Sample 1

The Evolution of Performance Measurement System:

An Actor-Network Theory Analysis

A dissertation submitted to the The University of Manchester

for the degree of Master of Science in Accounting and Finance in the Faculty of Humanities

2010

YANQING LAI

Manchester Business School

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CONTENT

DECLARATION 3

COPYRIGHT STATEMENT 4

ABSTRACT 5

1. INTRODUCTION 6

1.1 Background of the study 6

1.2 Statement of purpose 7

1.3 The structure of the study 7

2. LITERATURE REVIEW 9

2.1 Introduction 9

2.2 A brief review of previous PMS studies 9

2.3 ANT in management accounting change 11

2.4 Issues explored in the study 17

2.5 Research questions 18

3. RESEARCH METHODOLOGY 19

3.1 Introduction 19

3.2 Research approach 19

3.3 Data collection process 20

3.4 Data analysis process 21

3.5 Summary 22

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4. CASE STUDY: DISCUSSION

4.1 Introduction 23

4.2 The aircraft industry 23

4.3 The Company 24

4.4 A brief overview of the new PMS 25

4.5 The Evolution of The PMS 26

4.5.1 Problematisation 26

4.5.2 Enrolment: human actors 28

4.5.3 Interessement and mobilisation: non-human actors 33

4.5.4 A Matter of Fact? 38

4.7 Summary 39

5. CONCLUSION 41

5.1 General conclusions and findings 41

5.2 Further implications 43

REFERENCES 44

Word Count: approx. 12,122

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DECLARATION

No potion of the work referred to in the dissertation has been submitted in support of an

application for another degree or qualification of this or any other university or other institute

of learning.

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COPYRIGHT STATEMENT

Copyright in text of this dissertation rests with the author. Copies (by any process) either in

full, or of extracts, may be made only in accordance with instructions given by the author.

Details may be obtained from the Programme Administrator. This page must form part of any

such copies made. Further copies (by any process) of copies made in accordance with such

instructions may not be made without the permission (in writing) of the author..

The ownership of any intellectual property rights which may be described in this dissertation

is vested in the University of Manchester, subject to any prior agreement to the contrary, and

may not be made available for use by third parties without the written permission of the

University, which will prescribe the terms and conditions of any such agreement.

Further information on the conditions under which disclosures and exploitation ma take place

is available from the Academic Dean of Manchester Business School.

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ABSTRACT

This dissertation analyses and examines the case of the performance measurement system

evolution in a subsidiary of one of world’s largest aircraft manufacturers, based on a series of

‘Labourian’ studies – the Actor-Network Theory (ANT). It is believed that in terms of

continuously enrolling and employing different human and non-human actors to facilitate,

ease, maintain and enlarge manufacture of the network, the new PMS eventually will be

taken-for-granted by everyone throughout the whole organisation. The introductory stage was

guided by the consultancy firm-McKinsey’s, whose classical model of PMS has been applied

in the Company. Meanwhile, the top management and the heads of functions have been fully

dedicated to the transformation program, in terms of being motivated by a variable payment

linked to the PMS and also being given autonomy to set up operational measures derived

from five key value streams – SQCDP. There has been a high level of standardisation at a

senior level and increasingly alignment among different functions. Also, the site performance

has been significantly improved since the new performance management program is launched.

However, the new PMS is still fragile and not as robust as expected. The team leaders and

workforce at the shop floor have not been actively and sufficiently participated in the

campaign due to lack of standardised measures and coordination, more importantly,

inadequate incentives and motivations. Accordingly, the new performance measures have not

become the ‘matters and facts’ across the Company. The research also discovers and stresses

the critical importance of non-human allies in the ANT, acting as a prerequisite to coordinate

and congregate the diverse interests of different human allies in the network, so as to

facilitate and smooth the management accounting change process.

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The development of performance measurement systems (PMS) has been increasingly

attracted to both the academics and practitioners not only in the sphere of the management

accounting but also strategic management throughout the time. The PMS constitutes an

important part of the overall control system in the organisations, with the aim of measuring

and communicating a set of indicators or measures to precisely reflect the critical factors that

determines the success of the business (Wickramasinghe and Alawattage, 2007).

The conventional PMS is primarily in the determination of the notions of responsibility

accounting and only linked to the financial aspects of the business, which have been long

used to evaluate and benchmark against the performance of the business. However, the

increasing complexity of organisations and market dynamics has challenged its deficiencies

of mirroring changes in the competitive circumstances. In the late1980s, a group of

researchers criticised the ‘relevance lost’ of the traditional PMS in the context of strategic

formulation and implementations (Johnson, 1983; Kaplan, 1984; Johnson and Kaplan, 1987).

This has triggered a performance management revolution (Eccles, 1991; Neely 1999). Many

academic researchers, practitioners and consultancy firms have drew the attention to the

design and implementation of more appropriate measurement systems through aligning the

PMS with corporate strategies and non-financial measures. As a consequence, a bundle of

so-called advanced management systems and frameworks have been created. These

accounting innovations, such as the balanced scorecard (Kaplan and Norton, 1992) and

performance prism (Kennerley and Neely, 2000) are multidimensional, explicitly integrating

financial measures with non-financial measures, and linking the performance measures

closely to corporate strategy.

The discussions and investigations have thrived and flourished the pool of management

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accounting research, and facilitate manager’s understanding and knowledge of performance

measurement systems. Most of them justify the importance and necessity of conducting the

evolution of the PMS so as to ensure that the performance measures can catch up with the

ever-lasting changing organisation and business environment (Kennerley and Neely, 2002).

They also highlight the factors that can hinder the complex evolutionary change process. On

the other hand, through revealing the barriers to change, it also indicates how the

transformation will be successful if those issues are addressed. Whilst this dissertation will

not go through these implementation issues, instead, a theoretical framework named

Actor-Network Theory(ANT) will be applied to explain the PMS change in the case study

company. In this respect, the success of implementing a new PMS model is relied on

absorbing and recruiting all kinds of potential relevant actors to ‘weave’ the network. And

eventually everyone considers the novel performance management system as

taken-for-granted.

1.2 STATEMENT OF PURPOSE

This dissertation attempts to conduct a relatively detailed case study in a branch company of

one of the largest aircraft manufacturers in the world. The case is used to explain and

examine the way in which PMS evolves and implements in the Company, and demonstrate

that the result is hinged upon the construction and enhancement of the networks through

attracting and enrolling all potentially relevant human and non-human members to facilitate

the proposed technology become the ‘matter of fact’ throughout the whole organisation. The

basis of this exploration will be resided at the conceptions and principles of ‘Latourian’

research – ANT.

1.3 THE STRUCTURE OF THE STUDY

The dissertation will be organised in this way. Chapter two presents a relatively thorough

overview of the literature review about the role of ANT in management accounting change,

and indicates the marginal contribution of this study to the management accounting research.

The following chapter illustrates the research methodology, including the research approach,

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data collection and data analysis process. Provided the explanations of the preceding chapters,

chapter four will discuss and examine the creation and enrichment of powerful human and

non-human actor-networks during the new PMS adoption process. The final chapter will

conclude the whole dissertation.

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CHAPTER TWO

LITERATURE REVIEW

2.1. INTRODUCTION

Over the latest three decades, the traditional management accounting has been widely

challenged and criticised because of its inability and insufficiency to meet the information

requirements in current global and technology-driven business environment (Burns and

Viavio, 2001). On the other hand, the academics and practitioners have also been dedicated to

develop innovative and advanced management accounting techniques and systems to fill the

information gap. Among all inventions, the selection of performance measures becomes one

of the most significant issues under the pressure of increasing emphasis on market

competition, innovations, change and strategic aspects of managing business

(Wickramasinghe and Alawattage, 2007), since the PMS is meant to calculate and

communicate the critical aspects of organisational activities.

Lots of multinational organisations have abandoned conventional PMS and shifted towards

newly developed management accounting systems, and the subsequent benefits have been

widely appreciated in practice. On the other hand, a large amount of difficulties and issues

has also emerged with the development and implementation of the new performance

measures. Rather than conducting an investigation to discuss a variety of implementation

issues, this chapter attempts to demonstrate that the success or failure of the management

accounting innovation can be illuminated in a different angle, by borrowing the knowledge of

a series of ‘Latourian’ studies – ANT. The chapter starts with a very brief review of previous

PMS studies, followed by a comprehensive discussion about ANT’s contribution to

management accounting change through examining the previous academic and empirical

studies. And then the research questions will be defined.

2.2 A BRIEF REVIEW OF PREVIOUS PMS STUDIES

With the growing awareness of strategic management accounting, the PMS has been evolved

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to align with corporate strategies and non-financial dimension of businesses. Also, a large

number of criteria that used to indicate the effectiveness and appropriateness of those

novelties have been developed. For instance, performance measures are required to be

directly associated to an organisation’s mission, vision and objectives, to consistently reflect

the external competitive market, customer requirements and internal objectives (Globerson,

1985; Wisenr and Fawcett, 1991; Maskell, 1989; Kaplan and Norton, 1993). In a word, facing

the pressure from the market competition, innovations, change and strategic aspects of

running businesses, the PMS has been evolved to be integral with strategic management and

non-financial perspectives of the business.

In spite of the limited studies and literatures in the evolution of PMS, there is a significant

number of researches have been devoted to the discussion of management accounting change,

from which useful lessons relate to the management of change can also be learnt (Waggoner

et al., 1999). Most of them (i.e. Holzer and Norreklit, 1991; Kaplan and Norton, 1996a)

believe that the major benefit of introducing an innovative PMS framework is to overcome

the weaknesses and shortcomings of most traditional accounting approaches to performance

measurement. Meanwhile, it is vital to maintain a dynamic PMS, so that the measures keep

relevant and always reflect the issues of significance to the business (Lynch and Cross, 1991).

Although a lot of organisations have devoted considerable efforts to design and employ better

performance measures, a few have evolved following their implementation (Waggoner et al.,

1999). There are numerous investigations have been assigned to explore the reasons and

barriers behind this issue. Greiner (1996) classifies these inhibiting issues as institutional,

pragmatic, technical and financial. For instance, the assumed causality relation in the

application of activity-based costing and balanced scorecard implies the technicality flaws of

these accounting innovations. Townley and Cooper (1998) observe that performance

measurement initiatives could suffer from loss of initial enthusiasm and bring about

scepticism and disillusionment, which is primarily caused by the inability to manage the

change, lack of commitment to the change, and insufficient involvement of employees. Many

(i.e. Scott, 1995; Pettigrew and Whipp, 1991) also emphasise the magnitude of political

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nature of the organisation, especially the influence of corporate culture in the evolutionary

change (Tichy, 1983). Kasurinen (2002) echoes this view and added several other

implementation issues that may emerge during the management accounting change process,

including different understandings and knowledge of change, behavioural and organisational

implementation variables.

2.3ANT IN MANAGEMENT ACCOUNTING CHANGE

There has been a flood of academic and professional studies focus on the management

accounting change since the late 1990s (Bhimani, 1996; Shields, 1997), but only some efforts

have been taken to examine the change process itself (Hopwood, 1987). A few researchers

have provided general models of accounting change (Innes and Mitchell, 1990; Laughlin,

1991). Several have explored drivers and forces of change (Anderson, 1995; Gosselin, 1997;

Libby and Waterhouse, 1996). Others have assessed the ‘condition of possibility’ for

accounting change (Bhimani, 1993; Miller and O’Leary, 1997) and contributions of

institutionalisation theory on change (Abernethy and Chua, 1996; Burns and Scapens, 2000).

Also, many longitudinal case studies have been dedicated to examine the politics of change,

managerial resistance, and activities of champions and powerful agents during the change

process (Briers and Chua, 2001; Chua, 1995; Dent, 1991). This piece of work is conceptually

grounded on ANT (Callon, 1986; Latour, 1999; Law and Hassard, 1999), which is believed to

be beneficial for investigating the accounting change from a broad perspective and the

management accounting innovation diffusion in particular (Chua, 1995). In this case, the

accounting innovation is developed in a non-liner fashion and the success/failure not simply

in the determination of a quantity of listed social factors and addressing several

implementation issues. Instead, it depends on the enactment and interplay of numerous

human and non-human elements that are enrolled for easing and accomplishing the novel

accounting initiatives.

In ANT, management accounting is characterised as a system that developed based on

concepts with the objectives of defining social realities, which focuses on constructing

science and technology and developing systems for ‘getting things done’ (Jones and Dugdale,

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2001; Wickramasinghe and Alawattage, 2006). Meanwhile, those participants are closely

connected in networks and work actively and innovatively to promote and disseminate a

particular science and technology, making it accepted and popularised throughout the

organisation. This so-called actor-network is regarded as another important underlying

concept beneath the ANT.

Preston et al. (1992) derive the notion ‘fabrication’ from previous ANT studies and describe

the form of a management accounting system is a fabrication process, through assessing how

structured forces determine the direction of change and human agency determines the pact of

that change, respectively. The end product of this fabrication process is a ‘black box’, in the

case of the science and technology is accepted unquestioningly and taken for granted (Latour,

1987).

During the process of making management accounting technologies become ‘facts and

machines’, these actors affect each other in various networks through relationships or

‘intermediaries’ (Callon, 1991), such as written texts, technical artefacts and money (Jones

and Dugdale, 2002). Hence, it is logical to deduce that intermediaries are employed to

generate the networks of human and non-human allies, while the networks help the

construction of facts and machines. In the context of management accounting, it is the

management accounting technique and systems.

In the development and promotion of these technologies, human allies, such as consultants,

professional bodies, managers and accountants, intertwine with non-human allies like

common understanding of performance measures and information technology in order to

create a favourable environment within organisations for executing the newly emerging

systems (Wickramasinghe and Alawattage, 2007). Non-human allies are recognised and

realised by giving a voice with the help of those ‘spokespersons’ contribute to the

construction of networks. In this respect, accounting technologies are used to translate

changing and transitory interests of diverse groups of actors who intend to safeguard their

positions and interests within organisations and society (Alcouffe et al., 2008), through using

and manipulating these innovations to creating ‘inscriptions’ (i.e. figures and numbers

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become ‘facts’). Alcouffe et al. (2008) echo this view and indicate that ANT acknowledges

the power struggles and accounting technologies are not inert, which have to be pushed and

pulled by actors for propagation.

Latour (1987) believe that the destiny of a technology initially relies on those who come after

the ‘inventor’, while the following success/failure becomes a social accomplishment by

building networks of a variety of human and non-human allies. If the new technology is

believed to be ‘best practice’ or considered being aligned with objectives of powerful groups,

it will be diffused through the organisation (Brier and Chua, 2001). Usually, managerial

intentions play an essential role in introducing and guiding the general development of

accounting technologies, but the prosperity and flourish of these systems need interchanges

with other participating members. As Preston et al. (1992) assert, the technological product is

fragile and the fabricated systems can easily collapse if there is a lack of sufficient resources

and care committed to the maintenance. Therefore, the machinations, promotion and selling

of the technology within the organisation is of high importance to convince sceptics about the

objectives and impacts of the new management accounting technique. In other words,

achievement of any innovation is associated with other users, in conjunction with their

expectations, interests and problems other than pioneers (Lowe, 2001). Networks become

more powerful as human and non-human allies are increasingly enrolled and incorporated.

Eventually, the accounting technologies will achieve a solid and sound appearance. Hence,

the fabrication of a management accounting system is an inherently social process (Latour,

1987: 142-143; Preston et al., 1992). In addition to recruit supporters to join the manufacture

of the innovation, pioneers must to control their acts and gestures to ensure the predictability

of their actions (Lowe, 2000). Otherwise, issues may arise since allies may interpret and

convert the initiatives in a totally different manner, causing difficulty to manage and control

them.

Giddens (1984) argue that there is a reciprocal relationship in which participants’ actions

create and re-create organisational structures and in turn be conditioned and constrained by

these structures. Specifically, the emerging definitions, interpretations and meanings are

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intentionally shaped by actions and interactions of the individuals involved in the fabrication

process (Preston et al., 1992). Counteractively, these definitions and interpretations also

shape the ways in which people perceive, understand and sense about the system, and

individuals’ understanding and reactions may enhance and alter the expected results of the

system and the way in which it was meant to implement. Hence, the deliberate design of the

new system achieves desired and officially required results, which only reflects a part of the

fabrication process. Meanwhile, different understanding and responses from diverse

participating individuals bring about unanticipated and unintentional consequences. This can

be linked to the concept of ‘drift’ that introduced by Quattrone and Hopper (2001), which

problematise the manufacture of accounting change and challenge its liner characterisations.

In this respect, the configuration of human and non-human factors not only harbour the

potential of accounting change in unpredictable manners (ibid: 427), but also affects and/or

restrict the free-play of this action (Andon et al., 2007).

The drift represents accounting innovation as unfinished attempts, and reflects the inability of

change agents to control all contextual elements in order to achieve desired outcomes. It also

transmits the co-produced nature of change derives from the interdependent nature of

organisational actions, knowledge and rationalities. Andon et al. (2007:275) further augment

the notion of ‘relational drifting’ to illuminate this inherent unsettledness of accounting

innovation as a ‘knowledge object’ that reflects partial and changing ‘ontologies’, shape or

re-shape by the variegated and shifting collectives of elements. It is believed that the

mobilisation of resistance that is rooted in a wide array of established organisational

contingencies and historical legacies creates inertial forces and counters change agenda

(Scapens and Roberts, 1993; Granlund, 2001). In this case, the concept of ‘boundary objects’

is introduced, which is used to buffer resistance and coordinate different diverse interests into

an identical direction during the innovation process.

It is asserted that the ultimate objective of making the new technology as a ‘matter of fact’ is

achieved through applying these ‘boundary objects’, in order to facilitate and smooth the

introduction and translation of the new science and technology. In this case, ‘science and

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technology’ is no longer associated with newly discoveries and creations (Latour, 1987),

rather, embedded in the existing knowledge based on a ‘system-building process’ through

‘enrolling and controlling’ human and non-human allies until they are considered as ‘facts

and machines’ (Jones and Dugdale, 2002). A boundary object is used to mediate these diverse

actor worlds because of the commonality to multiple groups, along with its capability of

taking different meanings within each of them (Brier and Chua, 2001). Some have a

corporeal form, such as the lines of code in a computer system that forms centres of

calculation ; while the others do not have a physical form, such as ‘value generation’,

‘empowerment’, and ‘world best practice’, which is recognised through social interactions

(ibid.).

Star and Griesemer (1989) develop four forms of boundary objects to reconcile diverse actors,

including repositories of things, ideal types, coincident boundaries and standardises

form/work methods. In the accounting contexts, cost driver matrices, customer/supplier data

basses, general and subsidiary ledgers are considered as data repositories, which enable

different groups to use and reconfigure the information differently. Ideal type objects like

costing systems and PMS can be reasonably understood by different groups. In terms of

common objects, organisations can have the same boundaries but with different ‘internal’

contents, whilst they can ‘enable functional specialists to use their different perspectives

relatively autonomously and for cooperating parties to share a common referent’ (Brier and

Chua, 2001:240). Finally, through employing standardised methods of data collection,

aggregation and transformation, the boundary objects mediate different sites and times and

discipline invalidity usages and reduce the diversity. Brier and Chua (2001) introduce an

additional one labelled visionary objects, which have high levels of legitimacy within a

particular community and evoke similar emotive and affective reactions from diverse people.

By conceiving a sacred quality like ‘efficient work practices’, ‘accountable management’ and

‘world best practice’, the visionary objects induce the ‘rational’ people to be supportive.

Preston et al. (1992) developed a model of the fabrication process (see Figure 1 below) based

on Latour’s seven rules of method (Latour, 1987:258): unspecified social, political and

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economic conditions enable a number of weak, hesitant, technological possibilities to emerge,

which can be translated into increasingly convincing augments through using rhetoric,

experiments or other appeals to address the sceptical and potentially hostile questioning and

criticisms. With rising mobilisation and utilisation of allies and resources (either human or

non-human) around the technical project, some of augments or contested technology

eventually become ‘matter of fact’ or labelled take-for-granted as more networks utilise,

enhance and modify this technology. In other words, identical clones will be adopted and

reproduced along with possible translations and modifications due to the specificity of

context.

Figure 1: A Model of the Process of Fabrication and Translation from ANT (based on Latour,

1987; Preston et al., 1992; Alcouffe et al., 2008)

Similarly, Callon (1986) and Latour (1987) apply the ANT concept of ‘translation’ to

illustrate innovation diffusion through developing a four-process framework:

‘problematisation’, ‘interessement’, ‘enrolment’ and ‘mobilisation’ (Callon, 1986), which can

be coordinated with the model developed by Preston et al. (see Figure 1). Problematisation

Political, Social and Economic Conditions

Weak, Hesitant Possibilities

Convincing Arguments

Matter of Fact

Resources and Allies

Rhetoric and

Experimentation

Closure through use

and Modification

Problematisation

Enrolment

Mobilisation

Interessement

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requires actors’ efforts to persuade others to subscribe the correct solutions they come up with,

with the help of external elements like cultural and discursive resource (Ezzamel, 1994).

Interessement coordinates different interest of diverse stakeholders and reinforce the links

among these various interests (Lowe, 1997). Its success is built up on allies and

spokespeople’s ability to reproduce the whole of society and stand for non-human elements

(Lowe, 2001). Enrolment focuses on the construction of alliance networks so as to reach

agreement among the stakeholders caring about their own interest (Alcouffe et al., 2008).

Finally, mobilisation relates to monitor and manage various interests in order to maintain

their stability comparatively (Mouritsen et al., 2001). Besides the intertwining and

cooperation of these four processes, Latour (1987:74) point out that ‘trials of strength’ also

occurs. Accordingly, new technologies supporters have to battle with counteractors and

overcome the challenges and resistances through using a variety of ‘boundary objects’ or

‘intermediaries’. In turn, this questioning facilitates the acceptance of the innovation through

consistent adjustment and adaptation. Eventually, the translation process will be achieved in

the actor-network, in a way that the innovation represents all richness, complexity and

diversity of interests, and in such a way that makes the solution acceptable to both initial

proponents and counteractors.

In brief, ANT explores accounting change as a process of fabrication, in which accounting

inscriptions are viewed as constructions built upon uncertain beliefs, maintained and

strengthened by diverse stakeholders’ interests along with a various collection of social,

economic and political factors. Through the translation processes, these adherent interests

that associate with different elements are funnelled and congregated. Moreover, a broad range

of ‘boundary objects’ are employed to mediate and connect diverse interests within networks,

facilitating the implementation of accounting change process.

2.4 ISSUES EXPLORED IN THE STUDY

ANT mainly has been adopted to address two types of research questions. One is to

investigate the role of accounting innovations within organisations during the process of

being taken for granted, especially in the way how they act at a distance due to the

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inscriptions have been created (i.e. Bloomfiled and Vurdubakis, 1997; Ogden, 1997). The

other is to examine how management accounting innovation is initiated, transformed and

acknowledged by all participating individuals ultimately (i.e. Chua, 1995; Preston et al.,

1992). This dissertation focuses on the second question. The objective is to understand and

explore how and why a novel performance management system is produced and adapted and

eventually accepted in the case study company. By doing so, the ANT concept of the

‘fabrication’ and ‘translation’ will be employed. In particular, the modified model shown in

Figure 1 will be borrowed and used as a basic framework to study the ‘translation’ process.

In comparison with previous PMS-focused management accounting research, this dissertation

is distinguished in terms of the underlying conceptual basis and the angle that used to conduct

the analysis. Most of the PMS research emphasises addressing a number of implementation

issues and/or exploring the new ones during the process of management accounting change,

while this study contributes new knowledge as one of the first to look into the evolution of

the PMS as a social process based on the ANT framework. Also, the dissertation endeavours

to explore new findings to enrich the ANT studies, which will be presented in the final

chapter.

2.5 RESEARCH QUESTIONS

The dissertation will focus on addressing two preliminary research questions as follows:

1. How did the ANT’s four-process framework match with the PMS evolution and in

the case study company? More specifically, how the evolution process was

problematised, and the new PMS framework emerged? What kinds of human and

non-human allies and resources have been enrolled and mobilised to facilitate and

promote the transformation and implementation process?

2. Has the novel performance management system become a ‘black box’ in the

organisation? In other words, has the new PMS been accepted out of question and taken

for granted by everyone in the organisation?

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CHAPTER THREE

RESEARCH METHODOLOGY

3.1 INTRODUCTION

Research is fundamentally a process of intellectual discovery, and about the exploration,

interpretation and communication of new knowledge, which has the potential to transform

human being’s knowledge and understanding of the world (Ryan et al., 1992: 1). The research

methodology is developed and used to help researchers to carry out the procedure and others

understand the result, through making sure the data and information can be obtained and

assessed (Adams and Schvaneveldt, 1985). There are two major categorise of research

methodology prevailing in the social science studies, one is quantitative research

methodology and the other is qualitative research methodology. The qualitative methods that

depend on the qualitative information (i.e. words, sentences and narrative) rather than

scientific principles and mathematical models have been significantly appropriated and

adopted in the context of management accounting. This dissertation is also included.

This chapter attempts to present the research method that applied in this research, and explain

the overall research process. The rest of the chapter will be organised in this way. The

research approach will be introduced and discussed firstly, and then the data collection

process will be described. The next section presents the data analysis process. And the final

part concludes this chapter.

3.2 RESEARCH APPROACH

This dissertation will apply the case study based research approach. The case study research

has been recognised as a useful means for accounting researchers to develop an intimate,

contextually sensitive knowledge of management practices in the real world (Keating, 1995).

It helps researchers to understand the nature of accounting in practice, both in terms of the

techniques, procedures, systems etc., which is applied and the way in which they are applied

(Ryan et al., 1992: 143). Often, the term ‘fieldwork’ is used alternatively with the case study.

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In accounting, it could be a study of a single organisation, or a group of organisations.

Regarding this dissertation, the object of the study is one single branch company of an

aircraft manufacturer.

The primary objective of case studies is to achieve a better understanding and knowledge of

accounting practice as well as its role and functioning in organisation, such as the pressures

which accounting exerts and has exerted on it, and the interests it serves and undermines, and

to compare the claimed potential of accounting with its practical achievements and

consequences (Hopwood, 1987). The investigated accounting practice in the dissertation is

the performance measurement system, with a focus of examining the forces that provoke and

affect its change and evolution in the case study company.

This research is classified as an explanatory case study, which focuses on the specific case

only and attempts to explain the reasons for observed accounting practices by using available

theories (Ryan et al., 1992: 144). The theory enables researchers to develop convincing

illustrations of the observed practices in this specific study. Meanwhile, it will be necessary

to revise the existing theory or even create new one that can be adopted in other case studies

later (ibid). In this respect, the actor-network theory provides a conceptual framework to

illuminate the translation process of PMS in the case study organisation.

Moreover, the semi-structured interviews are selected to collect qualitative data and

information in the case company. This kind of interviews not only ensures a list of similar

general questions will be asked of different people and comparable information obtained, but

also offer researchers the flexibility to pursue new ideas and explore emerging lines of

enquiry (Ryan et al., 1992).

3.3 DATA COLLECTION PROCESS

Due to the time constraint and limited accessibility to the case company, these interviews

were not conducted by myself, rather they were organised and carried out by my supervisor

and his colleagues in 2004. Here, I would like to appreciate their generosity and fully

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supports.

The interviews were semi-structured, which facilitated the conversations outside of structure.

All conversations were mainly guided by a dozen of similar generic questions that focused on

the forces that effect the transformation and evaluation of PMS in the case company. Also,

more in-depth and detailed questions were explored and aspired from the responses and

information the interviewees provided. In total, there are five interviews with a Head of

Business and four senior managers, including manufacturing, logistic, change managers etc.

Most of interviews took about 1 hour, whereas the interview with the general manager lasted

approximately 2 hours. The collected information and data were carefully categorised and

well organised after being obtained and analysed, which demonstrated that research questions

could be applied in the case company.

3.4 DATA ANALYSIS PROCESS

It is believed that a theoretical framework is regarded as a necessity to start any case study,

whilst it also should be capable of being challenged and refined as a result of the research

process (Humphrey and Scapens, 1996). In this dissertation, the ANT’s four-process

theoretical framework (see Figure 1) will be used as a starting-point to analyse and assess the

information collected in the field. Specifically, these four processes including

problematisation, enrolment, interressment and modification process will be applied to

classify and explain individual and organisational behaviours when the new PMS initative

was launched in the case study organisation.

Furthermore, the fieldwork attempts to enrich the value of empirical enquiry, give due

recognition to the temporal nature of accounting knowledge, and appropriately define the role

of case studies as an important vehicle for questioning existing accounting theories and

analytical models, as well as developing new ones (Humphrey and Scapens, 1996). Therefore,

the analysis process also intends to enrich the current ‘Latorian studies’ through examining

ANT’s efficiency and effectiveness in illustrating the PMS transformation in the context of

this particular company.

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3.5 SUMMARY

The research methodology is considered as a vehicle to obtain, explain and examine the

useful information and data for social studies, so as to conclude the results that can be

understood by others and also provide indications for further investigations. This chapter

shows that this dissertation is a qualitative research and uses the case study approach. Also,

the data collection and analysis process is described in the following two sections. The major

findings of the fieldwork will be presented in the next chapter.

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CHAPTER FOUR

CASE STUDY: DISCUSSION

4.1 INTRODUCTION

As mentioned in the preceding chapters, it is believed that ANT is a powerful tool for the

explanation of management accounting change and accounting innovation circulation. And

the performance measurement system is included. In this particular case company, it is called

SQDCP (stands for safety, quality, delivery, cost and people). These Latourian research offers

a fresh view to investigate and illuminate the new PMS implementation process, asserting

that the success is determined by building up a powerful network through exploring and

establishing connections and linkages among various human and non-human actors inside

and outside the organisation.

This chapter will explain a case of the PMS change in the Company, based on the theoretical

framework of ANT. The model of the fabrication process derived from Latour’s seven rules

of method, along with a four-process translation framework developed founded on the work

of Callon (1986) and (Latour, 1987) will be applied to assist the analysis (see Figure 1). Also,

it will demonstrate how different individuals, teams and departments that conceived different

interests are aligned together and willing to join the SQDCP adoption campaign, through the

engagement of a variety of ‘boundary objects’.

The investigation will be conducted in seven sections, starting with a broad overview of the

aircraft industry and a brief introduction of the case study company (the Company

afterwards). Section four presents a brief overview about the PMS implementation process

and its current status in the Company. The following part applies ANT to explain the SQDCP

adoption process based on a four-process framework, through examining how different actors

have been enrolled in the network through using diverse motivations and incentives. Section

six concludes this chapter.

4.2 THE AIRCRAFT INDUSTRY

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The aircraft industry is a very unique and unusual business. It is a high-volume business and

the characteristics are subtly different in terms of making large components. However, in

comparison with other industries like commodities industries, it seems very low-volume. It

takes tremendous risks to run the aircraft business due to the stringent requirements of acute

investment and money, which leads to less competition and an oligopolistic market. This

characteristic stands out the critical importance of the life-cycle of product, whereas the rate

capability and stable volume must be developed before getting an opportunity to achieve

more improvement. Another unusual aspect is a huge level of manual intervention in the

processes. The man hour performance, work package performance and schedule adherence

are crucial measures throughout the whole Group. It is a labour driven business, in which

labour takes about 76% of the internal manufacturing costs of the Company.

From a safety and legislative point, there is an extensive amount of government and

airworthiness authority’s intervention like Civil Airline Association (CAA), who is extremely

concerned about and interested in the product quality. It is unique but normal for aircraft

industry to take a large number of special measures, such as quality assurance, quality audits

and the CAA audits. Furthermore, without the occurrence of major world wide crisis, it is a

very stable and an entirely predictable business since there is no seasonal volatility and

whimsical customers. On the other hands, the change of market dynamics is forcing the

players to evolve their marketing, sales and operation planning systems significantly. Hence,

in order to response to the market, a measuring system is always a necessity.

4.3 THE COMPANY

The Company is a wholly owned subsidiary of one of the world’s largest aircraft

manufacturers (the Group afterwards), and produces wings for the Group. It is responsible for

the design, manufacture, assemble and delivery of the high-technology wings for all models,

and also in charge of the overall design and supply of the fuel system. The Company started

to run the two model line pilot schemes: one in Single Aisle and the other in Large

Component Manufacture (LCM) in 2000 to 2001. In this dissertation, the PMS change will

focus on the LCM.

26

The preference of introducing a better PMS has been driven internally by the business as

much as it has externally. Between 1997 and 2000, the Company experienced an extreme

poor performance period, when the rate increase was at its most aggressive stage. Meanwhile,

a new production introduction resulted in a new whole wing production, which chronically

worsened the site performance on every dimension because of the insufficient amount of

experience, plus the requirements of replacing the SAP system for millennium compliance.

On the exterior, a series of significant events like 9/11 pushed the Company even further to

draw attention into the business and the Group to adopt a more centralised approach across

all countries and plants. There are 16 plants/sites in the Group but out of 16 the Company was

ranked 20th. It was so bad that the Group even started to consider about moving wing

production to another site/subsidiary. Meanwhile, The Company also needs measures and

data to satisfy customers’ enquires about the effectiveness and usefulness of certain KPIs. At

that point, the managers in the Company realised that they had to do something, so the

consultancy group was hired due to the limited management capability.

4.4 A BRIEF OVERVIEW OF THE NEW PMS

It is believed that the PMS evolution process is about growing and working together. In this

case, the Company allocated a project leader and produces a frame agreed by all to map

against the system, so as to identify where the gaps were and put some structure into it at

senior team level. All have been involved, and this high level of involvement was the key

behind the PMS design and adoption. The Company adopted a top-down approach in order

to maximise the engagement. Rather than control everything by setting directions and

purposes and then managing towards them, the Company starts with having a vision for the

entire organisation and ends with everyone doing the right thing at shop floor level that

actually support the vision. In this respect, the McKinsey’s model of PMS was applie.

The change process has been very much like an iterative process that went through a number

of stages and was reviewed on a number of occasions, aiming to satisfy the senior

management team as well as workers at shop floor levels. The transformation began at the

very top with Blue Sky vision in 2001/2002. The Company decided to have a measurement

27

system called the Head Up Display (HUD) of performance measures, which only included a

few KPI. The HUD stands for the five key business drivers named safety, quality, cost,

delivery and people, and present the dimensions of business management and measurement.

It can be easily identified that these values are closely associated with the characteristics of

this unique industry. The senior managers agreed no more than six measures under each

heading/values at site level.

Each head of functions have been participated and work altogether to launch the final model

and final templates, sign them off and get consent from the peer group. Then the Company

dedicated one young manger to implement, train and educate the Financial Account Manager

in each of these businesses in these new measures. Eventually, people would work with the

head of functions and head of business to deploy that down through the teams at an approved

time scale. This enhanced alignment and integration is one of the important characteristics

during the SQDCP implementation process in the Company. The following section explicitly

demonstrates how the PMS change can be analysed and understood based on the ANT.

4.5 THE EVOLUTION OF PMS

4.5.1 Problematisation

Before mid-1990s, the PMS was barely existent in the Company. At 1999, the Company

began to bring in the PMS, which was using qualitative information but not sufficiently

quantitative data that was rear mirrors and after the events. There was a lot of narrative, text

and words in terms of leading KPI’s initially and pulse singes from the business. But the

absence of measures had became a huge concern because they were absent in place.

‘At a site level, the only measure managers looked at on a weekly basis was

delivery schedule adherence, to the component availability programme and what

needed to really schedule.’(General Manager)

In addition to this, it was difficult to recognise a lot of them even the ones that did exist. At

that time, the Company did have a few scorecards which were a whole brochure of metrics

28

used by some senior leadership. However, they were simply crude bar charts only used to

report on the business rather than manage it. Therefore, those measures were result oriented

and only reflected what happen in the past. This has caused some gaps between the natural

work stream and the work stream in the Company, and the loss of these relevant information

and data was unable to identify the problem, assist decision-making and come up with

solutions in the future. As General Manager claimed:

‘No decision was ever made on the performance measures either, (while) the

purpose of a PMS is to provide with accurate facts that enables you to make

decision.’

Although the Group’s previous ‘four value’ – Quality, Cost, Delivery and People (QCDP)

might help to work something out, but the PMS never actually measured what mattered on

the shop floor or mattered to the customers, which was implied by the quotations from the

two interviewees.

“There were no standard measures across all plants, and no visual measures on

the jigs’.

‘The company itself seeks to maximise the efficiency to run the business – whether

we can get what customers asking for and whether we can response or not in

terms of having the measures and data.’

So, in a word, the Company did have a PMS before launching the change initiatives, but it

was not robust at all since it did not mirror how the business was performing, how it was

doing and where it was, as well as helpful for decision-making.

Problematisation refers to the pioneer’s work to convince others to subscribe to their own

view by showing they have the correct solutions (Alcouffe et al., 2008). This was not a

difficult task to persuade the members because the Company was struggling to survive in the

financial aspect, and also experiencing the lowest point of having a professional performance

management system. In which case, the development of an efficient and appropriate PMS is

29

extremely urgent.

‘We needed a more structured format of measuring what we do and why we do it,

which was the over-riding factor.’ (Engineering Manager)

‘…Why was it introduced? If you don’t have a measurement system how do you

know if you are performing? How do you know where you are? How can make

decisions without data? You need data to make decisions. Without the ability to

have measuring systems in place to where you have been, where are and where

you are going, then you have no chance and equally on what basis can you set

performance improvement and on what basis can you set targets. If you don’t have

measuring system in place you don’t know where you are, it is a bit like a compass

isn’t it? Lost at sea!!!’ (Head of Business)

Meanwhile, the extreme poor site performance and threats of closing the production lines

along with external market dynamics and competition urged a PMS change. Hence, the

Company immediately embarked on the PMS evolution once the consultancy

firm-McKinsey’s was appointed and proposed the new model of performance management

systems.

4.5.2 Enrolment: Human Actors

‘It is not just about a set of numbers, not just a scorecard, graph, or a chart. It is

about systems, it is about how it all works together linked into. They have to be

barometric which the sing of a good PMS is and they have to be owned, so there

is a lot to be done in terms of people’. (Head of Business)

‘It is not all about if you design and come up with a value together and design a

target and a measurement system together, if you agree every measure within that

together. Then you have created a huge social contact, team contact. That is

almost unwritten that this is where we agreed to put our business…’ (General

Manager)

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It is crucial to ensure everyone understand what the PMS is, what is measuring and why.

This requires the whole team to work together, to draw the system, to agree what the system

looks like and agree what the measures should be against that system. It is essential to have

influential and supportive leaders at a senior level. All operations and functions should be

aligned together and aiming for the same goal, which is guided by the Blue Sky vision. In

brief, the PMS should never be considered in isolation, rather, it is integral within the system

and business in that they are taken in the context of a richer business process.

Enrolment focus on the construction of alliance networks so as to reach agreement among the

different stakeholders caring about their own interests (Alcouffe et al., 2008). In this respect,

the ‘boundary objects’ will take up a critical role in facilitating and smoothing the

manufacture of social networks. This section will talk about how diverse human allies have

been engaged in the connections, while the non-human allies (also the ‘boundary objects’ in

this case) like facilitators and intermediaries will be explained in the following section.

A: Consultancy

The Company took the innovation initiatives when Mckinsey’s was hired, who is the fore

runner of the APS structure. They looked at the overall architecture and value stream in the

plant, suggesting the Company to develop and re-define the PMS value stream, in terms of

setting up targets, having plans for improvement, regularly reviewing process, building up

incentives, designing KPI’s hierarchy and installing tracking systems and process. This is the

typical McKinsey model of PMS. The consultancy was playing a significant role leading the

PMS change and facilitated the earlier stage of the SQDCP adoption in the Company, which

was acknowledged by four managers:

“It did take our engagement with McKinsey’s, (their) intellectual capacity and

intellectual competence to help create a new way for us.”

“The consultancy was deliberately chosen to help us with some of the more subtle

elements of the engagement when we attempt to manufacture a range of measures

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in a relatively short space of time, which needed a competence at shop floor level

to understand what we are trying to do.”

‘The McKinsey’s were here...They did the value stream mapping project. If it did

fit, we are looking at QDCSP have come later on. They encompassed as they

department list of the demands people being with HR safety, being everybody’s

responsibility’s quality, delivery being operations, or cost being finance.’

‘The consultant did be involved, in a sort of very light facilitation mode a test and

challenge our assumptions based on their external best practice.’

As a globally well-known consultancy firms, McKinsey’s has the world’s most talented

academies and business practitioners with extensive knowledge, expertise and experience in

the performance management, which exactly the Company was lack of and looking for.

Meanwhile, the consultancy firm has the great incentives to enlarge the network of PMS

models that developed by itself in the pursuit of the reputation and financial benefit.

B: Top Management in the Group and Company

The top management of the Group across different countries has been supportive to the

Company, through offering a high performance approach to the risk of employing a new

PMS in spite of different national interests and attitudes towards risk-taking. Guiding by the

same objectives, their different visions, methodical approaches and entrepreneurial spirits etc

helps the Group and Company establish a strong risk management and take enormous risks

but in a very well thought out and controlled fashion.

‘In terms of (information) flowing across, at a senior level, it has much improved

through giving extensive supports, we have gotten the contract of support

function commitments and then what the support function is going to do to

improve the business so there is some better stuff in there that’s swirling around.’

(Head of Business)

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The above quotation demonstrates that besides the endorsement from Group, the senior

managers in the Company also has been encouraging and promoting the PMS

evolution process. In order to combine the performance measures into leadership

development and alignment, the Head of Business introduced the process management

(PMI) into the business through revising the aim of LCM, which will consistently and

sustainably deliver unprecedented levels of customer satisfaction, efficiency and

quality in the products. Meanwhile, the Head of Business also granted the function

managers enough autonomy/amount of risk and latitude as long as they can prove what

they are going to change by setting up a base line for performance.

C: Heads of Functions and Operations

The Head of Functions were motivated to join the network of the PMS novelty in terms of

being in charge of deciding measures and setting standards in accordance with the five value

streams-SQCDP. This engagement to the independence on each other between functions and

operations would be easier to make the measures become the operational people’s measures.

On the other hand, the targets for all functions and operations are identical, which creates a

social and economic interdependence on the same outcome and targets for all. This has

contributed the significant performance improvement of the Company. Also, the heads of

operations of the Company have become closer by working as a union to reach the goals

because they are all involved in the performance measurement. As the Engineering Manager

explained:

‘(It is) so much an operation’s target, within that there is a quality, cost and

engineering inputs to achieve that target. It is enabling functions getting closer to

help achieve the desired output, but also it is getting more integrated within the

teams that we manage.’

This rising integration and coordination among all operational functions is primarily as a

consequence of the increasingly inextricable connection between five value streams: if an

unpleasant change occurs in a department, it will worsen the performance in the nearby

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operation because of a causality relationship between the SQDCP measures. In the Company,

the solid relationship between the five business drivers is explained as follows:

‘If it is a safer environment we are less likely to have people off, which means we

have the same man doing the same job more often, which means he is doing it a

safer fashion and the quality will be better. For quality we know that for every

one pound of saved quality defect here it will save us five pound on site, because

for that error paper work has to be raised, a modified tool has to be made…the

multiplier effect is enormous. So there is a clear link between SQCDP.’ (Head of

Business)

D: Team Leaders and Operational Staff

‘The HUD is cascaded down to team boards at a business level afterwards, where

the Company will put the focus and efforts in the future because of the poor

standardisation at team board levels so far (year 2004)’. (General Manager)

It has been acknowledged by all interviewees that workders at the operation and shop floor

level has not taken enough initiatives, so the effectiveness and deployment of the new

technology requires more efforts. This is mainly caused by the levels of process excellence

and lack of standardisation in the subheading measures. Therefore, it has been realised that

further development and enhancement of the SQDCP diffusion in the Company will be lying

in the efforts of enrolling the actors at shop floor levels.

‘For the last three years, it has crystallised all the majority of senior managers

and a lot of middle management as well...The other end will be crapped coming

out and what we need to do is cement that further and further down the

organisation, so we have standardisation...’(General Manager)

4.5.3 Interessement and Mobilisation: Non-human Actor Enrolment

‘There is so much work to be done in the design of the system plus the agreement

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of all the people involved, all the stakeholders, you have got to have everyone

seeing the same picture, understanding the assumptions. Everyone sees the world

differently you have got to get the team as close together as you can.’ (Logistic

Manager)

Interessement aims to converge the interests of diverse stakeholders and reinforce the links

among these various interests (Lowe, 1997), which relies on the allies’ and spokespeople’s

ability to reproduce the whole of (Lowe, 2001). In this respect, these allies and spokespeople

is the non-human actors. Mobilisation relates to monitor and manage various interests in

order to maintain their stability comparatively (Mouritsen et al., 2001). Furthermore, the

issues that raised during the process of management accounting change like different

understanding and insufficient knowledge about the change, behavioural variables and factors,

and the disharmony of organisational structure and culture, will cause difficulties and

problems to bring in the relevant actors to join in the network. Therefore, it is important to

apply a variety of ‘boundary objects’ or ‘intermediaries’ to ease the conflicts that caused by

the diverse interests of different actors, so as to facilitate the fabrication process in the

Company. In the case study company, a variety of non-human factors have worked as

‘boundary objects’ used to convince and motivate people to advocate the new PMS

framework. In other words, before human allies get recruited and engaged, a range of

appropriate, powerful and effective non-human actors should have already been developed

and mobilised to assist the enrolment of human actors later.

A: The Blue Sky Vision

The Company has moved towards a single corporate entity with one boss, one set of targets,

one set of objectives and one set of measures, which gave the freedom to create a PMS that

make sense. It also issued a Blue Sky vision to assist the members to understand what is

important, what should measure and what should be taken actions against, in terms of setting

up route maps to measures and business reviews.

‘All actions and measures must be linked to the Company’s objects and traced

35

right back to the Blue Sky vision.’ (Head of Business)

On the other hand, people at different operation levels and shop floor levels are also allowed

to express and present their own content through sharing a common referent-Blue Sky vision.

This ‘boundary object’ is termed as ‘coincide object’.

‘We decided an infinite number of models you can use…which approaches to

people, leadership, the measurable goals and targets that we have will still be

there and they will always come back to SQCDP, so we decided that we would

take on best practice and we have a team of people who are looking at well.

B: Other Industries’ PMS Practices

The development and employment of performance measure practices was not limited to the

aerospace industry where the Company is operating in. Instead, people in the Company has

keeping open-minded as the Blue Vision sky implies.

‘…we now clearly have different thinkers there which is appropriate for the

business characteristics today…we have adopted appropriate practice form other

industries. I think it has been a journey of improvement.’

Some staff who were previously working in the car industry like Toyota and Land

Rover have joined the Group/Company, and brought about some appropriate practice

from the volume car industry practice, such as standard work packages and takt time,

division of labour on assembly areas. Although it is not one size fit all, but the

appropriateness and modification was used to bench and did help the company run

around the business. As one interviewee claimed,

‘We will industrially benchmark, we’ll have target for the industrial benchmarks

and where we go and we will bring that learning back in as appropriate and we

will modify our targets a appropriate but we cling pretty dearly now this as a

model’. (General Manager)

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C: Head-Up Display: SQCDP

The SQCDP under HUD is aligned with periodic reviews and leads the business to the

shared vision. Although some performance measures are set up by centres, there has also

become a culture of self-generating target setting sessions based on the frame (SQCDP) of

the aforementioned targets. So it is a combination of site level and centre, and the

appropriateness of measures is negotiated and agreed by the centres, central functions and

the plants. There is a support function commitment which is a measurable mechanistic

approach and used to link departments altogether. This ‘coincindent boundary’ or ‘common

objective’ has brought all department managers into the connection of the PMS translation

process.

‘All heads of departments have been forced to use the same measures and check

their effectiveness every time, every week, which ensures a great standardisation

at top level.’ (General Manager)

In addition to this, every function has a key HUD measures to make sure the system is

working, in terms of drawing a system map to understand what is important in their system

under these five business drivers.

‘Project Unit Managers, Operation Managers are really inspired and are quite

passionate about having their own board…’ (General Manager)

Hence, the heads of operation have been also given the independence to express their

perspectives by placing standards in their own departments, which is viewed as the effective

momentum.

D: Standardised Methods of Information Presentation

The PMS have been evolving from using words and paragraphs to KPIs and controlling

charts and data, growing literally from people coming to a review with a paragraph and a

narrative. In all business reviews, rather than just looking at the chart, a traffic lights (Red,

37

Amber and Green-RAG) system has been employed on all charts. All greens will be skipped,

whilst the reds that indicate a point is under the target line will draw the most focus because

people have an understanding and intelligence of what will happen in the future.

‘We have got 5 value streams…got planning logistics, HR, finance, quality,

engineering-five functions…got 10 bodies each with 30/40 track delivery people

measure…we wont try and go to every single measure to review all that and give

them justices. (instead), we life the measure-the 6 safety measures we end up with

will just be on one page and will just see the RGA status: red, amber or green and

the trend up or down. If it is red or down, then we will look at the KPI to

understand why…’ (General Manager)

These standardised methods of aggregation, interpretation and presentation mediate

different sites and times, and discipline invalidity usages, which reduce the diversity

(Star and Griesemer, 1989). Eventually, it facilitates the decision-making and

understanding of what part of the performance management system creates the

concession, through offering a richness of data, a quicker accessibility and a easier

readability of reports.

E: Financial Incentives

Burns and Scapens (2000) assert that the management accounting practices themselves can

be both the medium and the outcomes of organisational activities. The PMS is not an

exception. Being an important component of PMS, the financial incentive has been acting as

an ‘ideal type object’ to reconcile diverse actors during the evolution process. Therefore, the

heads of functions have also been financially inspired to be part of the network, in terms of

signing off a performance contract that states the targets, such as the financial forecast

accuracy and unit production cost targets.

‘The variable pay is made up of two targets, one is company performance and

the other is personal performance and a large percent of senior mangers

annual pay is variable. Therefore, most of them are financially motivated.’

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(Head of Business)

The heads of functions are held accountable for keep the targets and all have a PDR, which

is used to decide whether they will get variable pay or not, or an increment in their pay.

‘All (heads of functions) are accountable and have to send reports, which are

linked to rewards. This is going to be more and more involved in the business as

variable pay becomes the norm.’ (Head of Business)

‘At a senior level, there is a series of monthly payment and salary reviews that

generally stack up the date and required by the Head of Business, which

contributes to the overall LCM scorecard.’ (Change Manager)

In this case, the interests and objectives of these powerful groups in the Company have been

closely allied with the diffusion and implementation of the new accounting technology.

F: Team Based Payment

“Team leaders at shop floor level, There is no adoption or use of decision-making

driven from data or PMS, or reward system to match as that as well.’ (Change

Manager)

‘But team leaders are not included (in the PDR), they don’t have appraisal, which

is a loophole in the system. So in terms of accountability it’s not clearly

established.’ (Change Manager)

Unlike senior and function mangers, the variable pay – PDR has not been applied to the team

leaders at shop floor level. Also, people in these fields have not seen the process behaviour

precisely. However, it is critical to win their hearts and minds since they are the workforce

that make things happen and work in the performance management system. Thus, the Head

of Business is thinking of a term-based variable pay and rewards, under which the team is in

control of their performance. This has been terrifically effective in Korean aerospace where

39

the workers get rewarded on the quality dimension through launching a respective rewards

system.

4.5.4 A Matter of Fact?

It is believed that PMS in the Company has become more standardised, visible and accepted

of the need to have hard performance measures. There is much structure to it, if it continues

to stand still, then it will become more embedded in everyone’s throughout the whole

Company. The measures have been increasingly transparent, which can be used to compare

and contrast very easily between different model lines and identify the problem. In a word,

the SQDCP have significantly improved the site performance, which is better than it ever

been. As the General Manager states:

‘We have gone from 20th in a league of 16 to last 3 years of being in the top 2 or 3,

and a 100% on time delivery for the last 3 years, improve quality by 59% and we

have hit the budget for the last 3 years…which was never achieved three years

ago.’

In spite of the robust and tight communication and information flows at a site and senior

level, the PMS is still not in a perfect shape and some issues have emerged as well. There is

a bit ‘silo’ issues that refer to the interfaces between departments because the HUD is

different in diverse functions without enough linkages between each of them. In particular,

when the QSDCP is cascaded down to the lower levels in the Company, the SQDCP is

weakening and HUD becomes a little more diluted due to the lack of standardisation of team

board leaders across the site. In addition to this, not everyone is using the same PMS,

especially the people that who is actually working do not have an in-depth understanding

about what it means. In this case, the QSDCP has not become a ‘black box’ and gain the full

acceptance across the Company.

‘Once we go down as I say, starting getting a bit more diluted in the business…’

(Head of Business)

40

‘The PMS is very robust at a site level, and the information flow up and down

very weel, and it helps us take the right decision, and it is good at a product level.

While if we start to go down that, and everybody from operational areas…there

are some good islands and excellence, but we loose when we go below heads of

opertionas by loosing standardisation quite quickly, so not suprinsinlgy on the

Team Leader board we see different standards of Team Leader boards all over the

factory. They have different types of data on them.’ (General Manager)

These two responses indicate that the existence of disconnections among functions as well as

the centres of excellence at low levels has broken away the trajectory of the accounting

change in the Company; in particular, a top-down approach is applied. Andon et al (2007)

argue that the success of management accounting innovations relies on the interdependent

nature of organisational actions, knowledge and rationalities, while the ‘relational drift’

reflects the inability of change agents to control all contextual elements fails to achieve

anticipated outcomes. In other words, the non-human allies have not been fully explored and

used to coordinate and align the diverse interests of different group in the case study

organisation. On the other hand, the senior managers have realised this issue.

‘…it’s important that it’s right the way across, that’s at all level of the

management team, and cascades lower down…we (Heads of Operations) got a

network within Norman’s direct reports, but there needs to be a network within

team leaders, which is probably seen as the shift leaders are doing most

everything like you are and team leaders will be closer to the operator’s mindset

rather than management and performance.’(Engineering Manager)

Moreover, the Head of Business also proposed the team-based variable payment that learnt

from the peer company in a Korean company.

4.6 SUMMARY

This chapter illustrates how ANT’s four-process framework is applied to explain the PMS

41

change process in the Company. The severe financial site performance and inefficient

performance measures have problematised the prior PMS and urged an evolution of PMS in

the Company. Started with employing the PMS model that developed by the consultancy

firm-McKinsey’s, the translation process has gained fully supports from senior managers and

the heads of operations that is motivated and persuaded by using and mobilising a variety of

non-human actors (i.e. ‘boundary objects’ or ‘intermediaries). However, this new PMS –

SQDCP cannot be recognised as a matter of fact in the case company because it has not be

completely diffused and accepted out of question at operational levels.

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CHAPTER FIVE

CONCLUSION

5.1 General Conclusion and Findings

This dissertation has illustrated the case of the performance measurement system evolution

in a branch company of a global aircraft manufacturing giant. The performance management

has become one of the most attractive topics in the management accounting sphere because

of its critical role in the success of the organisations’ strategic management. Beginning with

Johnson and Kaplan’s symbolic work-‘Relevance Lost’ (1987), over the past two decades,

there has been a great volume of criticisms against the traditional performance measurement

system to catch up with current market dynamics and environment. The PMS has

experienced a dynamic evolution with a focus of integrating the PMS with corporate

strategies and balancing the financial and non-financial perspectives of businesses.

Accordingly, a variety of so-called advanced management accounting techniques and

systems has been emerged to fill this information gap. In addition to this, researchers have

also identified some implementation issues that may hinder the PMS transformation process,

such as different understandings of change among diverse stakeholders, behavioural and

organisational variables, reluctance and lack of commitment to change, and political nature

and corporate nature (Tichy, 1983; Scott, 1995; Kasurinen, 2002).

The dissertation uses a different point of view to look into the evolution of PMS in the case

study company, rather than assess and explore the difficulties and issues that may surface

during the implementation of a new PMS model. Specifically, the ANT has been applied and

used as a theoretical framework to analyse the evolution of PMS in the case study company.

Specifically, in ANT, a new management accounting technique like PMS eventually will be

accepted across the whole organisation through rising participation and involvement of all

kinds of allies and resources working closely in a connection. This is a fabrication process,

and the end product is a ‘black box’ that the science and technology is recognised by

everyone without any explicit written format. Moreover, it is critical to use a collection of

43

‘boundary objects’ and ‘intermediaries’ to alleviate conflicts amongst different stakeholders

though linking their diverse interest to the new accounting technique during the process of

constituting the powerful network. In order to better understand the evolution process of the

PMS, a modified framework that stemmed from Latour’s seven rules of methods and

Callon’s four-process (i.e. problematisation, interessement, enrolment and mobilisation

process) translation framework has be used to assist the analysis.

The Company’s worsening economic conditions especially the extreme poor site

performance and inefficient performance management system enabled the new accounting

technological possibility to be introduced. This is the problematisation process. In addition

to this, Latour (1987) argues that prosperity of a novel accounting system and framework is

determined by the volume of people that follows the ‘inventor’ or ‘pioneer’, and constitutes

the most important parts to build up the network. In this respect, the consultancy firm –

McKinsey’s led the way of bringing in the new PMS framework – SQDCP that derived from

McKinsey’s typical PMS model. Furthermore, there has been increasing mobilisation and

utilisation of allies and resources applied to address the arguments and criticisms against

thenewly developed performance measures, so as to bring every potentially relevant actor

into the SQCDP network. The Company’s senor leadership have showed significant

enthusiasm and actively promoted the new performance management system. The heads of

functions have also taken the initiatives. The successful enrolment of these members has

contributed to the preliminary achievement of the SQDCP in the Company, in particular, at a

senior level.

The study also observes that non-human factors are of the importance to facilitate, ease,

maintain and enlarge the human allies in the translation process. The PMS framework

(SQDCP) itself has acted as a ‘boundary object’ to alleviate scepticisms and address

potentially hostile questioning about the new PMS framework, in terms of inheriting and

being developed from previous values streams – QDCP. As an important component of the

PMS, the financial incentives – performance-based variable payments and rewards aligned

the different interests of senior and functional managers with the performance measures. On

44

the other hand, the new PMS has not been fully recognised and endorsed amongst the

workers at the operational level, which is mainly attributed to the inadequate and

inappropriate utilisation and employment of non-human allies and resources. Therefore, the

new PMS model has not become the ‘black box’ or taken-for-granted, indicating the SQDCP

has not been accepted out of question and taken-for-granted in the Company.

5.2 Further Implications

The ‘Latourian’ studies – ANT highlight the importance of constructing and continuously

strengthening the alliance networks to make the science and technology become ‘matters and

facts’ in the organisation. The allies can be either human or non-human actors as long as they

are beneficial to management accounting change. This dissertation finds that there is a very

close and intimated relationship between the human and non-human allies. It is the people

take the initiatives and eventually make the end product become a ‘black box’ in the

organisation. During the process, there are a variety of tensions and interest conflicts among

different groups cause the difficulties and implementation issues, such as insufficient

involvement of employees and their lack of commitment to the change especially when a

top-down approach is adopted, which is common in the large organisations. In this case, it is

the non-human resources and vehicles ease the tension between different stakeholders,

congregate their diverse interests, and inspire them to join the management accounting

change campaign at the first place.

Thus, the enrolment of appropriate and effective non-human actors is a prerequisite to

alleviate and eliminate human actors’ hesitations as well as successfully convince them to

join in the network. In other words, the non-human allies are believed to be the most

important, powerful and effective ‘media’ and ‘intermediaries’ to smooth the progression of

management accounting change. This study stresses this critical significance of non-human

allies in the actor-network theory. On the other hand, a detailed classification and exploration

of the non-human actors (i.e. ‘intermediaries’ and ‘boundary objects’) are still deficient,

which could be inspiring for further research.

45

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