welfare of society (common good).
Postconventional level
Stage 5: Social contract and
individual rights
Consider the relativism of personal views, but still emphasize rules and law.
Stage 6: Universal ethical
principles
Act in accordance with one’s self-chosen ethical principles of justice and right
(perspective of the rational individual recognizing the nature of morality).
Fig. 1. Kohlberg’s six stages of cognitive moral development (Rutledge & Karim, 1999, 179)
8th Conference on Performance Measurement, 2015
“In Europe, a woman was near death from a rare type of cancer. There was
one drug that the doctors thought might save her. It was a form of radium that a
druggist in the same town had recently discovered. The drug was expensive to
make, but the druggist was charging 10 times what the drug cost him to make:
It cost $200 for the radium and he charged $2,000 for a small dose of the drug.
The sick woman’s husband, Heinz, went to everyone he knew to borrow the
money, but he could get together only about $1,000—half the cost. He told the
druggist that his wife was dying and asked him to sell it cheaper or let him pay
later. But the druggist said, “No, I discovered the drug and I’m going to make
money from it.” Heinz got desperate and broke into the man’s store to steal the
drug for his wife.”
“Most people say that Heinz’ theft was morally justified,” but what is your
reasoning?
https://www.youtube.com/watch?v=5czp9S4u26M
8th Conference on Performance Measurement, 2015
Preconventional
It really depends on how much Heinz likes his wife and how much risk there
is in taking the drug. If he can get the drug in no other way and if he really
likes his wife, he’ll have to steal it.
Conventional
I think that a husband would care so much for his wife that he couldn’t just sit
around and let her die. He wouldn’t be stealing for his own profit; he’d be
doing it to help someone he loves.
Postconventional
Regardless of his personal feelings, Heinz has to realize that the druggist is
protected by the law. Since no one is above the law, Heinz shouldn’t steal it.
If we allowed Heinz to steal, then all society would be in danger of anarchy.
Material quoted from Mintz, S.M., & R. E. Morris. 2014. Ethical
Obligations and Decision Making in Accounting. McGraw Hill.
Page 56.
8th Conference on Performance Measurement, 2015
Future Directions (4 cont.)
• Cognitive moral development (CMD) and
Machiavellianism are (Kish-Gephart et al. 2010):
-
‘largely distinct’
Are unique predictors of unethical behavior and unethical
intentions
• Is it another important individual characteristic that can
affect the benefits received from control systems?
• Does the effect of enabling control and Machiavellianism
on CWB depend on the level of moral reasoning?
8th Conference on Performance Measurement, 2015
Future Directions (5)
•
Male (versus female) and
younger (versus older) are
positively related to unethical
choices
– Will the use of coercive control more
effectively reign in unethical decision
making in males versus females?
In younger employees versus older
employees?
8th Conference on Performance Measurement, 2015
Future Directions (6)
– Change the level of analysis
• What about managers/supervisors?
OMS:
Maintaining
Power
OMS:
Management
Practices
OMS:
Manipulativeness
• Who is more likely to use control in a coercive way vs. an
enabling way?
• Which combination is most effective?
Kessler et al. 2010. Re-Examining Machiavelli: A
Three-Dimensional Model of Machiavellianism in the
Workplace. Journal of Applied Social Psychology.
8th Conference on Performance Measurement, 2015
Take A Ways
• Understanding the effects of control uses
is not simple
• Ethical characteristics combine with uses
of control to affect behavioral outcomes
• With the continuously occurring scandals
in business, understanding ethical
characteristics is important
8th Conference on Performance Measurement, 2015
Thoughts
• The opportunities to make a significant contribution are
tremendous
–
–
–
–
–
Moderators of control uses and behavioral outcomes
Benefits of coercive control
Integrating the content of the control system
Fleshing out our knowledge of ethical variables
Moderators of control uses and ethical variables on behavioral
outcomes
– Level of analysis
8th Conference on Performance Measurement, 2015
QUESTIONS????
8th Conference on Performance Measurement, 2015