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Notes / Aantekeningen Management Accounting Change (EBM711A05) 2022/2023
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Aantekeningen / Notes-
Management Accounting Change
(EBM711A05)
Lecturers: Semester 1A year 2022/2023
- Dr. M.P. van der Steen
- Dr. S. Girdhar
Index
Lecture 1 – Introduction, General views and Contingency theory ......................................................... 2
Management Accounting Change - some topics................................................................................. 3
Contingency theory ............................................................................................................................. 5
Institutional theory.............................................................................................................................. 6
Lecture 2 – Institutional theories I .......................................................................................................... 7
Lecture 3 – Institutional theories II ....................................................................................................... 13
Lecture 4 – Scripts ................................................................................................................................. 19
Lecture 5 – Routines .............................................................................................................................. 23
Lecture 6 – Theories of practice & Change in the controller’s profession I .......................................... 29
Lecture 7 – Change in the controller’s profession II & Conclusion ....................................................... 33
Identity .............................................................................................................................................. 33
Summary ........................................................................................................................................... 37
Exam .................................................................................................................................................. 38
,Lecture 1 – Introduction, General views and Contingency theory
Literature:
- Article 1: Otley, D., The contingency theory of management accounting and control: 1980–
2014, Management Accounting Research, 2016, 31: 45–62.
- Article 2: Chenhall, R. H., Management control systems design within its organizational
context: Findings from contingency-based research and directions for the future. Accounting,
Organizations and Society, 2003, 28(2): 127–168.
This is water
In 2005, David Foster Wallace, an American author, gave the following commencement speech to the
graduating class of Kenyon college.
Suffering from depressions for many years, he has not lived long enough to see it going viral*.
His address was about the many thing that exist, but that we do not experience consciously – the
routine vs. the extraordinary; the normal vs. the unique.
*If you have thoughts of suicide, you are not alone. Contact suicide prevention at
www.113.nl or call 0800-0113. Or come talk to me.
In praise of numbers, awareness, pirates, bats and being human:
Welcome to Management Accounting Change
- We are going to talk about change people that are in the automatic setting.
- All the models don’t work people didn’t change what they are doing.
- We going to look at the last 70 years and trying to keep something that works and is still
relevant. The reality is different for everyone. Every type of people is different.
- How you interper situations (sociology)
Customer retention specialist
“For any number of reasons, customers may feel the need to make a change either to a lower level of
Xfinity service or even a different carrier. Your job is to convince them that Xfinity can meet their
changing needs better – and keep them in the family.”
-Job description for a retention specialist for Comcast’s streaming media service.
CRS → try to hold people/costumers on board.
Comcast apology
- Listen to the following: "Comcast Customer Service Call" - "Funny Comcast Customer Service
Call Fail" - YouTube
- “We are very embarrassed by the way our employee spoke with Mr. Block and Ms. Belmont
and are contracting them to personally apologize,” the company said in a statement. :”The
way in which our representative communicated with them is unacceptable and not
consistent with how we train our customer service representatives. We are investigating this
situation and will take quick action. While the overwhelming majority of our employees work
very hard to do the right thing every day, we are using this very unfortunate experience to
reinforce how important it is to always treat our customers with the utmost respect.”
,PMS @Comcast
First call resolution:
“Anytime a customer calls back within 30 days, all the people in every department who’ve talked to
that customer within the 30 days (except the brand new person taking this call) get hit for first call
resolution, this is a metric everyone is judged on (everyone on the phone) regardless of what
department thery’re in.”
Average call length:
“You’re supposed to be off the phone within 660 seconds, anything longer and your metric for
Average Handled Time is impacted (which is bad). In the billing department their AHT goal is even
lower, at about 350 – seconds.”
Incentive “gates”:
“Let’s say that if you retain 85 percent of your customers or more (this means 85 percent of the lines
of businesses that customers have when they talk to you, they still have after they talk to you), you
get 100 percent of your payout – which might e $5-10 per line of business. At 80 percent you might
only get 75 percent of your payout, and at 75 percent you get nothing. The CAEs (customer service
reps) watch these numbers daily, and will fight tooth and nail to stay above the ‘I get nothing’
number.”
Cross-selling @Wells Fargo
- Employees opened ghost accounts in unsuspecting customer names.
- Pinning: creation of additional products without consent.
- 1,5 Million deposit accounts; 565,000 credit card accounts.
- Even insurance policies opened for unsuspecting clients.
Wells fargo → it is cheaper to sell an extra service than search a new customer.
Management Accounting @ Wells Fargo
- Extremely high cross-selling targets.
- Some mathematically impossible to achieve
- Creation of conditions for gaming and even fraud
Management Accounting Change - some topics
History
- Accounting change has been long seen as an economically rational process.
- Changing the parameters of the organisation leads to optimal result.
- Assumption was that human behaviour is easy to guide
e.g. Eisenstadt (’58, ’59)
- ‘Good rules will be followed’.
- ‘If they are not followed, they are not good rules’.
- ‘Therefore, we must improve rules’.
- Tautology: rationality was never a question
- Rather, it was assumed to be complete and present
, Man was seen as economically rational
- Able to oversee all alternatives
- Able to select the best alternative which…
- Maximises his own utility
- Change was accomplished by creating new utility calculation.
- Research worked by this assumption for a long time.
The economic man
“This man is assumed to have knowledge of the relevant aspects of his environment […]. He is
assumed also to have a well-organized and stable system of preferences, and a skill in computation
that enables him to calculate, for the alternative course of action that are available to him, which of
these will permit him to reach the highest attainable point of his preference scale.”
– Herbert Simon, 1957 -
Accountants adopted a generalised view of rationality
- As it allows us to generalise behaviours.
o I.e. Anthony & Govindarajan: Three reasons that hinder automatic organizational
goal achievement by decentralized manager:
1. Decentralized managers do not automatically understand the goald and
strategies developed by higher level managers, nor how they can
contribute tot these goals and strategies.
2. Decentralized managers do not automatically agree with organizational
goals and strategies developed by higher-level managers.
3. Decentralized managers do not automatically have the resource needed
to act with organizational goals and strategies developed by higher-level
managers.
- Quite the accomplishment: we don’t know this person, yet, we claim all sort of things that
motivate him/her and drive his/her behaviour.
Rationality
Assignment: Just to explain what it is for study and how you can study it. You don’t have to do the
study. Write a research proposal.
Management Accounting
- Has drawn substantially on these conceptions of rationally
- One of the most persistent approaches:
- Contingency Theory
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