Virtual Workforces and the Shifting Frontier of Control

VIRTUAL WORKFORCES AND THE SHIFTING

FRONTIER OF CONTROL

KERRY BROWN,∗ SUSANNE ROYER,∗∗ JENNIFER WATERHOUSE∗ AND STACY RIDGE∗

I t is argued that adopting a networked organisational model improves organisationalperformance and provides opportunities for innovation and creativity. The model is

premised on introducing a range of information and communication technology (ICT)into the work environment. ICTs establish a fundamentally different interface betweenworkers and their tasks and also connect managers and workers in new ways that requirere-conceptualising of labour management relations. This process necessitates adapting ex-isting organisational structures and systems to account for changes in the way work isscheduled and organised and the way workers are managed. It is argued that organisa-tions implementing such new organisational forms create non-traditional organisationalboundaries and fewer bureaucratic structures through forming networks. These networkarrangements may present an opportunity for shifting the labour management controlnexus.

INTRODUCTION

Industrial society is characterised by the rise of bureaucratic hierarchies and thedevelopment of the managerial profession (Braverman 1974). Labour ProcessTheory (LPT) emerged as a means of analysing labour management relations incapitalist workplaces. Labour Process Theory suggests that the fundamental roleof management is the conversion of labour power into labour effort to support theaccumulation of capital (Braverman 1974). Labour effort is maximised through,among other things, tight managerial control. The interdependence of labour andmanagement in negotiating effort and power relations thus results in a frontier ofcontrol and conflict emerges when this frontier is crossed (Dufty & Fells 1989).However, over time the traditional command and control mechanisms of man-agerial authority have undergone transition as organisational forms have altered(Markus et al. 2000).

Within the new organisational environment of post-industrial society, it issuggested that new organisational forms are replacing the traditional hierarchi-cal style of management (Jackson & Stainsby 2000). Castells (2000) identifiesthe organisational form in the ‘new economy’ as ‘information networking’. Fororganisations, networked structures represent a possible new organisational formthat may be selected to adapt to meet the challenges of the new environment.Networked organisational forms combine elements of team cooperation withinenterprises as well as across the borders of an enterprise. In this way, networks

∗School of Management, Queensland University of Technology, GPO Box 2434, Brisbane, QLD,Australia ∗∗International Management, Universitat Flensburg, Munketoft 3b, D-24937 Flensburg,Germany.

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establish an organisational form that has the flexibility to transcend traditionalorganisational boundaries and the rigidities of bureaucracy and avoid the adver-sarial relationships inherent in contractual market-based agreements.

Such networked arrangements rely on information and communication tech-nology (ICT) as a means of linking functions and dispersed sectors (Castells 2000).Relationships between relatively autonomous parties therefore exist within a ‘vir-tual reality’. Through the use of ICT, porous organisational boundaries and fewerbureaucratic structures, networks may provide an opportunity for a shift in thelabour management control nexus. The networked organisational form is thefocus of this paper. The paper examines the potential dislocation of the labourmanagement control nexus within networked organisational structures using ICTand posits the possibility of a self-directed and empowered workforce or the re-location of the locus of control with either new forms of managerial control orwith peers at the level of the team.

This research examines the implications and outcomes of adopting networkedorganisational arrangements in relation to managing virtual workforces. In sum-mary, two research questions are addressed: (i) are the new organisational formsa challenge to managerial power; and (ii) do these developments actually changethe frontier of control?

A case study of a public sector organisation adopting a networked organisa-tional model through a refined project management approach was undertaken toexamine managing and utilising virtual, networked workforces. The Departmentof Main Roads, Queensland, Australia presents an ideal case for examining theresearch question as the department is in the process of shifting from a traditionalhierarchy to a networked form.

This paper addresses the research questions through first presenting anoverview of the emergence of new organisational forms. Networks are then de-scribed and examined. The ways that ICT may be used within networks to co-ordinate activities are explored, leading to a discussion about how networkedorganisational forms and ICT may act as a means to alter the locus of control.The case study of the organisation is then introduced and consideration is givenas to whether the case demonstrates a shift from control to cooperation.

NEW ORGANISATIONAL FORMS: DEVELOPMENT AND UNDERLYINGFACTORS

Factors such as the globalisation of business activities and strongly rising fixedcosts have led many organisations to expand business activities beyond the tradi-tional firm boundaries (Picot et al. 1998). Traditional organisational boundarieshave blurred and more hybrid organisational forms between market and hier-archy have come into existence to overcome entry barriers to new global mar-kets, access market-specific knowledge and implement global economies of scale(Camuffo 2002). Firms have also adapted their internal structures to include in-ternal and external modularisation in many areas and project teams that work ona geographically dispersed basis.

Transaction cost research (Williamson 1991) has analysed the appropriatenessof such different organisational forms and modes of governance. The pursuitof efficiency outcomes are presented as a reason for the formation of alliances,

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outsourcing and contracting. At the same time, the costs and benefits of hierarchyare recognised as useful prescriptions for resolving various organisational designproblems (Teece 1984). Transaction cost economics considers hybrid organisa-tional forms between market and hierarchy to be efficient in different situations.

Justification for the selection of hybrid forms includes transactions charac-terised by high uncertainty or complexity and high specificity and strategic rel-evance. These factors force firms to work together with partners in differentorganisational forms. Hybrid forms also enable partners to exchange informa-tion efficiently by being able to overcome problems with information complexity(Arrow 1971), sticky information (Hippel 1994) and information spillovers (Picotet al. 2002: 191). Cooperative forms, including hybrids, are viewed as capable ofreducing risk and uncertainty, overcoming knowledge, capital and capacity con-straints and managing information exchange problems in an increasingly dynamicand complex business environment.

Cooperative forms can be simple licensing agreements, joint ventures, differentkinds of (mutual) capital investments, long-term contracts with suppliers with adual sourcing option as well as franchise organisations or dynamic networks (for anoverview see Picot et al. 2002: 189–212). Networks, described in the next section,therefore represent a new organisational structure that can be selected to addressthe changing business environment.

NETWORKED ORGANISATIONAL FORMS AND PROJECT MANAGEMENT

Networked organisational forms are characterised by independent people andgroups acting as independent nodes, linking across traditional firm boundaries.Such networked organisational forms usually have multiple leaders and voluntarylinks as well as a variety of interacting levels (Lipnack & Stamps 1994). Hierar-chical elements are exchanged for cooperative structures to achieve a commongoal. These new features influence the relationship between the organisationalmembers. Networked organisational structures are an option for smaller firmsto retain ‘the entrepreneurial spirit’ of smaller units while realising economies ofscale. Networks are also an organisational alternative for larger firms that want toachieve the same but from the opposite position, that is, to become more flexibleand achieve entrepreneurial spirit without losing scale and scope advantages.

The term networked organisational structure, therefore, can be considered asa general term used for organisations that react to environmental challenges bycreating more flexible organisational structures containing linked teams and in-dividuals who interact with each other on different levels to achieve set objectivestogether. Networks form through the different constellations of teams and indi-viduals working together within the firm and across traditional firm boundaries.Networked organisational structures are cooperative forms inside and/or betweenrelatively autonomous organisational units or firms that are bound in a net of re-lationships (Sydow 2003: 1).

A less permanent and more role-specific arrangement relating to networks isthe project management approach which seeks to achieve the goals of a networkedorganisation by transcending organisational boundaries and linking together dis-persed internal and external units and people. The aim of project management is

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to bring together experts in different fields to achieve the successful completion ofa particular project. This approach requires parties to form ‘self-managing, fluidteams’ requiring a different cultural and managerial orientation to that found inhierarchical, bureaucratic organisations (Lewis et al. 2002). Both networks andproject management are made possible through ICT and become ‘virtual’ in thatteams and individuals work together across space and time as well as organisationalboundaries.

INFORMATION AND COMMUNICATION TECHNOLOGY

Information and communication technology plays a major role in the context ofthe changing environment and changing organisational structures. The infras-tructure of the twenty-first century implies sophisticated communication, trans-portation, and computing technologies (Lynch et al. 2000), enabling the efficientcoordination of extensive activities.

Within networked organisational forms, studies tend to focus on the techno-logical aspects of virtual networks by examining the utilisation of ICT and theinterface between ICT and its users (Wilson 1999). To adopt a networked or-ganisational model, it is necessary to exploit technologies in the area of ICT toprovide the framework and interconnectedness that mediate traditional organisa-tional structures (Herndon 1997). ICTs thus play a dominant role in the successof networked organisations in providing the basis for these organisational forms.The new technologies such as video conferences, email functionalities, workflowmanagement or groupware make these new organisational forms possible.

Two other significant aspects of virtual network organisational forms relatefirst to identifying the characteristics of these emerging work arrangements andsecond the way in which labour is deployed to undertake tasks in the virtualworkplace (Markus et al. 2000). Networked forms may, for example, comprisetemporary contracted teams that work across organisations (Markus et al. 2000)or groups such as those formed to deal with intractable social issues such as poverty(Provan & Millward 1995), and these forms of organisation cut across traditionalmanagement and labour utilisation techniques. The second aspect considers howtraditional management approaches may need to change to respond to these dif-ferent organisational forms. Within networked organisational forms, new formsof division of labour may thus become possible and success in shifting the frontierof control appears achievable.

THE FRONTIER OF CONTROL IN NETWORKED ORGANISATIONS

Within networked organisations, aspects such as team orientation, project man-agement and managing dispersed employees gain importance. New forms of thedivision of labour lead to a movement away from a firm orientation towards achiev-ing the goals of a specific project. This can be considered as a cognitive, ratherthan technical, division of labour and forms a development away from a tech-nically oriented logic of the division of labour to forms of competency-orientedand qualifications-oriented divisions of labour (Moaty & Mouhoud 1994). Rele-vant dimensions to be analysed are team-based organisational forms as well as thevirtualisation of workplaces.

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In examining the social construction of virtual workplaces, the traditional formsof control through formalised rules and close supervision are no longer tenableand new norms relying on output rather than input-based criteria need to be im-plemented (Panteli & Dibben 2001). These new organisational forms may havethe potential to disrupt the cycle of control-resistance by workers and manage-ment postulated by labour process theorists (e.g. Braverman 1974). However,May (2002) contends that, unless intellectual property relations are codified toacknowledge the contribution of labour, there is little prospect of breaking themanagement domination of labour.

A crucial success factor in overcoming the control–conflict–resistance cyclewithin a network organisational form therefore becomes the ability to cooperate(Waterhouse et al. 2002). If cooperation is a ‘higher order’ mode of work organi-sation in networked arrangements, then this requires a different conceptualisationof labour management relations. Traditional models of labour management rela-tions have been premised on a notion of conflict as underpinning the employmentrelationship with a specific focus on conflict at work (Godard & Delaney, 2000).To manage this conflict, managerial practice has focused on maintaining author-ity to control the workforce. As organisations have changed form, mechanismsfor control of labour management relations may also change. Due to a propensityfor cultural manipulation and an inability to garner the benefits of team synergies,self-managed teams may, however, deliver a greater degree of control rather thanachieve cooperation (Korac-Kakabadse et al. 1999).

Cooperation in the form of personal relationships between the often dispersedemployees in virtual teams and between different virtual teams in a network growsover time and is considered the essence of successful networked organisations(Sydow 2003). Managerial dilemmas often arise because the structure makes itdifficult to have ad hoc meetings and more preparation and planning activities arenecessary in this area (e.g. video conferences have to be prepared and technicallyscheduled in advance). Figure 1 summarises the outlined determinants of net-worked organisations and identifies the three main features of such organisations.

COOPERATION, CO-OPTATION AND CONTROL

Many approaches and existing examples in business show that research is fairlyadvanced with regard to success factors relating to the implementation and con-tinued use of ICT (Konrad & Deckop 2001). This situation is somewhat differentin relation to the success factors of the division of labour leading to the ability tocooperate (Markus et al. 2000). The ability to address issues surrounding the divi-sion of labour appears to be a central determinant in achieving cooperation withinnew organisational forms such as networks that utilise ICT. Moreover, cooper-ation relies on bringing together complex relationships across cultural, technicaland structural frameworks.

Organisational cultures characterised by rigid bureaucratic reporting lines,minimal interdepartmental interaction, and little tradition of change experiencesignificant obstacles in adapting to a project management, cross functional struc-ture (Brown 1999). This research finding suggests that the instigation of structures

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Figure 1 Relevant determinants of networked organisations.

Information and Communication Technology (e.g. workflow system, groupware approaches)

Division of Labour (e.g. new forms of team

organisation)

Cooperation

and behaviour necessary to achieve cooperation is more difficult within such or-ganisations and there may be a tendency to maintain the management locus ofcontrol.

In the networked organisation management is still necessary, but their role incontrolling the labour process changes, because new forms of labour division needcoordination, rather than control, to be successful. Managerial strategies and im-peratives, however, require a new kind of thinking and action. Instead of accurateplanning, project goals and visions gain relevance; mobilising resources becomesmore important than organising a firm in a traditional sense; empowerment hasthe potential to replace control; direct instruction loses importance in favour oflong-term goals and internal orientation is widened to an external orientation(Handy 1995).

Therefore, the question arises as to whether organisations moving to networkedstructures are on a path from control to cooperation or whether control is merelychanging form. For example, forms of direct control may lose relevance in favourof controlling work results. Small project groups make it possible to attach exactresponsibilities for product outputs as well as performance results. In this way,control, monitoring and coordination are easier in smaller project groups enablingeasier implementation of performance-oriented reward systems as well as socialcontrol through group dynamics (Picot et al. 1999).

The paper posits that a combination of both cooperation and cooptation maybe needed in organisations using networked structures. Cooperation within an

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organisation appears necessary as it brings together the stakeholders and employ-ees to jointly achieve organisational goals (Royer et al. 2003). Cooptation differs inthat the driver is top-down and joint action is achieved through assimilating diver-gent groups to the dominant culture (Brown et al. 2002). How cooperation occursand the degree to which cooptation resembles or extends into coercion needs tobe explored in the context of an organisation changing to a networked form andthrough a research design that captures both process and different stakeholderexperiences.

METHODOLOGY

The research project examined the management and control issues surroundingthe implementation of virtual teams across organisational boundaries. A case studyof an organisation preparing to shift to networked organisational structures wasused to examine the process of moving to a networked structure and the managerialand employee responses to this shift.

The data collection commenced with introductory interviews with seniormanagers that allowed identification and exploration of managerial approaches(Sekaran 1992). These managers were chosen because of their strategic positionin the organisation. Two focus groups with middle managers were undertaken,followed by four focus groups with employees from various levels and occupa-tions. This procedure ensured that all major groups of the organisation werecovered including different hierarchical levels, administrative, operational, pro-fessional and technical staff. Rather than achieving proportional representation,interviewees were purposefully selected from volunteers within the departmentto obtain widespread perspectives. Interview and focus group participants weretherefore chosen according to principles of purposeful sampling (Patton 1990).

One-on-one semistructured interviews were conducted with a range of seniorofficers including a group interview with all regional directors in the department.These directors are geographically dispersed, being located within their regionsthroughout the state of Queensland. Given their role as instigators and in somecases, also as recipients of change, it was important to gain regional directors’ per-ceptions of what changes they were seeking to implement and their perceptionsof what more senior management in the department were seeking to achieve.Semistructured interviews were considered as the most suitable method to ac-complish this as they allowed the main topics and general themes to be targetedthrough specific questions, while allowing the freedom to pursue other relevantissues as they arose (Maykut & Morehouse 1994). These research methods weredesigned to draw out managerial attitudes towards, and understanding of, net-worked arrangements and their implications for labour management relations intheir organisation.

CASE STUDY

The Queensland Department of Main Roads (QDMR) is a large public sec-tor department responsible for the management and development of the state-controlled roads, as well as joint management responsibility of the total publicroad system through a network arrangement with local government (Main Roads

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1998). It is a geographically dispersed organisation consisting of four regionaland 14 district offices (Main Roads 1998). QDMR is also a technically orientedorganisation with high-level expertise in construction and engineering which isundergoing significant change processes. One such change is a planned shift to anetworked organisation with the priority and focus changing from constructionof infrastructure projects to managing and policy formulation (Main Roads 2000).

Up to the early 1990s, QDMR was characterised by a bureaucratic structureand culture. A hybrid organisation has evolved through a purchaser–provider splitwhere the organisation is now comprised of half commercialised/business struc-tures and half bureaucratic administrative structures. The case study is concernedwith the commercial operations arm of QDMR, RoadTek. It provides civil infras-tructure delivery to local governments, the private sector and the non-commercialarm of QDMR through the purchaser provider arrangement (Ryan et al. 2000).

In moving from a regionally based organisation to a statewide operation, Road-Tek aims to achieve vertical and horizontal integration of its activities. The goalis stated to be a self-driven organisation with high levels of leadership skills anda culture of innovation. Although ICT as an integrated business process is animportant aspect of the project management approach aspired to, another crucialaspect is communication and the linking of teams through a relational approachto stakeholders. The vision for the organisation reflects notions of self-learning,empowerment and networked organisational structures facilitating learning, in-formal education and alliances.

NETWORKED ORGANISATIONAL APPROACH

The initial changes implemented in RoadTek sought to shift the previous bureau-cratic program approach to embrace a ‘commercial project management culture’through

Ensuring the implementation of a common and consistent business system and pro-cess; the development of a project management culture within commercial operations(Lewis et al. 2002).

The objective of these changes is to become a networked organisation to gaineconomies of scope, improve innovation and introduce flexible workforce utilisa-tion. Therefore, QDMR seeks to achieve a shift from the traditional bureaucraticpolicy, culture and structure of a public sector organisation and forego authori-tarian positions to enter into true network relationships. An overarching structurehas to be found for both parts of the current organisation that is compatible withthe new organisational order.

ADOPTION OF INFORMATION AND COMMUNICATION TECHNOLOGIES

Information and communication technologies established a significant base fordeveloping the chain of linkages to achieve the ‘ideal’ of a cooperative networkedorganisation. QDMR adopted an intranet system, an electronic forum for dis-patching messages called ‘Main Roads Junction’ and Gateway, an integrated pay-roll and human resource information system. However, the introduction of other

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innovative ICTs formed the basis to shift to a new level of interconnectednessthrough networks. In particular, Project 21 was an innovative program that hasarguably affected the delivery of new forms of labour management relations.

Project 21 was not only an integrated ICT to improve organisational processesand business systems but also a change management program. The aim of Project21 was to shift RoadTek away from a ‘hierarchical, functional structure’ to astructure ‘based on project teams’ through implementing ICTs that integratebusiness systems (Lewis et al. 2002). Project 21 adopted a holistic approach toachieving these aims by focusing not just on operations and systems but also onfinancial and delivery outcomes, the management of stakeholder relations anda training and development program that sought to achieve skill-based careerprogression.

Information and communication technologies provided the platform for shift-ing to a networked organisation. However, the introduction and use of ICTs suchas intranets and human resource information systems did not initiate the moveto a network. The research findings indicate that recognising the inefficienciesarising from system inconsistencies in the numerous highly autonomous regionaloffices, the implementation of Project 21 and the adoption of a project manage-ment approach provided the impetus to explore the notion of virtual teams innetworked organisational structures.

NEW ORGANISATIONAL FORMS—DIVISION OF LABOUR

The project management approach together with a need to develop a way ofproviding consistency of operations and flexibility of functions acted as both anintroductory phase and also a continuing feature in the shift towards networkedorganisational arrangements. A project is an assignment that has to be finalisedin a specific time frame, is unique and therefore not integrated into establishedorganisational structures. One senior manager commented that the project man-agement approach was about

Getting them [the districts] to break out of their silos because they have district andgroup responsibility and they needed to think about the group as a whole, statewide.

In mid-2001, the director of RoadTek commented:

It’s about getting the whole organisation to operate on project management princi-ples. Whether you are the person who orders the stationery or builds the big projector road, we want to use project management as the way to do business.

One District Director stated in relation to the implementation of projectmanagement:

All our future projects will be networked projects—better outcomes regarding objec-tives and goals when people are focused on the project rather than where they comefrom.

Thus, the project management approach focused attention on the need notonly to break down the formalised rigidities of hierarchical structures but also to

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adopt an organisationwide perspective. In project teams, the property rights arecentralised in a small organisational unit that is technically able and also moti-vated to maximise project success (Picot et al. 1999). What was observed withinthe Department of Main Roads was the coexistence of these autonomous workgroups alongside a traditional functional hierarchy that was necessarily changingto allow it to successfully operationalise project management. The autonomy ofthe regions, while providing a strong identity for localised work groups, workedagainst achieving synergies across RoadTek. Mobility between regions was con-sidered costly and inefficient for the organisation as employees needed retrainingfor region-specific systems and work duties.

Therefore, another element introduced simultaneously with the project man-agement concept was working towards a standardised statewide integrated sys-tem (Lewis et al. 2002). This approach was not specifically driven by the projectmanagement concept, but rather from a need to align the disparate geograph-ical branches of the department, partly to gain economies of scale and scopeand partly, to enable a mobile, flexible workforce statewide to deal with unevenworkflows.

Senior management within the department wanted to achieve economies ofscale by rationalising the workforces of many different regions. This was to beachieved through both systems alignment and providing consistent staff trainingthroughout the state. A senior manager commented that maintaining the inde-pendence of the regions came at a high commercial cost. The autonomy of theregions had acted as a force for employees to adopt a relatively narrow focus ontheir functional and geographical area.

The new division of labour focused on achieving higher levels of flexibility ofthe workforce, specifically staff mobility. Organisational problems identified bythe District Manager was the ‘inability to move people around the organisation’,whereas another suggested that teams would now need to be flexible and mobile:

We will either have another large project for them or move them onto minor works.Project Management brings people in as needed.

In this way, it was argued that the project management approach dislocatedmanagerial control of employees in their day-to-day work by shifting the teamsbetween different kinds of work. It was considered to be the start of a dismantlingof traditional patterns of labour management relations. Furthermore, the tem-porary and mobile nature of work teams required an emphasis on new forms ofcommunication to connect geographically dispersed members.

A benefit of adopting networked organisational arrangements was thereforeabout changing the work environment through the development of sophisticatedICTs:

People are thinking laterally and they’re looking at having the technology there,satellite technology, GPS [Global Positioning System] and you’ve got designers therelinking that technology onto their plans, to survey it. . . having it all digitised thenfeeding it across to construction crews and they run it into a grader or something likethat to do the job with it. So you’ve got integration from right out in the technologicalarea right the way through.

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It was contended that a further benefit associated with a highly mobile work-force in a networked organisation was the ability to bring in expertise whenprojects required specific or high level skills. One District Manager cited thecase of the Environmental Officer who could be brought from another regioninto their more remote region when needed. The ability to shift specialist officersaround to different projects displaces the managerial locus of control exercised ata particular workplace.

The traditional division of labour has been under threat from moves to developa team-based approach and a statewide operational focus. The senior managerswithin the department saw an overriding need to deploy teams to different projectsites and that shift started to break down the geographical configurations of aworkforce located within specific regions.

CHANGING LABOUR MANAGEMENT RELATIONS—COOPERATION

Mobilising the workforce and establishing geographically dispersed and tempo-rary project management teams offers the possibility of changes in mechanismsof management control and the establishment of cooperation. The published ob-jectives of the department suggest that cross-cutting initiatives are integral tothe operation of the workplace at a regional level and are an expected manage-rial goal. Senior departmental managers have recognised these new organisationalforms require new sets of managerial strategies and imperatives. A senior managercommented that:

We generally have got to get used to the idea of being able to work in an environmentwhere we don’t always control the people we work with, they don’t always report toyou, we need to be able to work in these virtual teams or whatever. Because one ofthe things we’re finding is if you want to be successful you’re going to have to workin a whole lot of different ways. You need to be very fluid to meet customer needs soyou’re going to have to form and re-form.

This manager went on to suggest that the introduction of the ICTs in Project21 paved the way for a completely new way of managing employees:

I think that’s one of the things we’re starting to learn out of Project 21 now is reallyyou’ve got to get a culture that has an acceptance of people being able to managepeople without controlling them.

The methods of implementing the changes were acknowledged by the Directorof Roadtek as requiring both top-down and bottom-up implementation processesthat took into account employee attitudes and interests.

For one District Director, a networked organisation brought standardisationand consistency. It also could deliver members of the organisation onto a ‘similarwavelength’ and thus become the vehicle for developing ‘more common views ofthe world’. For another senior manager, the introduction of a networked organ-isation not only permitted better ‘value for dollars’ but also allowed a ‘focus onhigher level issues’.

For employees, there was recognition that there was a new way of work-ing and an acknowledgement of the possibility of their having input into those

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arrangements with a focus on cooperation. For one employee, the cooperativeapproach meant that their ideas were heard and opinions valued. Another em-ployee felt that there was the possibility to shift the frontier of control, ‘sincethe relationship framework, there is more room in RoadTek to challenge things.The general manager encourages people to challenge things’. Another employeenoted the change from the previous culture as a change to greater flexibility ob-serving that, ‘traditionally Main Roads culture is to build monolithic systemsand processes that inhibit flexibility while we are trying to build things moreflexibly’.

The shift was not perceived specifically as a move to a networked organisation,but to new forms of organisational arrangements.

So where RoadTek is thinking about how we can solve the problem by a differentmanagement style or incorporate project management principles at all projects. . .Main Roads is just throwing resources at it.

The need for a cooperative approach to implementing networked organisa-tional arrangements was cited as a significant departure from traditional organ-isational approaches to managing employees. However, it is very early in theprocess of changing to new arrangements. Lynch et al. (2000: 409) argue that apublic sector organisation implementing a virtual team approach ‘increases theavailability of talent and expertise, creates synergy and provides different per-spectives’. However, a threat lies in weakening the bonds between employer andemployees as this may militate against employees remaining with the organisa-tion and simultaneously weaken employers’ sense of responsibility for employees.Korac-Kakabdase et al. (1999) further warn that decentralised teams may lapse intodysfunctional behaviour through the ‘dark side’ of increased managerial controlrather than achieving greater innovation and empowerment.

The potential for such increased managerial control exists in a number of ele-ments of Project 21. In the design of integrated and standardised business systemsacross RoadTek exists the possibility of significant control of the labour process.The concept of an integrated technology guiding a construction project fromsurvey through to final construction suggests, as proposed by Laurel (1991), thatin the purposeful design of virtual workforces exists the possibility to both controland be controlled.

Project 21 has also sought to shift the focus of control away from scientificmanagement principles towards a reliance on financial delivery and performance.This shift is in keeping with the proposition of Panteli and Dibben (2001) thatthese new forms of work organisation result in traditional forms of control beinguntenable, leading to a greater reliance on output measurements. While the designof ICT may seek to reinforce industry ‘best practice’ and therefore managerialprerogative, the geographical and organisational dispersion of a project team mayultimately result in outputs being the only real means of control. This suggeststhe possibility of a genuine shift in the nexus of control. There is already evidencethat management has recognised the need to alter the traditional control cycle tocope with projects where workers on a project do not directly report to a particularorganisation or management team.

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Within networked organisations, management therefore appears far from beingobsolete but is more important than ever. Management, however, has to take placewithin new organisational forms such as the combination of traditional hierarchyand project management in the QDMR case. This case suggests that managementis aware of the need to manage without controlling, but that managing projectteams without controlling them is still some way to being achieved. Direct con-trol, however, loses relevance in favour of controlling work results. This occursalongside the problems associated with situations where output is hard to measureor takes time to achieve such as in the often large-scale projects undertaken byQDMR.

It appears from this case that it is important that both top-down implementa-tion from management and bottom-up implementation from within the groupsand project teams is fostered. Top-down implementation was used in QDMR toachieve consistency of systems and processes to enable espousal of project man-agement principles. Cooptation therefore appears to have occurred to assimilatedivergent groups towards the dominant hierarchical culture. In terms of coop-eration, QDMR employees saw a shift to new organisational forms but did notnecessarily understand the network philosophy. Such a situation may ultimatelyhave a negative impact on the success of shifting to a network organisational form.

Networked organisations do not work without cooperation between employeesand employers (Royer et al. 2003). Traditional control instruments become in-effective and the statements of QDMR managers underline this. However, May(2002) argues that control is more important than cooperation leading to theimplementation of control systems in many organisations, often through ICT.Potentially opportunistic human behaviour leads to risks from a principal agentpoint of view (Rumelt et al. 1991) in this context. The problem of opportunisticbehaviour in cooperative work teams cannot be solved by contracts as a tradi-tional way out of this dilemma. Therefore other possibilities for the managementof labour have to be identified. These are argued to be found in the area of trustand reputation that lead to successful cooperation (Royer et al. 2003).

In considering the empirical evidence presented, team workers in an organ-isation shifting from a traditional hierarchy to a networked organisation mayexperience a shift in their relationship with management to cooperation, but therelationship may also not be completely free of control. In networked organisa-tions there may be a shift to new output-oriented forms of control and the use ofcooptation. The insights into the case of QDMR as an organisation on the wayto a networked organisation suggest that a balance between control, co-optationand cooperation is difficult to achieve but that this is necessary to successfullyoperationalise a networked organisation.

CONCLUSION

In adopting a networked organisational model, the emphasis of management andmanagerial endeavour has shifted to harnessing the effort of different teams ina project management approach. This process may involve individual workers’input and effort being split over time, place and project. The arrangement servesto fracture the traditional management–worker nexus by displacing the traditional

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structure and function allied to day-to-day management and thus has the potentialto change the nature of managerial control.

The process of shifting to a networked organisation necessitates adapting ex-isting organisational arrangements such as the traditional forms of labour divi-sion and conventional managerial practices to account for changes in the waywork is scheduled and organised and the way workers are managed. It has beenargued that organisations implementing networked organisational forms createnon-traditional boundaries and fewer bureaucratic structures through the forma-tion of networks. Labour Process Theory posits that the frontier of control ismaintained by management who seek to use authority and coercion to controlthe workforce. Network arrangements may however present an opportunity for ashift in the labour management control nexus through eliminating the ability fordirect control, potentially leading to greater reliance on cooperation to achieveorganisational goals.

The findings indicate that senior managers within QDMR recognise that tra-ditional employee control mechanisms are not applicable to the new network ar-rangements, acknowledging the need for a change to ‘managing not controlling’.Although the shift to a networked organisation was in its early stages, the ap-proach signalled that senior managers were seeking a more cooperative approachto labour management relations. Employees acknowledged the emergence of neworganisational forms, but did not conceive of the new approach as a networkedorganisation and did not necessarily conceptualise labour management relationsas cooperative. However, the response of middle managers, traditionally the gate-keepers between senior management and employees, may be crucial in negotiatingthe implementation of virtual teams in the new networked organisation.

The management of employees dislocated from traditional forms of managerialauthority through the adoption of networked organisational forms may enable ashift in the frontier of control. With their reliance on virtual teams undertak-ing project-based work, networked organisational forms offer the prospect oftransforming traditional managerial roles. The case study indicates that man-agers recognise the need to change their reliance on direct managerial controlof workers in order to establish a networked organisation. Although employeesrecognised new forms of cooperation through consultative mechanisms, they alsoidentified that these new arrangements may also usher in new forms of managerialcontrol.

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