ORGANISATIONAL CHANGE AND ACCOUNTING CONTROL … · ORGANISATIONAL CHANGE AND ACCOUNTING CONTROL...

ORGANISATIONAL CHANGE AND

ACCOUNTING CONTROL SYSTEMS

AT AN AUSTRALIAN UNIVERSITY A LONGITUDINAL CASE STUDY

Jodie Moll B. Bus (Accy, P Sector Fin) Hons.

School of Accounting and Finance Faculty of Commerce and Management

Griffith University, Gold Coast

A thesis submitted in fulfilment of the requirements for the degree of

Doctor of Philosophy

January 2003

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Abstract

This thesis provides an attempt to better understand the design and operation of accounting control systems as part of an interrelated control package in an Australian higher education institution subject to an increasingly competitive environment. The study was designed: (1) to understand how and why the accounting control systems changed; (2) to understand how accounting shapes and can be shaped by other institutional processes; and (3) to understand the roles accounting control systems play in higher education institutions. The research aims and objectives lend to a longitudinal case study approach. The data collection consisted of two phases: (1) a pilot study to determine issues for the intensive study and to identify or develop a suitable theoretical framework; and (2) an intensive field study of the subject organisation to develop and explain the observations. Data collection involved a triangulation approach that mixes three sources: interview, observation, and document evidence over a two-year period between 2000 and 2002. The interviewees were selected from different hierarchical levels: Vice-Chancellor, Pro-Vice-Chancellor, Deans, Heads of School, general staff, and Education Queensland. This thesis draws on multiple theoretical perspectives to understand the complexities of accounting control systems change. These perspectives are: institutional theory, leadership theories, political and power theories, and resistance theories. Such an emergent research strategy was deemed pertinent to build a more holistic analysis and to offer alternative explanations of the phenomena under scrutiny. The case highlights a number of findings. First, despite the suggestion that universities operate as autonomous institutions, the University studied still succumbed to external pressures, especially from the Federal Government, for a more managerialist approach. In this study Federal Government pressures were the primary source of change identified. Second, the design and operation of the accounting control systems was found to be contingent on the related control systems and vice versa. Third, the accounting control systems played several roles in the organisation. In particular, they provided visibility to external constituents giving the impression that rational techniques had been employed consistent with Government prescriptions. This was the case for both the budget system and the performance management system. In addition to this, from an internal perspective, the budget was used to promote a sense of equity and fairness, at the same time reducing conflict in the organisation. Finally, the budget system was found to be a source of power in the organisation; it determined the level of control used to direct organisational activity. Implications for future research are presented in the concluding section.

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Table of Contents

Title Page .................................................................................................................................... i

Abstract....................................................................................................................................... ii

Table of Contents...................................................................................................................... iii

List of Figures ............................................................................................................................ xi

List of Tables ............................................................................................................................. xii

List of Acronyms and Abbreviations ..................................................................................... xiii

Acknowledgements ................................................................................................................... xv

Declaration ................................................................................................................................. xvi

Chapter 1 – Introduction

1.0 Background and Motivations............................................................................. 1

1.1 Research Objectives and Questions.................................................................. 8

1.2 The Structure of the Thesis................................................................................ 9

Chapter 2 – The Australian Higher Education Sector – An Overview

2.0 Introduction.......................................................................................................... 14

2.1 The Australian Public Sector.............................................................................. 15

2.1.1 The Financial Management Improvement Program ...................................... 18

2.1.2 The National Competition Policy ..................................................................... 19

2.2 Public Sector Reform and the Australian Higher Education Sector:

A Decade of Change ........................................................................................... 21

2.2.1 The Dawkins Review .......................................................................................... 24

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2.2.2 Quality Management in the Higher Education Sector ................................... 29

2.2.3 The Hoare Review............................................................................................... 31

2.2.4 The 1996 Federal Government Budget Cuts .................................................. 33

2.2.5 The West Review ................................................................................................. 34

2.2.6 Backing Australia’s Ability.................................................................................. 36

2.2.7 Universities in Crisis: Report into the Capacity of Public Universities to

Meet Australia’s Higher Education Needs....................................................... 36

2.2.8 Higher Education at the Crossroads and Related Papers .............................. 37

2.3 Research in the Higher Education Sector: An Overview .............................. 39

2.3.1 Strategic Planning ................................................................................................ 41

2.3.2 Governance and Accountability ........................................................................ 45

2.3.3 Budgeting .............................................................................................................. 50

2.3.4 Performance Management ................................................................................. 62

2.3.5 Behavioural Implications .................................................................................... 73

2.4 Summary and Potential Research Issues .......................................................... 78

Chapter 3 – Theoretical Framework

3.0 Introduction.......................................................................................................... 80

3.1 The Role of Theories in Research..................................................................... 81

3.2 Institutional Theories: Some Considerations................................................... 86

3.2.1 Old Institutional Theory: A Sociological Approach....................................... 87

3.2.2 New Institutional Theory: New Insights and Shifts in Focus....................... 89

3.2.3 An Institutional Perspective on Accounting Change ..................................... 94

3.2.4 Previous Institutional Research ......................................................................... 96

3.2.4.1 Criticisms and Areas for Advancement in the New Institutional Theory... 99

3.3 Understanding the Processes of Change: Theoretical Orientations of the

New Institutional Sociological Perspective...................................................... 101

3.3.1 Conception of the Need to Change.................................................................. 103

3.3.2 Organisational Transition................................................................................... 103

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3.3.2.1 Organisational Response .................................................................................... 103

3.3.2.2 Managing the Transition: A Closer Look at Power, Leadership, and

Resistance.............................................................................................................. 112

3.3.3 Institutionalisation ............................................................................................... 125

3.4 Integrations of Theory: A Framework for Understanding the

Dynamics of Accounting Change ..................................................................... 126

3.5 Conclusion ............................................................................................................ 135

Chapter 4 – Research Method

4.0 Introduction ......................................................................................................... 138

4.1 Assumptions, Beliefs, and Biases: The Qualitative Methods of Inquiry ..... 139

4.2 The Case Study: An Ethnographic Approach................................................. 142

4.2.1 Research Objectives, Questions, and Contributions of the Case Study

Method .................................................................................................................. 149

4.2.2 Methods of Generating and Collecting Data .................................................. 151

4.2.2.1 Interview ............................................................................................................... 151

4.2.2.2 Participant Observation...................................................................................... 155

4.2.2.3 Enumerations and Samples................................................................................ 158

4.2.2.4 Organisational Records....................................................................................... 160

4.3 The Research Site ................................................................................................ 161

4.3.1 Access to Data ..................................................................................................... 164

4.3.2 The Data Collection Methods Applied in this Study ..................................... 165

4.3.2.1 Phases of the Study ............................................................................................. 166

4.3.2.2 Face-to-Face Interviews...................................................................................... 166

4.3.2.3 Observation .......................................................................................................... 171

4.3.2.4 Documents and Archives: A Secondary Source of Information.................. 172

4.3.3 Data Analysis........................................................................................................ 172

4.3.3.1 Organising the Data ............................................................................................ 174

4.3.3.2 Generating Categories, Concepts, Themes, and Patterns.............................. 175

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4.3.3.3 Coding the Data................................................................................................... 175

4.3.3.4 Testing the Emergent Understandings............................................................. 176

4.3.3.5 Searching for Alternative Explanations............................................................ 176

4.3.3.6 Writing the Report............................................................................................... 177

4.4 Conclusion............................................................................................................ 177

Chapter 5 - Historical Background to the Research Site

5.0 Introduction ......................................................................................................... 179

5.1 The Dawkins Reforms ........................................................................................ 179

5.2 Diminished Public Funding ............................................................................... 180

5.3 Growth in Student Numbers ............................................................................. 181

5.4 Introduction of a Sixth Campus........................................................................ 182

5.5 Enterprise Bargaining Agreements ................................................................... 182

5.6 The Organisational Culture................................................................................ 184

5.6.1 The Organisational Subcultures ........................................................................ 187

5.7 Conclusion............................................................................................................ 189

Chapter 6 - Strategic Planning

6.0 Introduction ......................................................................................................... 192

6.1 Strategic and Operational Planning................................................................... 193

6.1.1 Faculty Research, Teaching and Learning Equity Plans ................................ 199

6.1.2 Business Planning for the Elements ................................................................. 201

6.1.2.1 Perceptions and Problems of Strategic Planning ............................................ 202

6.2 Discussion............................................................................................................. 207

6.3 Conclusion............................................................................................................ 212

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Chapter 7 – Governance and Accountability

7.0 Introduction ......................................................................................................... 214

7.1 Governing Bodies and Positions of Power...................................................... 216

7.1.1 Council .................................................................................................................. 216

7.1.2 Academic Committee.......................................................................................... 220

7.1.3 Vice-Chancellor.................................................................................................... 220

7.2 Changing Management Structures .................................................................... 221

7.3 Restructuring the University Management Structure and Devolving

Management Responsibility ............................................................................... 223

7.3.1 Motivations and Rationales of the Restructure ............................................... 227

7.3.2 Implications and Ramifications of the Restructure ........................................ 233

7.3.2.1 Academic Units.................................................................................................... 233

7.3.2.2 Pro-Vice-Chancellor............................................................................................ 235

7.3.2.3 Dean ...................................................................................................................... 236

7.3.2.4 Head of School .................................................................................................... 237

7.3.3 Commitment and Acceptance of the New Structure..................................... 239

7.3.4 The Centralisation of Administration: Perceived Economies of Scale........ 241

7.3.4.1 Commitment and Acceptance of the Centralisation of Administrative

Services.................................................................................................................. 243

7.3.4.2 Consequences and Implications of the Administrative Restructure ............ 245

7.3.5 Confusion Sets In: Problems and Inadequacies in Planning and

Unexpected Shifts in Power............................................................................... 250

7.3.5.1 Faculties ................................................................................................................ 250

7.3.5.2 Dual Footprint Schools ...................................................................................... 251

7.3.5.3 Size and Number of Schools ............................................................................. 252

7.3.5.4 Role Ambiguity for Management ...................................................................... 254

7.3.5.5 Power..................................................................................................................... 255

7.3.5.6 General Perceptions About the Changes......................................................... 258

7.3.6 A Reassessment of Operating Structures at an Element Level..................... 259

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7.4 Discussion............................................................................................................. 260

7.5 Conclusion............................................................................................................ 268

Chapter 8 – Accounting Control Systems: A Budget Focus

8.0 Introduction ......................................................................................................... 269

8.1 Resource Allocation: A Top Down Approach................................................ 271

8.1.1 University Revenue.............................................................................................. 274

8.2 Black Box Budgeting........................................................................................... 278

8.3 The Restructure of the Schools and Devolution of Responsibilities:

Allocation of Funds to Schools ......................................................................... 283

8.3.1 A Change in Budget Methodology.................................................................... 283

8.3.2 Allocation to the Schools ................................................................................... 288

8.3.3 School Budget Preparation................................................................................. 292

8.3.3.1 The Process of Budget Construction in the Schools ..................................... 293

8.3.3.2 Budgeting in Education: A Different Approach............................................. 297

8.4 Budget Control..................................................................................................... 301

8.5 Pressures from the Institutional Field: A Search for Budget Savings and

Income Supplements........................................................................................... 307

8.5.1 Savings................................................................................................................... 308

8.5.2 Income Supplements........................................................................................... 310

8.6 Crises Mode: Clawback and Funding Changes – A Double Whammy for

Schools .................................................................................................................. 313

8.6.1 Fee Paying Students ............................................................................................ 313

8.6.1.1 The Behavioural implications of Fee Paying Allocation Rate Changes....... 316

8.6.2 The Clawback....................................................................................................... 316

8.6.2.1 The Clawback: A Catalyst of Changed Budget Related Attitudes ................ 322

8.6.2.2 Related Issue: The Clawback and Repercussions for Business Planning .... 326

8.7 Behavioural Consequences and Implications of Changes to the Budget .... 328

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8.7.1 Devolution of Budget Responsibility and the Distribution of Power at

Griffith .................................................................................................................. 330

8.7.2 The Budget Methodology: Formula Based Funding for Student Load....... 336

8.8 Discussion............................................................................................................. 340

8.9 Conclusion............................................................................................................ 352

Chapter 9 – Accounting Control Systems: Performance Management and Efforts for Accountability

9.0 Introduction ......................................................................................................... 354

9.1 Performance Measurement at the Organisational Level: Using

Performance Indicators ...................................................................................... 357

9.1 Performance Appraisal ....................................................................................... 362

9.2.1 Dean ...................................................................................................................... 366

9.2.2 Head of School .................................................................................................... 367

9.2.3 Academic Staff ..................................................................................................... 369

9.2.4 Administrative Staff............................................................................................. 371

9.3 External Performance Reporting ...................................................................... 375

9.4 Behavioural Consequences and Implications of Performance

Management ......................................................................................................... 378

9.5 Discussion............................................................................................................. 384

9.6 Conclusion............................................................................................................ 390

Chapter 10 – Summary, Conclusions, and Implications

10.0 Introduction ......................................................................................................... 392

10.1 Summary of Evidence......................................................................................... 392

10.2 Lessons of the Griffith Case .............................................................................. 399

10.2.1 Strategic Planning ................................................................................................ 399

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10.2.2 Governance and Accountability ........................................................................ 400

10.2.3 Budgeting .............................................................................................................. 402

10.2.4 Performance Management ................................................................................. 404

10.2.5 The Behavioural Consequences of Management Control Change .............. 405

10.2.6 Theoretical Issues ................................................................................................ 406

10.3 Conclusions .......................................................................................................... 407

10.3.1 Strengths ............................................................................................................... 409

10.3.2 Limitations ............................................................................................................ 410

10.3.3 Directions for Accounting Research ................................................................ 411

Appendixes

2.1 Management, Accounting, and Education Journals Reviewed..................... 414

2.2 Summary of Previous Research in the Higher Education Sector................. 416

4.1 Information Sheet................................................................................................ 424

4.2 List of Individuals Interviewed at Griffith University ................................... 426

4.3 Consent Form ...................................................................................................... 428

4.4 Interview Questions ............................................................................................ 429

4.5 Summary of Documents..................................................................................... 445

6.1 School Business Plan........................................................................................... 449

9.1 Academic Activity Log........................................................................................ 472

9.2 Performance Documentary Evidence .............................................................. 480

References............................................................................................................................. 484

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List of Figures

Number Page

3.1 Model for Understanding Organisational Change.......................................... 109

3.2 Model for Understanding the Dynamics of Management Control Systems

Change................................................................................................................... 127

5.1 Staff/Student Ratio ............................................................................................. 182

6.1 Griffith University Strategic Plans Relationship with other University

Policy ..................................................................................................................... 197

6.2 The Relationships Between Griffith Strategic and Operational Plans......... 198

7.1 Griffith University Governing Bodies.............................................................. 217

7.2 Senior Management Structure Before the Restructure .................................. 224

7.3 Senior Management Structure After the Restructure..................................... 225

8.1 Percentage Change in Source of Income......................................................... 273

8.2 Sources of Revenue............................................................................................. 277

8.3 The Budget Process............................................................................................. 284

9.1 Systems of Accountability and Performance................................................... 364

9.2 Operational Plans and Performance Review of Senior Managers................ 366

10.1 Griffith University Institutional Field............................................................... 393

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List of Tables

Number Page

2.1 Australian Universities ........................................................................................ 22

2.2 A Comparison of a Traditional Bureaucratic Organisation and an

Academic Organisation....................................................................................... 23

2.3 The Higher Education Sector Pre-Post Dawkins Reforms .......................... 26

2.4 The Enterprise National Recommendations Applicable to the Higher

Education Sector ................................................................................................. 30

2.5 Changes to the Higher Education Sector ........................................................ 39

3.1 Strategic Responses to Institutional Processes................................................ 106

3.2 Ways a Leader Can Bring About Change ........................................................ 114

3.3 Types of Power .................................................................................................... 120

4.1 Procedures Used to Improve the Credibility of Case Study Research ........ 145

4.2 Formal Interviews................................................................................................ 167

5.1 Enterprise Bargaining Academic Salary Increases .......................................... 183

6.1 Griffith University Vision, Mission, and Value Statements .......................... 194

7.1 Council Representation....................................................................................... 219

7.2 Background of Council Membership ............................................................... 219

7.3 Duplicate Schools at Griffith............................................................................. 230

8.1 Growth in Total Revenue................................................................................... 274

8.2 Griffith University Budget Model 1994 ........................................................... 281

8.3 Funding Rates from the 2001-2003 Budget..................................................... 314

9.1 Performance Indicators used at Griffith University to Measure

Operational Performance ................................................................................... 357

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List of Acronyms and Abbreviations

AAS

AASCB

ACSs

ALHMU

ARC

ASU

BCAE

CAE

CIMA

CTEC

DEETYA

DEST

DETYA

DEETYA

EBA

EFTSU

FBS

FMI

FMIP

GCCAE

GIHE

GST

HECS

HEFA

HOS

HRM

IGS

IMAA

MCS

NABS

NCP

NBEET

NPM

NTEU

OECD

Australian Accounting Standards

American Assembly of Collegiate Schools of Business

Accounting Control Systems

Australian Liquor Hospitality and Miscellaneous Workers’ Union

Australian Research Council

Australian Services Union

Brisbane College of Advanced Education

College of Advanced Education

The Chartered Institute of Management Accountants

Commonwealth Tertiary Education Commission

Department of Employment, Education, Training and Youth Affairs

Department of Education, Science and Training (formerly DETYA)

Department of Education, Training and Youth Affairs (formerly DEETYA)

Department of Employment, Education, Training and Your Affairs

Enterprise Bargaining Agreement

Equivalent Full Time Student Unit

Finance and Business Services

Financial Management Initiative

Financial Management Improvement Program

Gold Coast College of Advanced Education

Griffith Institute for Higher Education

Goods and Services Tax

Higher Education Contribution Scheme

Higher Education Funding Act 1988

Head of School

Human Resource Management

Institutional Grant Scheme

Increased Ministerial and Authority and Accountability

Management Control System

New Age Business System

National Competition Policy

National Board of Employment, Education and Training

New Public Management

National Tertiary Education Union

Organisation for Economic Co-operation and Development

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PELS

PhD

QCA

QCM

QPSU

RFM

RHD

TAFE

UNS

USA

UK

Postgraduate Education Loan Scheme

Doctor of Philosophy

Queensland College of Art

Queensland Conservatorium of Music

Queensland Public Sector Union

Relative Funding Model

Research Higher Degree

Technical and Further Education

Unified National System

United States of America

United Kingdom

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Acknowledgements

I would like to express my sincere appreciation and deepest thanks to Dr. Zahirul Hoque for his supervision, guidance, and motivation in the preparation of this thesis. I would also like to thank Professor Trevor Hopper at the University of Manchester for his feedback on the proposal of the study. In addition, special thanks goes to Griffith University for providing me with a postgraduate scholarship that enabled me to complete this thesis. I also owe a debt of gratitude to the staff in the School of Accounting and Finance for their support over the three years. I would also like to extend my thanks to the Human Resource Ethics Committee at Griffith University for their help in the study. Special thanks also to staff at the University who agreed to participate in the study, and devoted their time and provided me with the relevant information required to complete this thesis. I am grateful, too, to the Office of Higher Education at Education Queensland for their assistance with the study. Finally, I would like to thank my family, in particular my parents, Robert and Noela Moll for their constant support and encouragement. I would also like to thank Stephanie Moll who was generous enough to edit individual chapters.

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Declaration

This work has not previously been submitted for a degree or diploma in any university. To the best of my knowledge and belief, the thesis contains no material previously published or written by another person except where due reference is made in the thesis itself. Jodie Moll January 2003

1

IInnttrroodduuccttiioonn

1.0 Background and Motivations to the Study

As part of a discussion on the state of the Australian higher education sector (HES)

Dr Brendan Nelson (2002b), the Minister for Education Science and Training,

recently wrote, “Universities need to recognise that they too are businesses…” (p.

30). This quote clearly indicates government expectations for corporate

managerialism1 in the higher education sector.

Similar expectations have been voiced in government reform efforts over the past

two decades, both within the HES and the public sector in general. Governments

have embarked on widespread micro-economic reform of the public sector to deal

with diminishing public sector resources, changing public expectations, and

globalisation (Ferlie, Ashburner, & Pettigrew, 1996; Hood, 1990, 1991; Yeatman,

1997a). As part of the broader micro-economic reform of the public sector, the

HES has been targeted for its perceived role for improving the economic status of

the nation (Currie & Vidovich, 1998; Marginson, 1997b; Vidovich & Currie, 1998).

1 Corporate managerialism, also known as new public management, refers to the implementation of private sector business practices in public sector organisations. Corporate managerialism is built on the assumption that by adopting such practices organisations can become newly effective and efficient in their operations (Alford, 1997; Pollitt, 1990). Chapter 2 discusses this concept further.

1


2

Governments sceptical about the effectiveness and efficiency of university

operations have issued policies and undertaken reviews of the sector with the

intention of improving the governance and management of higher education

institutions. They have subjected higher education institutions to market

mechanisms and greater competition by reducing the proportion of government

funding, forcing universities to diversify their funding sources, introduce student

fees, and increase the accessibility to higher education (Green & Hayward, 1997;

Hardy, 1991; Ramsden, 1998; Wilson, 1997a). The rationale behind such reforms

was that competition would produce better outcomes than government intervention

(Mahony, 1996; Marginson, 1997a).

In view of the reduced government funding, and the increase in student

contributions, governments have argued that universities need to become more

accountable for their use of resources (Higher Education Management Review

Committee (Australia), 1995a). Consequently, the combination of increased

competition, decreased funding, and increased demand for enhanced accountability

has forced universities to appraise the effectiveness of university finances and the

other management and control devices employed (Dopson & McNay, 1996; Jones,

1994a; Jones, 1994b; Miller, 1995). In response, universities have become more

corporate or business like, adopting private sector models of organisational

structure, management systems, accounting practices, and accountability

relationships to accomplish the desired Commonwealth Government changes

(Boyce, 2002; Gioia & Thomas, 1996; Hardy, 1991; Parker, 2002; Simkins, 2000).

Deem (1998), and Winter, Taylor, and Sarros (2000) amongst others, identify

internal cost centres, a flattening of hierarchies, the fostering of competition


3

between employees, public relations, the monitoring of efficiency and effectiveness

through measurement of outcomes, the introduction of accrual accounting and

audit, the introduction of long term strategic planning, and individual staff

appraisals to be some of the private sector techniques.2 These techniques are

believed to foster more efficient organisational functioning.

This research seeks to explore how accounting control systems (ACSs) have been

implicated by changes in the organisational environment. In particular, this thesis

documents how one university in Australia changed and developed its ACSs in

response to the commercialised and competitive environment. Related to this, a

second objective of the study is to determine what roles ACSs play in higher

education institutions. The ACSs were chosen as the focus of this thesis because

they are believed to offer rational methods for organising and supporting

organisational goals and objectives; thus, there was an expectation that if the ACSs

were to operate as intended, the systems should have changed because of the

change in the environment. In this study, the ACSs comprised a budgetary system3

and a performance management system;4 hence these will form the primary focus of

study.

This study adopts the view that in order to understand the design and functioning

of the accounting system it is necessary to study the interrelated management

2 See Pollitt (1990), Alford (1997), Guthrie (1991, 1993), Guthrie and Parker (1998), Orchard (1998), and Thomson (1998) for further discussion on managerialist techniques and their origin. 3 For the purpose of this study, the budgetary system refers to those procedures used to estimate and plan for the revenues and costs in the organisation. 4 This study uses Holloway’s (1999, p. 240) definition of performance management, “the managerial work needed to ensure that the organisation’s top level aims (sometimes expressed as ‘Vision’ and ‘Mission’ statements) and objectives are attained. To be clear, performance appraisal is only one part of the performance management system.


4

control systems (MCSs) and the wider organisational context (Birnberg, Turopolec,

& Young, 1983; Otley, 1994). By doing so, this study provides an attempt to

understand how accounting is shaped by the interrelated systems and vice versa.

This study adopts Lowe’s (1998) definition of a management control system:5

A system of organisational information seeking and gathering, accountability, and feedback designed to ensure that the enterprise adapts to changes in its substantial environment and that the work behaviour of its employees is measured by reference to a set of operational sub-goals (which conform with overall objectives) so that the discrepancy between the two can be corrected for. (p. 67)

In this study two additional elements are considered to understand the design and

function of the ACSs: (1) the strategic planning system,6 and (2) the governance and

accountability system.7

There is some suggestion in institutional literature that by changing the MCS to

mimic private sector models organisations can regain stakeholder confidence

conferring organisational legitimacy (Guthrie, 1993) to the organisation and

securing funding for their operations (DiMaggio, 1991; Meyer & Rowan, 1977;

Scott, 1995). One view then is that governments act as homogenisers, forcing

institutions to adopt business like procedures to become newly effective (Marginson

& Considine, 2000). Alternatively, it has been argued that organisational response is

self-determined; to mimic others in the field is as much of a chosen response as is

5 This definition extends traditional definitions of management control which tended to focus on accounting-based controls to include strategic planning and operational controls (Hoque, 2001; for further discussion see Langfield-Smith, 1997; Otley, 1994, 1999). 6 For the purpose of this thesis, strategic planning is defined as the process by which organisational goals and strategies are resolved. It relies on management surveillance of the environment and the reformulation of organisational strategy to correspond with the environment. To be effective, it also requires integration with all subordinate plans (see Anthony & Young, 1994 for a further discussion on strategic planning). 7 In this thesis, governance and accountability structures refer to the management structures implemented that define the roles and responsibilities of the staff in the organisation.


5

the decision to manipulate or conceal organisational activities (Marginson &

Considine, 2000; Miller, 1995; Oliver, 1991). Adherents to this view then suggest

the internal dynamics including power, politics, interests, and values serve to

determine the organisational response. This view is taken in this thesis. Chapter 3

develops a theoretical framework based on these dynamics to explain more

adequately how and why the MCSs changed in the organisation.

One of the larger universities in Australia was chosen as the research site for this

study. The University is located in the south-eastern corner of the State of

Queensland.

There are four motivations for this study. Whilst there has been significant

development in our understanding of how ACSs are implicated by public sector

reform (see for example, Abernathy & Chua, 1996; Alam & Lawrence, 1994;

Edwards, Ezzamel, Robson, & Taylor, 1995; Lapsley & Pallot, 2000), this study’s

main contribution stems from the lack of previous research in Australian higher

education. A number of papers and books have been written which speculate how

universities have been implicated by government reform, however, few have

conducted in-depth analysis in a particular setting (Currie & Vidovich, 2000). The

first motivation for the study is therefore to address some of the gaps in the public

sector literature.

The second motivation arises from a lack of previous attention to the total

management control package for understanding ACSs change. For instance, Lowe

(1998) suggests that decisions to change one element of the control system can have


6

implications for the other interrelated systems and as such the systems should be

studied as a total system. He suggests that this is particularly the case for accounting

controls, which have in the past been studied in isolation from their organisational

and technical contexts (see also Abernathy & Chua, 1996; Berry, Broadbent, &

Otley, 1998; Otley, 1994; Otley & Berry, 1994). Similarly, Macintosh and Daft

(1998) note that this could attribute to our lack of understanding of the

complexities of how accounting systems function.

An extensive literature review revealed several accounting studies connected with

the reform of the public sector. However, no studies offer in-depth explanations for

how and why ACSs change occurs in the HES, especially in consideration of its

interrelations with other control practices. Edwards, Ezzamel, Robson, and Taylor

(1995), and Edwards, Ezzamel, and Robson (1999) explored how accounting and

budgeting systems were implicated in the Local Management of Schools initiatives

in the UK. Lapsley and Pallot (2000) studied the accounting systems of four local

government organisations in New Zealand and Scotland. In these studies

government reform efforts were identified as the major triggers of change to the

accounting systems. Still, questions remain such as what role accounting plays in

public sector organisations, if any at all?

Where studies have been carried out that adopt a total management control

approach the selection of cases has been limited to a number of areas namely local

government, health or public utilities, and schools. For example, Alam and

Lawrence (1994) conducted a study to understand the implications of New Zealand

health sector reform on costing and budgeting. Similarly, Abernathy and Chua


7

(1996) carried out a longitudinal field study in a public teaching hospital to

understand the control mix acknowledging both the technical and institutional

environment. Kloot (1997) investigated how the introduction of competitive

tendering implicated two local government accounting systems in Australia.

Broadbent, Jacobs, and Laughlin (1999) explored the role of accountability in

processes of management control in Schools in the UK and New Zealand. Whilst

the importance of this research is acknowledged, it does suggest there is significant

opportunity for researchers to study the accounting system as part of an interrelated

control package, especially in fields such as the HES.

The third motivation for the study arises from the inadequate use of the case study

method. The longitudinal case study approach offers the possibility of an in-depth

understanding of the processes of ACSs change. Consequently, this study will

contribute to the relatively small number of field studies conducted within the

accounting discipline (Ferriera & Merchant, 1992; Humphrey & Scapens, 1996;

Kaplan, 1986; Lillis, 1999). More importantly, the study will contribute to the call

for richer research (see for example, Ahrens & Dent, 1998) dedicated to developing

a deeper understanding of the nature of accounting practice (Abernathy & Chua,

1996; Berry et al., 1985; Humphrey & Scapens, 1996).

In the past, accounting researchers have been criticised for overlooking the

potential of case studies to further develop theoretical explanations of accounting

practice (Burchell, Clubb, Hopwood, & Hughes, 1980; Hopper & Powell, 1985;

Humphrey & Scapens, 1996). Instead of using case based research to illustrate

social theories, there exists an opportunity to challenge these theories and to


8

combine particular theories with other theories to develop frameworks driven by

problems and issues derived from accounting practice (for details, see Humphrey &

Scapens, 1996). The fourth motivation of this study arises because of this void in

the existing literature. This thesis combines a number of perspectives including

institutional theory, strategic choice theory, resource dependence theory, power and

legitimacy theories, and resistance theories to understand the complexities of ACSs

design and operation by examining the role of the individual actor in the processes

of change. Recently, many accounting researchers have argued for a similar

approach (Ansari & Euske, 1987; Carpenter & Feroz, 1992; Carpenter & Feroz,

2001; Hoque & Hopper, 1994; Lord & Lawrence, 2001). Naturally, the robustness

of the model will only become apparent with further testing.

1.1 Research Questions

To meet the research objectives outlined in the previous section, five specific

questions are addressed by this study:

(1) To what extent have ‘external’ institutional pressures forced the organisation to change?

(2) How was the organisation’s response determined? In what ways do

intraorganisational dynamics such as power, interests, and values influence the type of change?

(3) How was the transition to a new archetype managed amongst the

functionally differentiated groups? Specifically, in what ways do power, interests, and values influence the outcome of the change process?

(4) What were the outcomes of change?

(5) What were the implications of change? How were other components of the

MCS influenced by the change? How were employees influenced by the change?


9

To address these theoretical and empirical questions and to meet the research

objectives a longitudinal case study approach was adopted.8 This holistic research

approach allows for an understanding of the complexities inherent with the design

and operation of the MCS; it considers the technical and institutional context (Otley

& Berry, 1994; Scapens, 1990). One might argue that there are limitations for

generalising the findings of a single case study (Yin, 1994). However, this approach

was deemed appropriate given the research aims described above.9

Whilst it is acknowledged that it is difficult to predict how an organisation will

respond to specific pressures using the case study approach, a deeper and richer

understanding of how intraorganisational dynamics interact offered by this

approach should allow practitioners to be more mindful of the issues involved in

changing the ACSs. For instance, it should improve practitioners awareness of how

theirs and others’ actions influence the outcome of the change process.

Furthermore, it may help to illuminate some of the key problems of accounting in

practice. The findings will also offer new insights and inspirations to future

accounting studies.

1.2 The Structure of the Thesis

The remainder of this thesis is organised into nine chapters, each of which is

described briefly below.

8 The theoretical motivation of this study is further discussed in Chapter 3. 9 For a discussion of the issue of generalisation within a case study, see Scapens (1990). Also, the issue is further discussed in Chapter 4.


10

Chapter 2 outlines the context of study. The chapter is divided into two parts. In

the first part, the Government reform of the public sector and the HES is

chartered. The second part, on the other hand, reviews the MCSs research

conducted in the HES. The purpose of the first part is to inform readers of the

specifics of reform efforts in the Australian context. This is necessary for those

readers unfamiliar with the Australian specifics of reform. The second section

provides details of a literature review of the studies and articles published on four

components of the MCS: strategic planning, governance and accountability,

budgeting, and performance management. The review was deemed necessary so

that the reader could get a full appreciation of how this study will contribute to the

existing literature.

Chapter 3 introduces a theoretical framework for the evaluation of the findings. The

chapter is divided into four sections. The first section discusses the roles of theory

in research. Following this, the next section reviews the old and new institutional

theories as the chosen theoretical orientation. In particular, this section of the

chapter looks at the relevance of the institutional theory for offering insight into the

processes of MCSs change in a higher education institution. The third section seeks

to address limitations of institutional theories and to provide a more complete

explanation of MCSs change. This section of the chapter argues for a multi-

perspective approach to the study of control system change. Leadership, politics

and power, strategic response, and resistance theories are reviewed to improve the

researcher’s ability to make sense of the findings. These theories were chosen based

on their ability to offer plausible explanations to the processes of MCSs change.


11

Section four integrates the theories in a model designed to illuminate the interplay

of power, politics, interests, and values to understand the processes of change.

The research methods utilised in this study are described in Chapter 4. The chapter

comprises four sections. Section one explains the philosophical foundations of the

study. The second section reviews the case study approach, its use, methods,

limitations, and contribution to accounting research. The next section deals with the

data collection methods utilised in this study. This section describes the research

sites and the access to field data. Data collection methods used in the study are

described in section four, followed by a conclusion.

Chapter 5 provides further background information on the research site. The

chapter is divided into two parts. In the first part of the chapter the Government

imposed changes from the Dawkins reforms and Enterprise Bargaining Agreements

are investigated. The second section deals with the organisational culture and

subcultures at the research site.

Chapters 6, 7, 8, and 9 are the most substantive chapters of the thesis. These

chapters present the research findings and observations from the field study. The

chapters use narratives and documentary evidence to substantiate the research

findings. Throughout the course of these chapters, the research questions listed

above will be revisited and addressed utilising the theoretical framework outlined in

Chapter 3. It proved analytically useful to separate the specific elements of the MCS

into separate chapters.


12

Chapter 6 addresses the first element of the control system, identified as strategic

planning. Strategic planning processes were included because of their links to the

governance, budgeting, and performance management systems. This chapter

explores how the strategic planning process came to be used in the organisation and

why they came to exist in the fashion they did.

Chapter 7 is devoted to the second element of the control system, identified as the

governance system. Using the theoretical framework provided, the chapter attempts

to provide an explanation for how and why governance and accountability

structures exist in the subject organisation.

Chapter 8 offers a partial explanation for how and why the ACSs were designed and

operate. The chapter focuses on the budget, as one element of the ACSs. The

chapter attempts to understand how and why the budget systems were designed and

operate using the theoretical framework provided in Chapter 3. The chapter is

divided into nine sections: each section looks at different aspects of the change

process.

In similar vein, Chapter 9 explores a second element of the ACSs, the performance

management system. Specifically, the chapter attempts to provide further insight

into how and why ACSs are designed and operate by focusing on the performance

management system. Importantly, it investigates the development of the

performance management system in view of the interrelated control systems and

contextual and institutional environment.


13

The final chapter of this thesis is presented in two parts: a summary, and a

conclusion. The summary section is further divided into three sections. In the first

section, the research findings are drawn together using the research questions

outlined above. Next, the lessons learned from the study are discussed and the

theoretical issues are presented. Finally, the chapter concludes with a discussion of

the strengths and limitations of the study and presents recommendations for future

research.

14

PPuubblliicc SSeeccttoorr RReeffoorrmm aanndd tthhee AAuussttrraalliiaann HHiigghheerr EEdduuccaattiioonn SSeeccttoorr:: AA LLiitteerraattuurree RReevviieeww aanndd IIssssuueess ffoorr FFuurrtthheerr RReesseeaarrcchh

2.0 Introduction

This chapter has two objectives: first, to describe the changes that occurred in the

public sector, and more specifically, the higher education sector (HES); second, to

discuss the literature pertinent to the topics of study. The chapter has been divided

into two parts: the first part provides an explanation of the context of the study,

and the second part reviews the literature relating to the management control

system (MCS). A review of recent education, management, and accounting journals

revealed that the Australian HES has undergone significant reform over the past

two decades. Although it would seem the reform of the Australian public sector

parallels those in other Commonwealth countries, differences do exist (Miller,

1995). Consequently, this chapter outlines the changes in the Australian public

sector to inform those readers not familiar with its culture or history. Part one is

further divided into two sections. The first section of the chapter provides a brief

discussion of the changes occurring within the public sector. The second section,

on the other hand, concentrates on the HES. In particular, the second section of

the chapter details the specific changes that have occurred within the sector since

1986.10 The main focus of this section is specific government policy and review. It

10 This section of the chapter is limited to discussing the changes from this date forward because the higher education sector underwent major reform at this time.

2

Chapter 2 –Public Sector Reform and the Australian Higher Education Sector

15

was expected that these would have some influence on how individual institutions

were managed. Consequently, this section provides critical context for a more in-

depth understanding of the design and operation of the MCS in the research site.

The second part of the chapter focuses on a literature review of research projects

and commentary that have investigated the following elements of the MCS: strategic

planning, governance and accountability systems, budgetary systems, and

performance management. Coincidentally, those studies conducted in a higher

education context were the focus of this section. The findings of the literature

review are divulged so that one can get a better appreciation of how this study will

contribute to the existing literature. To do this, gaps or areas requiring further

investigation will be highlighted. It is important to note that this literature review is

limited to the selection of management, accounting, and education journals that

have been listed in Appendix 2.1.11

2.1 The Australian Public Sector

The past two decades have seen widespread interest in the management of the

public sector (Considine & Painter, 1997; O'Faircheallaigh, Wanna, & Wella, 1999;

Zifcak, 1994). Faced with a number of new challenges including the need to curtail

public expenditure, changing community perceptions, and globalisation public

managers have been forced to reassess their management practices to become more

accountable, and efficient with public sector resources (Ferlie et al., 1996; Funnell &

Cooper, 1998). In response, managers have imported private sector management

11 The journals listed in Appendix 2.1 were chosen because they were deemed to be the most relevant to the topic of study.


16

techniques (Broadbent & Laughlin, 1997; Funnell & Cooper, 1998; Hood, 1991;

Hood, 1995). The reform from traditional administration and management to a

more corporate style of management has been coined the ‘new public management’

(NPM) reform (Aucoin, 1990; Barzelay, 1992; Hood, 1991; Hood, 1995) or the

‘managerialism’ of the sector (Considine & Painter, 1997; Doolin & Lawrence,

1997; Guthrie & Parker, 1990; Mathews, 1997; Mok, 1999; Paterson, 1997).

Several versions of NPM have emerged in the public sector literature.

Notwithstanding, dominant themes have emerged in all versions. These include

strategic planning, the shift to outcome focused resource allocation, an increased

focus on performance measurement and performance improvement, accrual

accounting and annual reporting, the linking of pay to performance, the devolution

and decentralisation of administration, total quality management, and the use of

competitive tendering and contracting out.12 It is widely acknowledged that the

public management reforms reflect the principles of economic rationalism. That is,

these management techniques and practices are thought to be the key to achieving

greater efficiencies in the sector (Coaldrake, 2000; Considine & Painter, 1997;

Funnell & Cooper, 1998; Yeatman, 1997b).

Many scholars take the view that NPM emerged in the UK when the government

initiated a range of administrative and economic reforms under the Thatcher

administration (Ferlie et al., 1996; Lane, 2000; Pollitt, 1993; Thomas, 1999; Zifcak,

12 For additional details on the types of business practices that NPM and managerialism includes, see Aucoin (1990), Barzelay (1992), Common (1998), Curtin (2000), Ferlie, Ashburner, and Pettigrew (1996), Glynn and Murphy (1996), Hood (1991, 1995), Matthaisen (1999), Olson et al. (1998b), Osborne and Gaebler (1992), Thomson (1992), and Yeatman (1997a, 1997b). In education, see Boston (2000), Coaldrake and Stedman (1999), and Hardy (1991).


17

1994). These reforms were aimed at reducing the size of the sector, reasserting

political control, improving management, and eliminating waste and inefficiencies

(Conservative Central Office, 1979, p. 9). The Financial Management Initiative

(FMI) and the subsequent Next Steps Review are perhaps, the most widely

acknowledged of these reforms. The FMI was established in May 1982 with the

intention of creating greater efficiencies within central government departments

(Guthrie & Parker, 1990; Jones & Pendleburry, 2000). The FMI was later assessed

and further developed in the Next Steps Review.13 From here, the NPM ideals

underpinning the Thatcher administration reforms impelled a range of government

initiatives within other OECD countries (Common, 1998; Considine, 1997; Ferlie et

al., 1996). In particular, Federal Governments in OECD countries have been

sourced as the origin for the widespread transfer of managerialism (Common, 1998;

Ferlie et al., 1996). For example, the Canadian Federal Government introduced the

Increased Ministerial and Authority and Accountability (IMAA) reforms (Paterson,

1997). These reforms are also centred on achieving greater efficiency and

accountability in the sector by adopting a more corporate style management. The

New Zealand government also underwent enormous changes at this time through

the introduction of a new management model introduced through the Treasury’s

1987 paper Government Management ( for a discussion, see Boston, 2000; Lane, 2000).

The Australian Federal Government was no exception (Ferlie et al., 1996; Lane,

2000). Similar to other OECD countries,14 the Australian Federal Government

embarked on a reform agenda aimed at achieving greater efficiencies in the public

13 For additional details on the UK financial management reforms, see Humphrey, Miller, and Smith (1998a). 14 See Olson, Guthrie, and Humphrey (1998).


18

sector as far back as the 1970’s with the Coombs Report (Royal Commission on

Australian Government Administration, 1976) and the 1980’s with the Reid Review of

Commonwealth Administration (Australia) (Reid, 1983).15 For the most part, the real

changes began in the mid 1980’s with the election of the labour government under

the direction of Bob Hawke (Funnell & Cooper, 1998; Harrold, 1998; Zifcak, 1994).

Once elected, the Hawke Government issued two White Papers: Reforming the

Australian Public Service and Budget Reform (Commonwealth Government, 1983, 1984).

These papers provided the impetus for a succession of reviews and reforms

including the Financial Management Improvement Program (FMIP), which mirrors

the financial reform initiatives undertaken in both the UK and Canada

(O'Faircheallaigh et al., 1999; Paterson, 1997) and a micro-economic reform, known

as the National Competition Policy (NCP) aimed at subjecting the public sector to

the same market principles operating in the private sector (Davis, 1997; Zifcak,

1994). The characteristics and origins of the FMIP and NCP are now discussed.

2.1.1 The Financial Management Improvement Program

As suggested in the previous section, the FMIP was part of the Hawke

Government’s pursuit of a more efficient public sector. (Zifcak, 1994). The FMIP

was introduced in 1986 after conducting a diagnostic study in 1984 (Mathews, 1997;

Zifcak, 1994). The objectives of the policy were:

1. To develop budgetary and regulatory processes which would encourage efficiency and effective departmental management practice.

15 For additional details on the Coombs Report and the Reid Committee Report, see Davis (1997), Funnell and Cooper (1998), and O’Faircheallaigh et al. (1999).


19

2. To identify and promote techniques and systems which would help departmental and agency managers, ministers and others to focus on results.

3. To change administrative procedures and practices to give managers more

incentive to manage and a greater awareness of the resource implications of their decisions. (Commonwealth of Australia, 1983, p. 20-21).

The FMIP stressed that it was imperative to “let the managers manage” (Funnell &

Cooper, 1998, p. 84; Mathews, 1997, p. 615; Shand, 1990a, p. 66; Zifcak, 1994, p.

93). This implied a move to a more devolved structure (Funnell & Cooper, 1998).

In particular, the FMIP highlighted the need to create a more timely and

comprehensive budget process by focusing on improved standards and practices,

through improved management systems encompassing corporate management,

program management, organisation design, and management information and

evaluation (Shand, 1990a, 1990b). All in all, the FMIP was seen to provide a

comprehensive framework for improved resource management (Guthrie & Parker,

1990).

2.1.2 The National Competition Policy

In October 1992, Prime Minister Paul Keating commissioned a committee to

conduct an inquiry into the need for a national competition policy (Independent

Inquiry into a National Competition Policy, 1993). The findings of this review were

submitted to government in what is commonly referred to as the ‘National

Competition Policy.’ This policy is aimed at improving the use of resources in the

public sector through increased competition. It does this by subjecting public sector

agencies to market principles (Davis, 1997; Funnell & Cooper, 1998; Mathews,

1997; O'Faircheallaigh et al., 1999). In short, the policy includes seven elements: an


20

extension of the coverage of the Trade Practices Act 1974, third party access, prices

oversight of monopoly or near monopoly government businesses, structural reform,

competitive neutrality, a legislative review, and NCP-related reforms (for more

details see, Independent Inquiry into a National Competition Policy, 1993).

The Council of Australian Governments (COAG) endorsed this report in February

1994. In April the following year, the COAG, signed three agreements to execute

the findings of the Hilmer report: the Conduct Code Agreement, the Competition

Principles Agreement, and the Agreement to Implement the National Competition

Policy. From here, these reforms were legislated in the Commonwealth’s Competition

Policy Reform Act 1995.16

More recently, in addition to the broad reviews of public sector, the Federal

Government has targeted specific industries and fields, such as the HES, in a

number of reviews, policies, and government initiatives. In the HES, these reviews

and policies are consistent with the managerialist orientation of the wider public

reform; that is, they are focused on strengthening the management of universities by

adopting a more corporate style of management. The next section discusses the

Australian HES in greater detail.

16 For additional details of NCP and related reforms, see Funnell and Cooper (1998), and Mathews and Grewal (1997).


21

2.2 Public Sector Reform and the Australian Higher Education Sector: A Decade of Change

Universities are part of society; they are not magically immune from the forces that have produced transformations across the globe and within Australia. (Coaldrake, 2000, p. 9)

The Australian HES resembles many of its international counterparts (Slaughter &

Leslie, 1997). That is, a majority of universities are government funded,

governments participate in regulating universities at a national level, and university

mission and academic focus are similar. Universities are accountable to not only

Federal and State Governments but also a whole host of other stakeholders in the

wider community (e.g. faculty boards, governing boards, students, local

governments, industry, and other taxpayers). In the past, the Australian Federal

Government has steered the sector using various policies and reviews. These

policies and reviews cover a wide range of issues including industrial relations,

student intake, discrimination policies, and health and safety (Coaldrake & Stedman,

1998, Coaldrake, 1999). The Federal Government also controls university

operations using performance based funding allocations and incentive schemes. As

publicly funded institutions, universities have also been heavily affected by the wide

sweeping financial management reforms described above (Coaldrake, 2000;

Coaldrake & Stedman, 1998; Coaldrake & Stedman, 1999; Meek & Wood, 1998).

Notwithstanding, universities continue to operate as autonomous institutions: they

determine research and teaching areas of interest; they set their own programmes

and courses; and they use a governing body to make major decisions. Cutt, Trotter,

and Lee (1993) outlined the key functions of universities to be teaching, research,

and public service.


22

Table 2.1: Australian Universities

Name Year of Establishment

Total Enrolment (1999)

Public Sector:

Australian Catholic University

1991

10186

Australian Defence Force Academy 1986 1690 Australian National University 1946 9271 Central Queensland University 1992 11994 Charles Sturt University 1990 22096 Curtin University of Technology 1987 23542 Deakin University 1974 27291 Edith Cowan University 1991 19051 Griffith University 1971 21126 James Cook University 1970 9143 La Trobe University 1964 20820 Macquarie University 1964 18609 Monash University 1958 39181 Murdoch University 1973 10042 Northern Territory University 1988 3992 Queensland University of Technology 1988 29057 Royal Melbourne Institute of Technology 1992 28719 Southern Cross University 1994 9056 Swinburne University of Technology 1992 11013 The Flinders University of South Australia 1966 10900 The University of Adelaide 1874 13533 The University of Melbourne 1853 32543 The University of New England 1954 14404 The University of New South Wales 1949 27663 The University of Newcastle 1965 18283 The University of Queensland 1909 28404 The University of Sydney 1851 33402 The University of Western Australia 1911 12977 University of Ballarat 1990 4335 University of Canberra 1990 8846 University of South Australia 1991 23339 University of Southern Queensland 1992 14846 University of Tasmania 1890 11882 University of Technology 1990 22864 University of the Sunshine Coast 1999 1919 University of Western Sydney 1989 28364 University of Wollongong 1975 11857 Victoria university

The University of Notre Dame 1992 1990

17102 1059

Private Sector: Bond University 1989 1632

SOURCE: Developed by the author based on DEST publications and The Good Universities Guide to Universities, Tafe and Private Colleges, by D. Ashenden, & S. Milligan, (1999). Western Australia: Hobsons Australia Pty Ltd.


23

Currently, there are 45 higher education providers in Australia servicing a

population of 659,000 students: 39 of these are publicly funded universities (see

Table 2.1 for a list of institutions) (Nelson, 2002b). These publicly funded

universities now operate in a competitive environment similar to that of the private

sector. In particular, they compete for ‘clients’ and for new sources of revenue.

Traditionally, academic institutions have been characterised as featuring collegial

models of structure. In particular, Riley and Baldridge (1977) suggested that

academic organisations were unique because they operated according to ambiguous

goals, they served clients, they had problematic technology, they were professional

organisations, and they were especially vulnerable to their environment. A

comparison of the difference between the traditional bureaucratic organisation such

as a government agency and the traditional academic organisation is presented in

Table 2.2.

Table 2.2: A Comparison of a Traditional Bureaucratic Organisation and an Academic Organisation

Academic Organisation Traditional Bureaucracy

(Government agency, industry)

Goals

Client Service

Ambiguous, contested,

inconsistent

Client-serving

Clearer goals, less disagreement

Material processing, commercial

Technology Unclear, nonroutine, holistic Clearer, routinised, segmented

Staffing Predominantly professional Predominantly nonprofessional

Environmental relations Very vulnerable Less vulnerable

Summary image “Organised anarchy” “Bureaucracy”

SOURCE: From Governing Academic Organisations, (p. 7), by G. L. Riley, & J. V. Baldridge, 1977, Berkeley, CA: McCutchan Publishing Corporation.


24

Similar to their international counterparts, the Australian HES has been subjected to

unprecedented levels of change over the past decade (Coaldrake, 1999; Taylor,

1999; Taylor, Gough, Bundrock, & Winter, 1998; Wilson, 1997a). These changes

include, but are not limited to an expansion of the HES, an increase in institutional

funding, the introduction of quality imperatives, and perhaps most importantly, the

importation of private sector management techniques (Coaldrake & Stedman, 1998;

Higher Education Council, 1998b). Business and accounting principles now tend to

dominate the running of these institutions (Gleeson & Shain, 1999; Winter et al.,

2000). Coincidentally, institutions are markedly different; they are much more

bureaucratic17 than before.

The introduction of these techniques has been linked to government reviews and

policy papers on the status of the HES, the most notable being Higher Education: a

policy discussion paper (also known as the 1987 Green Paper), the Higher Education: a

policy statement (known as the 1988 White Paper), and more recently, the Higher

Education Management Review Papers.

2.2.1 The Dawkins Review

The cornerstone of change in the HES was the 1987 Green Paper and the 1988

White Paper. The review, more commonly known as the ‘Dawkins Review’, was

deemed necessary by the standing government to promote growth in the HES and

17 Bureaucracy underpins the managerialist philosophy. See the following publications for further discussion: “Managerialism and the Public Services: The Anglo-American Experience,” by C. Pollitt, 1990, Oxford, UK: Basil Blackwell Ltd; “Learning to Lead in Higher Education,” by P. Ramsden, 1998, London: Routledge; and “The Reform of Public Management: An Overview,” by A. Yeatman, A. (1997). In M. Considine & M. Painter (Eds.), Managerialism: The Great Debate (pp. 173-187). Carlton South, Melbourne: Melbourne University Press.


25

to develop a long term strategy for managing the Australian HES (Dawkins, 1987,

1988). The subsequent Dawkins reforms were built on the belief that the economy

would become more productive if the education system was highly flexible and

adaptive to changing economic circumstances (Bessant, 1996). The purpose of

reviewing the existing structure and developing a new policy framework was to

create more efficient and effective universities by subjecting them to greater

competition (Baldwin, 1991; Coaldrake, 2000; Dawkins, 1987, 1988; Karmel, 1989;

Mahony, 1992; Meek, 1993; Smyth, 1995; Williams, 1992). 18 The Dawkins Review

and subsequent reforms were seen to be a symptom of the Federal Government

pursuit for economic rationalism (Marginson, 1997b). They forced institutions to

compete against each other. The difference in the HES pre- and post-Dawkins is

documented in Table 2.3.

One of the most significant changes from the Dawkins reforms was the abolition of

the binary system and the establishment of the Unified National System (UNS) (see

commentary by Gamage, 1992; Karmel, 1989; Lowe, 1994; Williams, 1992). The

UNS was designed with the following assumptions: (1) larger institutions would be

more efficient; and (2) larger institutions would be able to provide a wider range of

courses to students, especially in science, technology, and business disciplines which

in turn would contribute to stabilising the economy. The pressures that led to

Dawkins Review and ultimately, the replacement of the binary system with the UNS

were identified as changing economic circumstances including globalisation, the

increased educational gap that existed between Australia and other OECD

18 As we discussed in Chapter 1, the Federal Government took the view that competition was more likely to make higher education institutions more aware of the need to become more efficient and use resources more effectively than government intervention.


26

countries, and demographic changes (Dawkins, 1987). The binary system had

become as one scholar put it an “obstacle to progress” (Williams, 1992, p. 281).

Table 2.3: The Higher Education Sector Pre-Post Dawkins Review

Prior to 1988 Post 1988

• Binary System

• Commonwealth Tertiary Education

Commission

• CAEs were funded on the basis of

teaching

• Universities were funded on the basis

of both teaching and research

• Unified National System

• Setting of minimum enrolment levels

• Consolidation of institutions

• National Board of Employment, Education

and Training

• Australian Research Council

• Changes to the governance and

management of universities

• Introduction of user pays concepts

• New funding arrangements for teaching

and research

SOURCE: Developed by the author.

The higher education system prior to the Dawkins Review consisted of universities,

colleges of advanced education (CAEs), technical and further education colleges

(TAFE), and institutes of tertiary education. Over 98% of students at this time

attended either CAEs or universities (Dawkins, 1987, p. 5). Universities were

funded on the basis of teaching and research activity according to their size and

faculty mix. In comparison, CAEs were funded solely on the basis of number of

enrolments in approved courses (Karmel, 1989; Marginson, 1987). A second

fundamental difference between universities and CAEs was the fact that universities


27

at the time were required to be established by State Acts of Parliament, CAEs, on

the other hand, were not. 19

The introduction of the UNS required the HES to consist only of universities. It

demanded the existing CAEs amalgamate with existing universities (Coaldrake &

Stedman, 1999; Mahony, 1993; Meek, 1993; Slaughter & Leslie, 1997). This meant

that all universities were established under acts of parliament and that where

required, acts were modified to incorporate the CAEs operations. In particular, the

UNS required the formation of a single governing body, one chief executive, one

educational profile, one funding allocation, and one set of academic awards

(Gamage, 1992, p. 78; see also, Marginson, 1987). In effect, the UNS was devised

based on the assumption that it would be easier to govern the sector under a unified

approach (Bessant, 1996). Coincidentally, the demise of the binary system led to a

reduction in the number of higher education institutions from 19 universities and

69 colleges to 36 universities by 1996 (Higher Education Council, 1998a; Industry

Commission, 1997; Mahony, 1992, 1993). Introducing a unified system meant that

all institutions could be funded on the same basis – their educational profile

(Johnson, 1993; Karmel, 1989; Meek, 1993). Besides that, it meant that all

institutions were now operating on a similar level and thus competition was

increased (Bessant, 1996). The UNS was first implemented on January 1, 1989

(Smart, 1990).

19 These acts provide a framework for the institution’s operations. For additional details on the acts, see Meek (1993).


28

The Dawkins Review Committee took the view that the introduction of an

arrangement, such as the UNS, would involve a review of current management

processes to make the structures more effective and efficient. Hence, a second

objective of the Dawkins Reforms was to prescribe a review of institutional

management including: organisational structure, ensuring there were adequate

systems of accountability, streamlining the decision-making process, and developing

MCSs that were flexible enough to enable new policies and procedures to be

implemented (Dawkins, 1987, see p. 52). To do this, the Dawkins reforms granted

institutions greater autonomy in setting their courses and research, and greater

control over their resources (Dawkins 1987; see also commentary by Marginson,

1997c, 1997d).

The Dawkins Review also clarified and defined the relationships between the

Commonwealth Government, State Governments, and the HES. The White Paper

(Dawkins, 1988) recommended that the State Government have the power to

legislate the establishment and governance of new universities, and the

Commonwealth Government have the power to ensure that funds were allocated in

alignment with the national educational objectives (for details, see also Meek, 1993).

These recommendations have since been implemented.

Consequently, the introduction of the UNS has increased the number of student

enrolments and also led to the introduction of a partial user pays system, commonly

known as the Higher Education Contribution Scheme or ‘HECS’ (Coaldrake, 1999).

It has been suggested that the partial user-pays system was introduced firstly to


29

provide fiscal relief to governments, and secondly to strengthen industry

relationships and improve national competition in the sector (Marginson, 2001).

Many scholars have suggested the changes brought about by the Dawkins reform

have challenged many of the standing notions underpinning university management

including academic freedom, collegiality, and institutional autonomy (see, for

example Bessant, 1996). From an external perspective, Karmel (1992) contends that

five major areas of concern remain from the changes to the sector. These include

centralisation, uniformity, stability, funding, and the size of the HES. Most of these

concerns were addressed in subsequent reviews, details of which follow.

2.2.2 Quality Management in the Higher Education Sector

A committee headed by Mr David Karpin was established in 1992. This committee

(from here on known as the Karpin Committee) was formed to advise the Federal

Government on how to improve the quality of management and leadership

practices in Australia (Higher Education Council, 1996).

The Karpin Committee (1995) presented a report, Enterprising Nation: renewing

Australia’s managers to meet the challenges of the Asia-Pacific century, to the Education

Minister detailing their recommendations for improved quality and leadership

practices in the education sector. The recommendations applicable to the HES have

been listed in Table 2.4.

In April 1995, the Federal Government set forth to act on these recommendations.

Some were implemented and others were reassigned to obtain further advice. With

particular reference to the HES recommendations, the Federal Government sought


30

advice on a recommendation for the establishment of a professional accreditation

system. The Higher Education Council rejected the idea. They stated “the Council

does not believe there is a need to establish a discrete mandated national

accreditation system for management education” (1996, p. 30).

Table 2.4: The Enterprising Nation Recommendations Applicable to the Higher Education Sector

Enterprising Nation Recommendations

1) Development of an enterprising culture within Formal Education and Training

2) Information and quality control for management School

3) The drive for improved quality management of Schools

4) Industry linkages for management Schools

5) International links for management Schools

6) Curricula in postgraduate and undergraduate management education

7) International business skills program

8) MBA students consulting with small business owner/managers

9) Development of articulated TAFE-university undergraduate courses in small business

formation and management

10) Management for diversity

11) Articulation for management schools

12) Human resource management of academics

SOURCE: Developed by the author from Quality and Standards of Management and Education. by the Higher Education Council, 1996, Australian Government Publishing Service.

In 1997 the Minister for Employment, Education, Training and Youth Affairs,

Senator Vanstone, requested that the Higher Education Council develop the

government’s new approach to quality improvement. This approach entailed the

formation of a quality structure that was flexible enough to account for institutional

diversity. Senator Vanstone (1997) stated in a media release, “there is no national

model for quality improvement programmes, and the reviews will be based on

conditions that exist in individual institutions.” Following this, in January 1998 the

Higher Education Council presented advice to the National Board of Employment


31

Education and Training (NBEET). The Council developed a quality assurance

system in this paper in accordance with the government requirements (Higher

Education Council, 1998b). This system included the integration of quality

improvement plans in the educational profiles process, suggested a review of quality

improvement in institutions every three to four years, and provided general

guidance and assistance on any remaining issues or concerns. This framework has

since become part of the documentation required to be submitted by triennially

funded institutions as part of the educational profile process to receive funding.20

2.2.3 The Hoare Review

As suggested above, a second review that had significant implications for the

management of universities was the Higher Education Management Review. This

review was conducted in 1995. The combination of increasing international

pressures and the ongoing public sector management reforms required a review of

the HES at this time to determine how best to strengthen management practices

within universities and also to determine how to optimise the performance of

universities (Meek & Wood, 1998). Also known as the ‘Hoare Review’, the Higher

Education Management Review, investigated issues of accountability, governance

structures, strategic management, workplace reform, and finance and asset

management (Higher Education Management Review Committee (Australia),

1995b, p. 5). The Hoare Review Committee suggested that the review was limited to

these five areas because they were deemed to be the most important for the

effective management of universities.

20 See Coaldrake (2000) for additional details on quality assurance and accountability in the Australian HES.


32

The two papers, Report of the Committee Inquiry (Higher Education Management

Review Committee (Australia), 1995a) and Summary of Committee Report and

Recommendations (Higher Education Management Review Committee (Australia),

1995b), published the findings and recommendations of the Hoare Review.

Recommendations were designed to support universities in the management of the

areas listed above. For example, under the workplace reform the Committee (1995)

recommended, “stakeholder and employee satisfaction should form part of the

assessment of the performance of the Vice-Chancellor and the leaders at every level

of the university…. senior management should review all current communication

processes for their effectiveness in building shared vision and commitment” (pp.

16-17). More importantly, perhaps, the Review Committee recommended the

Commonwealth establish a University Change Implementation Scheme aimed at

supporting universities in the pursuit of better management practices.

The Review Committee recognised the importance of managing the universities

according to their individual institutional environment and thus the

recommendations made in the report were meant as a guide and not made

mandatory. More importantly, perhaps, the Hoare Review recognised that change

must be internally driven if it is to be successful. The Review Committee also

emphasised that managing the change is key to achieving success. Despite this, the

Hoare Review Committee noted significant evidence to suggest that changes were

not being adequately planned within institutions prior to their implementation.

In general, the recommendations of the review built on, and were consistent with

the previous recommendations set out in the Green and White Papers (Tilley,


33

1998). In many ways, the Hoare Review highlighted and addressed the major

management issues and challenges remaining from the Dawkins and Karpins

Reviews.

2.2.4 The 1996 Federal Budget Cuts

A general election in 1996 led to the replacement of the labour government by a

liberal government. Consequently, the new government has strived to improve the

sector, by changing the level of funding allocated across the sector beginning with

the 1996 Federal Budget. Most notably, $1.8b was cut (Smart, 1997) from the

Commonwealth Operating Grants, leaving $4.6 billion to fund the research and

teaching activities of universities (Borland, Dawkins, Johnson, & Williams, 2000;

Marginson, 2001). Chapman and Salvage (1997) argued that these could have been

the most “radical variations in charging arrangements for at least the last quarter of

the century” (p. 50). Since 1996 public investment in the HES has continued to

decline, recent reports (AVCC, 2000a) suggesting by as much as $546 million since

1996.

In keeping with such trends, a recent government report, the Higher Education Report

for the 2002 to 2004 Triennium, has projected Commonwealth payments will continue

their downward spiral reaching a record low of 61% of total university revenue by

2004. Notwithstanding this, it is important to note that whilst Commonwealth

Operating Grants have decreased, this decrease has been matched by a proportional

increase in the HECS funding program, allowing institutions to recover the

difference using up-front payments (Marginson, 1998; Smart, 1997). It is worth

noting, however, that at the same time as the Federal Government cuts, universities


34

were burdened with new government policies that required salary increases of 10-

15% over a three-year period (Meek & Wood, 1998). Undoubtedly, this has placed

increasing pressures on how resources are used. The worst effects noted from the

1996 budget cuts include reductions in staff (Currie, 1996), reductions in tutorial

classes, and further course rationalisation to reduce university expenditure (Harman,

1999). In view of these effects, it is hardly surprising that some scholars have

suggested the fiscal pressures have hastened the pace with which universities have

been forced to adopt a managerial focus (Winter et al., 2000).

2.2.5 The West Review

In August 1996 a committee led by Mr. Roderick West was commissioned to

undertake yet another review of the HES. This review was focused on funding and

policy development. The West Review Committee (1997a, 1997b) suggested two

reasons for this review: first, because of the increasing rate at which the sector had

been changing; second, because the current structure was inadequate for dealing

with those changes. Thus, the West Review focused on developing a policy and

financial framework that was flexible enough to ensure that the HES would

continue to meet the Australian social and economic requirements for the next two

decades (Johnson, 1998).

In short, the review was centred on three changes: developing student centred

funding, developing priorities in research, and developing a world-class higher

education industry (West, 1997a, p. 15). A discussion paper was released in

November 1997 detailing preliminary investigations, submissions, and issues of the

review. The issues discussed in the paper included the funding of teaching, the


35

appropriate funding mix between private and public resources, and the benefits of

using several funding mechanisms. The final paper was released in April 1998

detailing the recommendations of the review. Recommendations made in the paper

included the strengthening of the university’s ability to mobilise resources, to reduce

barriers to entry and increase competition in the sector, to increase the consumer

protection mechanisms, and to review decision-making structures so that they

remain effective (West, 1997a, p. 22). The West Review Committee stated that these

changes were necessary to enable universities to meet student needs and to account

for any demographic changes. Furthermore, these changes were deemed necessary

to ensure that a direct relationship existed between universities and student funding

to allow for greater control over resources.

According to Harman (1999), the recommendations of the review received mixed

reactions. From one perspective, Marginson, (1998) suggests that the discussion on

government funding is “tired and unconvincing” (p. 161). Furthermore, he

(Marginson, 1998) claims that if accepted, the West Review recommendations

would be the most radical reform to date because of their abstractness and inability

to prescribe how the reforms should be monitored and evaluated. Others also

voiced concerns over the student centred funding model (see for example, Harman,

1999). The Education Minister, however, ruled against extending HECS to the

TAFE community and allowing universities to set their own fees. In October 1999,

a cabinet submission was leaked detailing the government’s intention to adopt the

West funding recommendations. The public did not react favourably to this, and as

a result the Government was forced to dismiss the West recommendations (Senate


36

Employment Workplace Relations Small Business and Education References

Committee, 2001).

2.2.6 Backing Australia’s Ability: An Innovation Action Plan for the Future

In 2001 the Federal Government released a policy statement, Backing Australia’s

Ability. This policy was released in the wake of a several other Federal Government

initiatives including the White Paper, Knowledge and Innovation: a policy statement on

research and research training, which outlined the Commonwealth Government’s

intention to introduce a new policy and funding framework to enhance a national

innovation system, and a summit of innovation which saw the release of The chance

to change, a report which reviewed the effectiveness of science, engineering, and

technology for innovation. The purpose of Backing Australia’s Ability was to outline

the Government’s strategy for promoting research, development, and innovation in

the research community. The important outcome of the statement was an injection

of $2.9 billion into the sector in the form of Australian Research Council

competitive grants, contributions to research infrastructure and research and

development activity, investment in national research facilities, and the financial

backing of an additional 2000 EFTSU places in the HES each year for the next 5

years.

2.2.7 Universities in Crisis: Report into the Capacity of Public Universities to Meet Australia’s Higher Education Needs

On instruction from the Senate, the Employment, Workplace Relations, Small

Business and Education References Committee released a report in 2001 describing

the current status of the HES for meeting Australia’s higher education needs, in the


37

context of the policy change and financial restraints. Areas of concern highlighted

in the report included the funding of enterprise bargaining agreements (EBA), the

effect of HECS increases on student participation levels in higher education, the

effect of funding arrangements on the quality and diversity of research and teaching,

changes to management and governance practices, and the increased focus on

commercial operations in the sector. This report was collated based on submissions

from various associations, student representative committees, interest groups, Vice-

Chancellors and individual academics. The report tabled 36 recommendations based

on the areas of concern, most of which required greater public investment in the

sector. For example, the report recommends a review of salary levels, funded

through an increase in public funds, or the increase in government funding to

support on-line courses for undergraduate students. The Senate has yet to comment

on the recommendations of the report.

2.2.8 Higher Education at the Crossroads and Related Papers

In April 2002 the newly appointed Minister for Education, Science and Training, Dr

Brendan Nelson, released a ministerial discussion paper, Higher Education at the

Crossroads. The Minister released the paper to provoke some debate on the

challenges facing universities and to highlight the possible policy choices available.

Minister Nelson (2002a) suggested, “it is time to take stock of where we are, where

we want to go and how we intend to get there” (p. v). This was necessary, according

to the Minister before considering further reform. This paper was the first of


38

several to be released addressing the state of the sector.21 Individuals were invited to

comment on the contents of this discussion paper.

In July 2002 the Minister released another paper, Setting Firm Foundations: Financing

Australian Higher Education. This paper was released to stimulate debate on the

model used to allocate funds to universities. The paper outlines four possible

models for reform. The Minister has invited the community to comment on the

proposed models.

Another paper, Meeting the Challenges: the Governance and Management of Universities was

released by the Minister in August 2002. The purpose of this paper, similar to the

other papers released by the Minister, was to stimulate debate on the HES. This

particular paper was concerned with how Federal Government can help universities

to become more efficient and effective. The paper examines several issues including

governance, management, and workplace relations. In particular, Minister Nelson

criticised the current policy, which required universities to prepare and submit quite

lengthy quality reports in order to receive Federal Government funding. Once

again, individuals have been asked to comment on the issues presented in the paper.

In this section, we discussed Federal Government policy and review of the HES

beginning with the Dawkins reforms. The reviews and their resultant changes are

summarised in Table 2.5. These changes to the sector provide background to this

study.

21 Other discussion papers released as part of the Crossroads review explore the quality of teaching and learning in higher education, the financing of higher education, diversity, specialisation and regional engagement, and achieving outcomes for indigenous Australians in higher education.


39

Table: 2.5 Changes to the Higher Education Sector

Date Reason for change Changes since 1996

1987-1988 1992- 1992 1995 1996 1996 2001 2002

Dawkins Review Karpins Review NCP Hoare Review Budget Cuts West Review Backing Australia’s Ability Senate, the Employment, Workplace Relations, Small Business and Education References Committee Higher Education at the Crossroads: An Overview Paper Setting Firm Foundations: Financing Australian Higher Education Meeting the Challenges: the Governance and Management of Universities

• Unified National System

• Setting of minimum enrolment levels

• Consolidation of institutions

• National Board of Employment, Education and Training

• Australian Research Council

• Strengthening of management of universities (greater focus on more corporate style management)

• Major changes in staffing

• Introduction of Enterprise Bargaining Agreements

• Move of financial burden to individuals and the private sector including user pays concepts

• Decrease in Government Funding

• Increased statistical reporting to DEST

• Educational profile (DEST)

• Increased focus on quality

SOURCE: Developed by the author. 2.3 Research in the Higher Education Sector: An Overview

In completing a PhD study it is traditional to conduct a review of literature to gain

insight into topics that have been researched and to look for ‘loopholes’ or areas

that require further investigation or clarification (Foster & Young, 1997). Further to

this, conducting a literature review in other fields can produce a whole new source

of research ideas in one’s field. The literature review also gives the researcher an

indication of what topics are timely and relevant in the field, and also may suggest

avenues for future research (Foster & Young, 1997). According to Foster and

Young (1997), a further source of research ideas can come from managers in the

field. That is, the researcher can further investigate and examine those management


40

areas that are proving to be a challenge or are of significant interest to managers. In

this study, the research topics chosen emerged from a review of recent literature in

accounting, management, and education journals, and also from interviews

conducted during the pilot phase of the study.

The corporate and commercial environment created by the government policy

described in part one of the chapter calls for universities to change to be able to

address the new challenges presented by the environment. In response to the

competition fostered by the environment, universities have adopted a more

business-like orientation and have imported managerial techniques from the private

sector to become more efficient, effective, and accountable (Broadbent & Laughlin,

1997; Gioia & Thomas, 1996; Hood, 1991; Lawrence & Sharma, 2002). In

particular, there is the view that by modeling accounting practices on the private

sector, universities can become newly effective in their use of resources (Marginson

& Considine, 2000). This implies a shift from the traditional accounting

technologies to a ‘new accounting’ comprised of methods such as program

budgeting, enhanced annual reporting, performance indicators, asset registers,

accrual accounting, performance auditing, and identification of costs (Guthrie, 1991;

Guthrie & Humphrey, 1995).

Traditionally, accounting controls have tended to be studied in isolation from the

organisational and institutional context; that is, the interrelated nature of the

accounting control systems (ACSs) to other systems and their context has not been

considered (Macintosh, 1992). It was asserted in Chapter 1, that this provides a

restricted view of the reasons for how and why accounting controls systems come


41

to be designed in a particular fashion (Flamholtz, 1983; Langfield-Smith, 1997;

Otley, 1994; Otley & Berry, 1980). Consequently, the view taken is that it does not

make sense to only study the ACSs for an understanding of its design and

operation. This thesis extends the focus of the study to the MCS, of which the

accounting controls are just one part. Two other interrelated processes and systems

comprise the MCS studied: strategic planning, and governance and accountability.

The subsequent sections review the literature on the following topics: (1) strategic

planning, (2) governance and accountability, (3) budgeting, and (4) performance

management. These topics were chosen based on their relation to the managerialist

philosophy and their existence in the research site. The literature review provides an

attempt to show what research has already been conducted in the HES, and more

specifically, in an Australian context. Additionally, literature pertaining to the

behavioural implications of the reform of the HES is discussed to provide a more

complete picture of how the reform has affected those working in the sector. From

the literature review, issues for further study will be identified.

2.3.1 Strategic Planning

Recall, that by definition, strategic planning is a process used to establish the

organisation’s goals and the strategies required to attain them (Anthony &

Govindarajan, 2001). Governments argue that strategic planning is critical for the

effective management in the HES to deal with the increasingly complex and

changing environment (Crebert, 2000; Doyle & Lynch, 1976).


42

Shirley (1983) suggests universities can use strategic planning effectively at four

levels: institutional, campus-wide, program, and program level. Institutional

strategies refer to mission statements, goals, and objectives. Campus-wide

functional strategies include those strategies related to resource allocation,

enrolments, admissions and recruitment, human resource development, and

facilities management (see p. 97). The third level of strategy, the program strategy

refers to the preparation of a strategy similar to the one prepared at the institutional

level, however, this strategy should be designed at the business unit level. The final

level, the program-level functional strategies are those strategies used to implement

the program strategy such as recruitment strategies and curriculum change

strategies. To be clear, institutional strategy and campus-wide functional strategies

are designed at the institutional level, however, the program strategies and program

level functional strategies are designed to operate at the subunit level (i.e. Faculty,

School, or Research Centre). To be effective, the institutional strategy must be

integrated with the subordinate strategies (Anthony & Govindarajan, 2001).

Surprisingly, the use of strategic planning is relatively new in the HES (Anderson,

Johnson, & Milligan, 1999; Higher Education Management Review Committee

(Australia), 1995a, 1995b). The following studies have investigated the use of

strategic planning in a higher education context.

Conway, Mackay, and Yorke (1994) conducted an exploratory study to discover the

extent to which new universities and higher education colleges in the UK apply a

market orientation to their strategic planning processes. Specifically, the authors did

a content analysis of 83 mission statements collected from a number of sources


43

including annual reports and prospectuses. The researchers concluded that almost

half of the institutions implied a customer orientation in their strategic plans.

Consequently, they suggested that most of the education institutions in the UK

were not adequately prepared to respond to the commercialised environment.

Anderson, et al. (1999) carried out a study on strategic planning in Australian higher

education institutions. The purpose of the study was to identify the strengths and

weaknesses of individual plans and to report on good practice. The plans were

evaluated using the Hoare Report criteria. Data for this study were collected from

33 universities. Data collection methods included interviews and workshops.

Specifically, data were collected from 12 institutions using interview techniques and

two workshops. The findings reported the following strengths of the existing

processes: all university strategies discussed the social, financial, and political

context, most universities discussed the effect of technological advances, some

universities discussed equity as a goal, most universities had their plans erected on

the web, and some universities had reported that rewards were used to engage the

interest of staff in the planning processes. The limitations reported included: a

failure to link the strategic plans and the university resources, a failure to articulate a

philosophy of education in the plans, a failure to gauge the extent to which staff

were aware of the plans, and a failure to state what their defining characteristics

were in their plans. The findings of the study are shown in Appendix 2.2.

Crebert published an article in 2000 titled, “Links between the Purpose and

Outcomes of Planning: Perceptions of Heads of School at Griffith University.”

This article reports the findings of a pilot study that explored the academic view of


44

business planning at Griffith University. Data were collected using a series of

interviews and nine workshop sessions. Data were collected on the following issues:

the purpose of business and strategic planning, the outcomes of the planning

process, the relationship between purpose and outcomes, how the Heads of School

intended to use the plans, and the involvement of Heads of School in the process.

A number of findings emerged from the study. Firstly, Crebert reports that not all

staff were aware of the purpose of strategic planning in the organization and

because of this the strategic plans had little effect on aligning the strategic direction

of the School. At the lower levels of the organization Crebert reported that people

felt excluded from the vision and mission of the organization and they believed that

a more consultative and participatory model was needed. Finally, it was found that

in order for the business plans to be effective there was a need for greater cohesion

and articulation between the plans at all levels. The paper concluded that although

the systems were problematic, they had served to change the culture by improving

staff awareness to think strategically and compete in the quasi- market environment.

More specific to accounting, Nelson, Bailey, and Nelson (1998) explored the use of

strategic planning for accounting education in the USA. In this paper, they

examined the implications of the recent environmental changes facing accounting

departments including the increased professional requirements, the 150-hour

requirement, and the American Assembly of Collegiate Schools of Business

(AACSB) Accreditation Requirements. The paper described a step-by-step strategic

approach based on models designed by Hofer and Schendel (1978) and Porter

(1985) to be used by accounting departments and schools.


45

In this section, we presented the literature on strategic planning. Four studies were

identified with a strategic planning focus: two of these were conducted in Australia.

Most of the research conducted in this area appears to be qualitative and

exploratory. As mentioned at the outset of the thesis, the purpose of this study is to

get a better understanding of how and why ACSs are designed and operate. The

inclusion of strategic planning in this study is simply to reduce the likelihood that

changes to and from the ACSs will not be appropriately linked to their interrelated

systems. Having said that, this study will also contribute to the relatively small

number of studies on strategic planning in the sector by investigating the

development of strategic planning processes in the subject organisation.

Governance and accountability structures are reviewed next.

2.3.2 Governance and Accountability

Increases in the growth of the sector and decreases in the level of funding have

forced universities to appraise their governance structures to ensure that they are

operating as efficiently and effectively as possible. As intimated in the first part of

this chapter, much of the Federal Government policy has focused on the need to

manage university governance structures and accountability systems. For instance,

the Hoare Report (Higher Education Management Review Committee (Australia),

1995a) highlighted these issues as key management concerns in the sector.

Universities need to satisfy these accountability and governance concerns to secure

government funding and to ensure they continue to receive community support. As

a result, existing structures have been modified (Coy & Pratt, 1998).


46

Australian universities are governed using two levels: the Council, and academic

governance (see commentary by Meek, 1993; Meek & Wood, 1998; Wood & Smith,

1992). The Council, sometimes referred to as the Board of Governors, is the more

powerful of the two. The Council has the power to manage the institution, and also

to devolve responsibilities to subordinates, the senior academic staff.

More commonly, criticisms about the governance and accountability have been

centred around perceived inefficiencies in the institutional structure, inefficient

decision making processes, and a lack of demonstrated managerial competence

(Meek & Wood, 1998). According to Wood & Smith (1992), the composition of the

governing bodies also has particular accountability concerns. Several papers have

been written addressing the above issues. These are now discussed.

Wood and Smith (1992) examined the governing structures of 26 Australian

universities. They surveyed Australian universities to determine the number of

people involved in the governance of the University and their respective positions.

Survey findings indicated that at the time of the study, university governing bodies

ranged in size from 17 to 44, the average being 27. Interestingly, the Higher

Education Policy Statement (Dawkins, 1988) suggests the appropriate size should

be similar to the boards of large private corporations, 10-15 members. Wood and

Smith also found evidence to suggest that the governing bodies were composed

mostly of external constituents rather than internal constituents (for commentary,

see also Meek & Wood, 1998).


47

Meek and Wood (1998) surveyed a number of Executive Officers, Heads of

Departments, and Faculty Deans from various Australian universities. Their 1998

paper focused on the results of the questionnaire in the areas of leadership,

collegiality versus managerialism, academic tenure, and the effectiveness and roles

of Council. The purpose of this survey was to determine what senior managers

viewed to be the main issues and problems of operating the university. The results

of the survey indicated that the Executive Officers, Heads of Departments, and

Deans responded positively to having two levels of leadership: department and

faculty. In addition to this, the Executive participants and the Deans responded

positively to the effective leadership given at this level. Interestingly, two thirds of

the responses given by the Heads of School were not in agreement that the

leadership at this level was effective. This, according to Meek and Wood

demonstrates the tension between the academic staff and the administrators.

The second issue discussed in Meek and Wood’s (1998) paper was the decision

making structures used in the university and whether these were collegial or

managerial. Views expressed indicated that both the Heads of Departments and the

Deans viewed the decision making in their university to be more managerial than

collegial. The majority of Executive Officers (66%), however, responded that

decision-making was collegial. Responses to the topic of academic tenure indicated

that the majority of Executive Officers believed that academic tenure prevents the

university from setting new directions, whilst most of the Heads of Departments

responded that the tenure does little to restrict the setting of new directions. Finally,

the role of the Council was discussed. Unlike all of the other topics, the participants

responded in a similar fashion here. All parties voiced concerns over the Council’s


48

ability to effectively represent the institution to the Federal Government. At the

same time, the results of the survey indicated that all levels disagreed that Council

should be more involved in the running of the university. In sum, the results of this

survey support previous contentions that there has been a break down in the

communication between academic and administrative staff, resulting in greater

tensions between the two. Hence, there is a need to reform or modify these

relationships so that institutional efficiencies can be optimised.

Currie and Vidovich (1998) reported on the governance of American and Australian

universities over a five year period. The study was designed to have academics

describe the extent to which they perceived their university to be collegial or

corporate managerial. Three universities were chosen from each country. In

Australia the sample consisted of the University of Sydney, Murdoch University,

and Edith Cowan University. In the USA the sample consisted of the University of

Arizona, Florida State University, and the University of Louisville. Interviewees

were asked the following three questions: (1) Would you describe decision making

at your university as bureaucratic, democratic, collegial, or something else? (2) Have

there been any changes in the decision-making process over the last five years? (3)

Who or which group of people makes the most important decisions at your

university? Seventy three percent of respondents in the USA indicated the university

used a centralised approach to decision making compared with 59% of Australian

respondents. Over half of the respondents in the USA (63%) and Australia (53%)

had perceived a shift towards more centralised decision making over the last five

years. It was reported that senior executives were more likely to make decisions in


49

universities than middle management, powerful communities, community boards,

or academic councils.

The preceding discussion suggests that although the government cannot dictate the

governance structures used by universities, universities have restructured their

governing bodies over the past decade to accommodate government policies and

changing community pressures, to become more effective in their decision-making,

and to display a higher level of managerial competency. Despite this, concerns as to

how best to govern and manage universities remain (Meek & Wood, 1998). Thus,

one of the aims of this thesis is to investigate how the subject organisation

governance and accountability systems have changed or developed in recent years,

to explore reasons for those changes, and to determine who instigated the changes.

This section reviewed the literature studies conducted on the governance and

accountability structures in the HES. The section reported that universities have

become increasingly managerial in the size and function of their governance boards.

At the same time, a number of studies reported that staff were unhappy about the

way the institutions are run. It appears that there are only a handful of studies that

have researched university governance in Australia, despite the heightened focus on

these systems by government. Furthermore, of those studies that were conducted,

most were conducted using quantitative research approaches such as survey which

allow for findings to be generalised, but do not permit for an in depth

understanding of how and why particular structures exist. This study seeks to

understand how and why the ACSs were designed and operate in a higher education

institution. Thus, the purpose of the study is not to understand the governance


50

structures per se, rather to understand how the design and operation of the

structures are implicated by their relationship with the ACSs. Be that as it may, the

study will also provide for an in depth understanding of how and why the

governance structures came to be fashioned. The next section focuses on the

research conducted on budgeting.

2.3.3 Budgeting

Budgetary systems of public sector organisations are especially important sources of

management control and planning (Emmanuel, Otley, & Merchant, 1990; Funnell &

Cooper, 1998; Jones & Pendleburry, 2000; McKinney, 1995). Traditionally,

budgeting in a public sector context has been defined as “attempts to allocate

financial resources through political processes to serve differing human process”

(Wildavsky, 1975, p. 5). For the most part, budgetary control is achieved through

the matching of actual expenditure with budgeted amounts and the achievement of

organisational goals and objectives. More specifically, budgeting can serve several

purposes in a public sector context including policy direction, mutual contract,

communication, motivational control, monitoring of services, resource allocations,

and accountability.22

Currently, there are five methods available for the allocation of resources in the

public sector. These include the bid system, financial planning systems, planned

programming budgeting systems, or zero based budgeting systems.23 Higher

22 For an expansion of these points see McKinney (1995, pp. 214-220). 23 For details on these methods, see Coombs and Jenkins (1994), Henley, et al. (1989), Hofstede (1981), Jones and Pendleburry (2000), McKinney (1995), and Williams and Carroll (1998).


51

education institutions have traditionally used line item budgeting24 to allocate

resources (Balderston, 1974; Henley et al., 1989; McKinney, 1995). Several papers

have investigated the use of budgeting in a public sector context (Alam &

Lawrence, 1994; Edwards et al., 1995; Goddard, 1997; Hoque, 1995; Jacobs, 1995;

Jönsson, 1982).

Many scholars suggest the budgeting process can have serious behavioural

consequences within an organisation that may reduce their ability to meet their

objectives within the expected expenditure level (see for example, Berry, Broadbent,

& Otley, 1995b; Emmanuel et al., 1990). Indeed, as might be expected, this has

important consequences for the choice of budgeting methods and the development

of the budgeting process. Several behavioural implications were revealed in a

literature review. For instance, Jones and Pendlebury (2000) contend that the

budgeting process can produce conflict or departmentalism between cost centres

(see also, Coombs & Jenkins, 1994). This supports the view that budgeting in the

public sector is a highly political process (Covaleski & Dirsmith, 1986; Hoque &

Hopper, 1994, 1997a; Wildavsky, 1975). On the other hand, Hofstede (1981) claims

the amount of participation in the budgeting process can have significant effects on

employee motivation (see also commentary by Birnberg, Turopolec, & Young,

1992). Equally important, some suggest the budgetary control system can also have

significant behavioural effects, such as the creation of budgetary slack when used

for performance evaluation purposes (Argyris, 1952; Briers & Hirst, 1992; Jones &

24 Langfield-Smith, Thorne, and Hilton (2000) suggest that line item budgeting “occurs when resources are allocated to line items such as salaries, office supplies or telephone expenses” (G.6). For further review on line item budgeting, see McKinney (1995), Anthony and Young (1994), and Balderston (1974).


52

Pendleburry, 2000; McKinney, 1995). Furthermore, many scholars take the view

that the type of budgetary control system applied can result in a manipulation of the

budget figures or ineffective decision-making (Jones & Pendleburry, 2000). There is

also the view that the budgeting process be developed in such a manner to motivate

employees and to achieve the organisational goals (Berry et al., 1995b; Buckley &

McKenna, 1992; Langfield-Smith, 1997; Macintosh, 1992).

It was explained in part one of this chapter, that a large portion of university

funding is Federal Government related. In Australia, the Federal Government

allocates funds to universities using the Relative Funding Model (RFM). This model

allocates funds to individual universities in the form of an operating grant. This is

calculated on the basis of student load or equivalent full time student units

(EFTSU). Appropriately, these funds are differentiated by discipline and course

level (Meek, 1993). In addition to the funding received for teaching purposes, the

Federal Government also allocates funds for research using a competitive grants

index which is calculated on the basis of research load proportions, the number of

postgraduate research students, competitive research grants, and research grants

from other sources (Meek, 1993).25

The use of Federal Government funds and other resources (i.e. research grants

from industry, full-fee paying international students) at an institutional level is

however, highly unprescribed. Be that as it may, budgeting methods used by

individual universities, similar to other public sector institutions, has come under

25 More details of the Government Operating Grant and other sources of revenue can be found in Chapter 8.


53

increased scrutiny over the past two decades and traditional budgeting techniques

have been replaced in favour of the newer techniques more suited to the public

sector environment (Jönsson, 1982).

During the 1970s a host of papers (see for example, Hills & Mahoney, 1978; Manns

& March, 1978; Pfeffer & Moore, 1980; Pfeffer & Salancik, 1978; Said, 1980;

Salancik & Pfeffer, 1974) were written investigating budgeting and resource

allocation methods, primarily in an American context. Then in 1994, the Chartered

Institute of Management Accountants (CIMA) published a book titled Management

Accounting in Universities. This book focused on budget models used in universities in

the UK. It explored issues such as profit centre management, resource allocation

processes, and activity based costing for improved efficiency. The following section

looks at some of the papers in greater detail.

One of the more prominent and critical papers in this area that is that written by

Covaleski and Dirsmith (1988a) titled “The Use of Budgetary Symbols in the

Political Arena: An Historically Informed Field Study.” This paper investigates the

demise of a budgeting system and the creation of a new budget category at a State

college in the USA. Two conclusions were drawn from this paper. First, the

investigations provided strong evidence to suggest that budgets can be used to

justify the organisation’s operations to key persons (i.e. government, other

organisations, customers). Further to this, Covaleski and Dirsmith contend that the

interests of powerful actors and groups within the organisation largely shape the

contents of the budget.


54

Several papers have been written by Doost (1997a, 1997b) to explain budgeting

practices in a US university. In the first of these papers, Doost (1997a) examined

the financial reports of a university to determine if they gave an accurate reflection

of the financial affairs. According to the Vice-President of Finance at the university,

the reports were prepared in accordance with the external reporting requirements.

Doost (1997a), however, suggests that the reports were of little use to the internal

audience (the faculty and administration). Because of this, he suggested that internal

audiences could not be held accountable for the use of university resources.

In a second paper, Doost (1997b) set out to determine how the university overhead

costs were allocated and what the university overhead costs were. Doost identified

that over 41% of the university budget was classified as indirect or overhead costs,

the remaining 59% were classified as direct costs. Based on his investigations, he

reported that indirect costs had been over budgeted by around $29 million.

Consequently, Doost (1997b) made the following recommendations and

conclusions: reporting should be in line with the audience; reporting needs to be in

line with how faculty time and effort are expended; for the purpose of reporting,

overhead costs should be allocated to the same accounts; overhead costs should be

clear and follow a certain pattern; comparative data needs to be prepared between

the budget and the actual data and between years; data prepared should be

complemented with additional information such as student statistics and cost per

student; overhead budget allocations should be broken down into instruction,

research, and service components; university performance should be compared with

other institutions; and the university should validate their performance with a series

of outcome measures.


55

Set in a UK context, Jones (1994a) investigated how three British universities

accommodated changes in their external environment, in particular, from

government policy. The focus of this study was on organisational structures and

resource allocation models. Jones discovered that each of the universities responded

to government polity pressures in different ways. There were, however,

consistencies that existed: all had a top-down approach to management; final

budget allocations were incremental or historical; and all operated with extensive

committee structures.

Bourn wrote a paper in 1994 commenting on the evolution of devolution in

universities. In this paper, Bourn provided a historical rendition of the higher

education environment in the UK and then went on to discuss the traditional

methods of resource allocation and control. From here, he used the University of

Southampton to provide evidence of how one university’s system evolved. Bourn

(1994) concluded, “a university’s structure and processes are influenced by its need

to shape a strategy which responds to the environment in which it operates” (p. 23).

Thomas (1999) carried out a case study to investigate the use of formula-based

systems of resource allocation in a higher education institution in the UK.

Specifically, he commented on the degree to which higher education institutions

imitate formula-based resource allocation models of external funding bodies, and

the degree to which those models should be used as an allocation basis or merely as

an aid to managerial decision-making. He concluded that the adoption of external

funding models are not in their own right sufficient for allocating resources within

higher education institutions. Instead, Thomas proposes that they be used as an aid,


56

and that models should be developed according to the individual resource

requirements of the institution.

Thomas (2000) also published an article that examined the implications of adopting

devolved formulaic budgeting systems for the power and influence of key senior

managers. Using the case study method, he studied the use and consequences of the

budget system in the departments of two universities. He wrote of the changes in

both institutions from a centralised budget methodology to devolved formula based

systems. Thomas concluded the article by identifying the following implications for

institutional managers resulting from the devolved, formula based system: the

process was still subject to micro-political activity, especially at the sub-unit level;

external methodologies may not be entirely rational, and these can therefore

increase micro-political activity; for effective implementation the devolved model

needs to be easily understood by those holding responsibility for the budget; under

a devolved system decisions may be motivated by financial rather than academic

considerations; those holding budget responsibility have increased power; when

resources are devolved, managers may not have the requisite skills to make

decisions and use resources effectively.

Angluin and Scapens (2000) carried out a survey to determine how resource

allocation processes were perceived and understood by accounting and finance

departments in UK universities. Fifty-two responses were received from a sample

population of 88. The results of this study suggest a number of different uses of

financial information between institutions and different levels of transparency exist

within institutions. This implies the universities did not operate as a homogenous


57

group. More importantly, Angluin and Scapens (2000) suggest that academics were

more likely to perceive the resource allocation to be fair when a high degree of

transparency existed.

Scott (2001) critically evaluated the use of devolved budgeting in further education

colleges in the UK. The article focuses on the power implications of devolving

budgets to middle managers. The advantages highlighted in the article included

greater flexibility for the effective use of resources, increased cost consciousness,

and the carry forward of surpluses. The concerns identified from devolving the

budget to middle management included the clawback of unspent budgets, a lack of

training for managing the budgets, and a lack of information to control the budgets.

Notwithstanding this, Scott (2001) concluded that devolved budgeting could result

in greater efficiencies if the middle management roles and the organisational culture

are considered prior to implementation.

Goodwin and de Gouw (1997) surveyed 147 heads of departments and 80

administrators from seven New Zealand universities to find out the determinants of

attitudinal responses to the resource allocation processes used in the respective

institutions. The significant finding of this study was that despite a significant

relationship between budgetary communication and influence over goals, Goodwin

and de Gouw found that this had little to no bearing on the budgetary response

attitudes of the administrative staff surveyed.

More specific to the Australian higher education environment, Piper wrote a brief

paper in 1995, detailing the use of performance related funding within universities.


58

This paper identified four types of funding used by universities including capitation,

categorical, initiative, and incentive. Both initiative and incentive funding was

further identified as performance related funding. The author posed the following

research questions: (1) Are universities adopting a similar raft of funding

mechanisms internally, using a combination of all four types? (2) If they are, what

proportion of the funds are distributed by each of the four types? (3) What are the

implications? (4) Does the adoption of a different combination of funding

procedures make any difference to the amount of money the sub-units get? (5)

Does it make any difference to the way in which the subunits spend the money they

receive? Although the article posed several questions it was not the intention of the

author to answer these rather the article was purely descriptive written to instigate

some discussion on the topic.

Watts wrote two papers in 1996 dedicated to understanding the budgeting

implications of the reform of education in Australia. Specifically, he focused on the

change in resource allocation and the creation of budgetary slack in universities. In

his first paper, Watts (1996a) examined the changes to budgetary practice across

Australian Tertiary Institutions since the demise of the binary system in 1988. Watts

(1996a) argued that the reform of the HES in conjunction with the obsolescence of

many traditional management techniques led to a need for new budgeting

techniques. Specifically, he claimed that universities have replaced their traditional

budgeting systems with the RFM or elements of the RFM because of the forced

amalgamations, the transformation of universities, resource constraints, time and

budgeting pressures, dependent behaviours, increased accountability, a change in


59

the perception of rationality26 and legitimacy, improved technologies, and

institutional behaviours.27 The interesting thing that Watt’s noted about the RFM is

the fact that it was developed to be used at a system wide level, and even though the

Commonwealth Government stressed that this model should not be used at an

institutional level, universities continue to import it into their own institutions.28

Watts concluded that universities adopted the RFM for two reasons. First, to give

the impression that rational, legitimate budgeting occurred while the universities

were actually in a state of flux. Second, the RFM was being used by individual

institutions because of a lack of information about teaching and research costs.

These costs, he explained, are required for the development of a budgeting

methodology that more adequately addresses the institutions requirements. By

adopting the RFM Watts suggests that universities ensured that they would continue

to receive government funding.

Watts’ second paper (1996b) reported the results of a field study that investigated

the creation of slack by academic budget managers. In particular, the paper

investigated whether slack was created within schools and faculties, and how and

why this slack was created. In contrast to Young (1985) and Lukka (1998), Watts

(1996b) contends that there was little evidence to support claims that participation

and performance evaluation lead to the creation of slack in universities. Watts also

revealed that budget managers appeared to be more focused on teaching, research,

and research training to be concerned with budget performance. Watts (1996b)

26 This suggests that the concept of what is rational is socially constructed. Hardy (1991 see, p. 130) takes this further claiming that rationality is conceived according to one’s experiences, and because of this may be unconsciously biased. 27 For additional details on the adoption of the RFM at an institutional level, see Meek (1993). 28 For further discussion on this, see Koder (1992).


60

identified three reasons for creating budgetary slack: budget managers introduce

slack in their budgets to give them a degree of flexibility in meeting their

departmental objectives; to allow them to pursue specific academic goals; and to act

as a buffer in case of reduced funding allocations. In this context, budget managers

revealed the use of five methods to create slack in their budgets. These included

budgeting to fill all of the full-time positions, keeping income from fee-paying

programs in discretionary accounts outside the operating budget, paying

development and service costs from recurrent budgets, negotiating separate

allocations for equipment and building works with supplies, and budgeting for the

refurbishment of existing offices used the capital cost of new works (Watts, 1996b,

p. 15). The author therefore concluded that a university should review current

budgeting procedures to increase the flexibility of the budgeting process and to

improve managements’ ability to meet specific goals and objectives.

Recently, Walker (2000) wrote a paper titled “Statutory Budgetary and Financial

Reporting by Australian Universities.” In this paper, Walker investigated New South

Wales universities compliance with the NSW Annual Reports Act 1984 and other

requirements (i.e. Department of Education, Science and Training (DEST)

reporting requirements and Australian Accounting Standards). The NSW Annual

Reports Act requires that in addition to the standard financial statements (i.e. profit

and loss statement, statement of cash flows and balance sheet), government

authorities should also include budget forecasts of their operations. This act was

introduced to ‘fill’ or ‘round out’ the picture of the financial affairs of government

authorities for external stakeholders. In a review of university annual reports,

Walker found evidence to suggest that the universities were not meeting all of the


61

reporting requirements. In fact, some university annual reports neglected to include

the budgets at all. Based on his analysis of reports, Walker (2000) commented

“Budget presentations are currently confused presentation, combining reports on

line items or functions of internal allocations, and presenting numbers which are a

mix of cash-based and accrual-based measures, with the odd inter-fund transfer

thrown in” (p. 11). Walker concluded that the current budgeting statements (if)

prepared by the universities did little to satisfy or improve the stakeholders

understanding of their financial affairs. Furthermore, Walker speculated that

universities use budgets to authorise expenditure and not as a planning device or a

means to discharge their accountability to external stakeholders as originally

proposed by Emmanuel, et al. (1990).

This section reviewed budget literature. Numerous studies concerned with budget

models were reported; four were in an Australian context. Despite this, budgeting in

universities, especially at the institutional level in Australia, remains to be what

could only be described as a highly controversial and timely issue for discussion.

The review of budgetary literature suggests there is still significant scope and

opportunity for understanding budget systems in the HES. As Angluin and Scapens

(2000) observed, “Despite the amount of public expenditure involved, knowledge

of how universities allocate resources appears to be largely restricted to those

responsible for the processes” (p. 2). The results of this review further support

Angluin and Scapen’s contention that the studies or papers that have been

published have tended to be focused on reporting good practice and that they are

more likely to be a recollection of formal policy than of actual practice. It appears

that this has particularly been the case in Australia. This thesis provides an attempt


62

to address this gap by providing rich and detailed descriptions of the budgeting

processes used in one of the larger higher education institutions in Australia.

Furthermore, unlike the studies reported in this section, this study will investigate

how and why these systems were designed and operate as part of an interrelated

control mix, and not as an isolated system.

Performance management has commonly been linked to budgeting (see for

example, Otley, 1999). As indicated earlier, greater emphasis on accountability, the

reductions in government funding, and the push for greater efficiencies, has forced

universities to appraise their operations using various forms of performance

measurement such as benchmarking. Accordingly, the following section details a

review of recent literature on this topic.

2.3.4 Performance Management

In order to understand the operation of the MCS, Otley (1999) recommends that

one needs to “look beyond the measurement of performance to the management of

performance” (p. 364). Emmanuel et al. (1990) claim that performance management

is an essential component of an organisation’s MCS.

Traditionally, performance management systems were focused on financial

performance (Emmanuel et al., 1990; Evans & Bellamy, 1995; Ittner & Larcker,

1998; McKinney, 1995; Otley, 1999). However, in recent decades there has been

increased emphasis placed on the use of multiple non-financial and financial

measures for the achievement of an organisation’s objectives (Evans & Bellamy,

1998; Ittner & Larcker, 1998; Kaplan & Norton, 1992, 1996; Williams, 1998).


63

Consequently, it has also been suggested that these measures be tied to the

organisation’s budget and strategy if they are to be effective (Kaplan & Norton,

1992, 1996; McKinney, 1995; Otley, 1990; Williams, 1998). For instance, Otley

(1999, pp. 365-366) suggests that there are five questions that must be addressed

when developing an organisational performance management system. These are:

1. What are the key objectives that are central to the organisation’s overall future success, and how does it go about evaluating its achievement for each of these objectives?

2. What strategies and plans has the organisation adopted and what are the

processes and activities that it has decided will be required for it to successfully implement these? How does it assess and measure the performance of these activities?

3. What level of performance does the organisation need to achieve in each of the

areas defined in the above two questions and how does it go about setting the appropriate performance targets for them?

4. What rewards will managers (and other employees) gain by achieving these

performance targets? 5. What are the information flows that are necessary to enable the organisation to

learn from its experience, and to adapt its current behavior in the light of that experience?

As suggested previously, performance management has been a major thrust of the

NPM (Evans & Bellamy, 1995; Kouzmin, Löffler, Klages, & Korac-Kakabadse,

1999). This is consistent with the view that performance management is related to

an organisations ability to become more efficient and effective (Emmanuel et al.,

1990; Evans & Bellamy, 1995).

In order to comply with the NPM culture and with the recommendations of the

Green Paper (Dawkins, 1987), the White Paper (Dawkins, 1988) and Hoare Report

(Higher Education Management Review Committee (Australia), 1995a), Australian

universities have introduced forms of performance management. The Higher


64

Education Division (Higher Education Council, 1998a) of the Department of

Education, Training and Youth Affairs claim that universities turned to

performance indicators to guide students in their decision to enrol in their

institution, to compare their performance with other institutions, to represent the

diversity between institutions, to contribute to public accountability, and to assist in

the development of future education policies (Taylor, 2001). The report of a study

carried out in 1991 to develop and trial quantitative indicators to measure the

performance of universities at both a system level and an institution level suggest

performance indicators can satisfy a range of purposes in a university context

including “assessing the impact of educational reform, monitoring standards and

trends, providing feedback to staff with a view to enabling them to develop and

improve their practice, manipulating funding and assisting with the internal

management, and routine monitoring of departmental and institutional

performance” (Hattie, Adams, Tognolini, & Curtis, 1991, p. 6).

Similar changes to those made in Australia have been noted in other countries. For

example, in the UK standard performance measures are used by academic staff to

gauge performance. This is required by the Higher Education Funding Council

(HEFC). The consequence of such reforms is that staff have been forced to take on

a self-audit role of both teaching and research performance (Power, 1997).

Notwithstanding this, Coaldrake and Stedman (1998) contend that this new interest

in performance has not been readily accepted in the HES. They claim the outcomes

of university teaching are difficult to measure (see for example, Doost, 1997a;

Johnes, 1996; Madden, Savage, & Kemp, 1997; Power, 1997) and thus question the


65

appropriateness of using performance measurement in universities. There has also

been considerable debate about how, if measured, the results of performance are to

be used, and the validity of those results, especially as measures of quality (Power,

1997). Moses (1989) has also delved into these issues proclaiming that performance

management systems need to be tailored to the unique environment within which

the university operates. Furthermore, she concluded that regular performance

measurement of academic staff is impossible due to the nature of their working

environment. Hughs and Sohler (1992) also drew similar conclusions. They

investigated the merits of using performance management systems at the University

of New South Wales. They concluded that the university-operating environment

limited the university’s aptitude for adopting performance measurement principles

applied in the private sector. Sizer, Spee, and Bormans (1992), also support this

view stating: “the role of performance indicators in higher education depends on

the political culture, the educational funding systems and the quality assessment

procedures that determine the optimal allocation of resources in a particular

country” (p. 133).

More recently, the NBEET (1996) identified three measures of performance

including efficiency measures, effectiveness measures, and quality of performance

measures suitable for performance measurement within universities. They go on to

state that efficiency is dependent on the relationship between the inputs and

outcomes, and effectiveness is the extent to which the organisational goals have

been met.


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Recently, universities have shown an increasing interest in benchmarking as a form

of performance measurement. Reasons for this sudden interest vary. For example,

Cotter (1997) claims that the HES has introduced benchmarking, in response to the

pressures to incorporate business practices into the sector. By contrast, Epper

(1999) suggests that universities have been implementing benchmarking into their

administrative structures to remain competitive. From a broader perspective,

Kouzmin et al. (1999) claim that public sector organisations have turned to

benchmarking for two reasons: to assess organisational performance, and to learn

from other benchmarked organisations on how best to improve their organisational

performance (Kouzmin et al., 1999).

A review of recent accounting, management, and education journals revealed that

while there has been a widespread interest on performance management in the

education sector, few empirical studies have investigated the use of performance

management systems in a higher educational context.

Johnes wrote an article in 1996 investigating performance assessment in higher

education in Britain. Similar to the Australian government push for greater

accountability and efficiency, the UK has been subject to similar reform; in

particular, the government recommended the calculation and publication of

performance measures to increase the efficiency of the sector. Consequently, Johnes

explored the development and interpretation of performance measures for use by

universities in her paper titled “Performance Assessment in Higher Education in

Britain.” Johnes claims the multiple objectives nature of a university requires the


67

development of multiple indicators. Furthermore, she suggests that this can lead to

large quantities of information that are often difficult to interpret.

In order to construct appropriate measures, Johnes drew on production theories,

which examine the relationship between inputs and outputs. Accordingly, she

identified the university outputs to be: output from teaching activities, output from

research activity, output from consultancy, and cultural and social outputs (p. 21).

University inputs were defined as raw materials, labour services, human capital

services, physical capital services, consumables, institutional characteristics, and

environmental factors. Using multiple regression to identify the group of inputs that

explain the largest proportion of variation in a particular output measure, Johnes

was able to identify the following variables as having the greatest explanatory

power: graduates entering employment and university subject mix; degree of

academic success of students and entry level scores; percentage of first and second

class honours and library expenditure, location, and age; university non-completion

rate and subject mix; university weighted research rating and student/staff ratio; and

geographical location. Johnes reached two main conclusions in this study. First, she

suggested that a failure to include university inputs for assessing the efficiency of a

university could lead to a misleading interpretation of performance. In addition to

this, Johnes stressed that the use of regression analysis as a method of identifying

performance indicators should also take into account the subjective opinions of

those applying this method.

Lord, Robb, and Shanahan wrote an article in 1998 investigating the use of

performance measurement systems in university management . Despite the fact that


68

this paper investigated the use of performance indicators in New Zealand, the paper

offered some interesting insights on the subject. Of particular interest were the

authors concluding comments that not all activities are able to be assessed using

mechanistic measures and therefore other measures should be used. In addition to

this, the authors commented on a range of issues including the benefits to be gained

from the use of performance measures in the education sector and the definition of

measures. Clearly, the key contribution of the paper was the performance

measurement system that was developed by employees interviewed during the

study. The development of such a system emphasised the need for the performance

measures to be tailored to their individual environment.

A more recent article, written by Amaratunga and Baldry (2000) investigated the

characteristics of the performance evaluation of higher education properties and

developed a framework based on Kaplan and Norton’s (1992, 1996) balanced

scorecard to measure the performance of higher education institutions. The

underpinning assumption of Amaratunga and Baldry’s article is that facilities

management can be used to increase the efficiency of organisational activities.

Hence, the authors suggest that by monitoring the facilities management

performance a university can improve the efficiency of their operations. In this

paper, Amaratunga and Baldry, explored the use of the balanced scorecard as a

technique for performance evaluation. They developed a balanced scorecard based

on responses to interviews and a survey of a university facilities management

department. This scorecard identified the critical success factors of the unit and

developed corresponding performance measures to evaluate those factors. For

instance, customer satisfaction was identified to be a critical factor for determining


69

the success of the facilities management department. Consequently, value for

money, higher performance professionals, personalised quality services, range of

services offered, quality of service, reaction to the customers’ needs, and high

performance professionals were devised as measures of customer satisfaction. The

authors concluded that the use of the balanced scorecard offered significant

advantages to performance management including a feedback loop in the process of

strategic change, improved communication and teamwork, improved employee

commitment, and improved feedback and learning.

Lawrence and Sharma published a paper in 2002 titled, “Commodification of

Education and Academic Labour-Using the Balanced Scorecard in a University

Setting.” In this paper they described the impact of policy changes on university

administration. In particular, Lawrence and Sharma used a case study approach to

document the importation of private sector managerialist approaches including

Total Quality Management and the balanced scorecard into a Fiji University. They

found that the balanced scorecard had been introduced in the university as a

response to the State’s commitment to efficiency and effectiveness; its

implementation mirrored societal trends.

In Australia, few papers have investigated the use of performance measures in the

HES. Recently Taylor (2001) published a paper titled, “The Impact of Performance

Indicators on the Work of University Academics: Evidence from Australian

Universities.” This study surveyed 152 academics to try and understand how

attitudes had changed towards teaching and research with the introduction of

performance indicators. Taylor observed that the focus on incentives for improving


70

research performance had possibly led to a change in academic attitudes favouring

research at the expense of teaching. Furthermore, she suggests the mandatory

application of some performance indicators can and has been applied superficially

within universities to satisfy compliance requirements with little regard for quality

concerns. To conclude, Taylor (2001, p. 58) suggests universities should be using

indicators, which have a functional purpose and not merely a cosmetic.

Vidovich and Currie (1998) carried out a study between 1994 and 1995 to

understand the changing nature of academic work. The study focused on two

issues: accountability and autonomy. The study was carried out by interviewing

academics at three Australian universities: Sydney, Murdoch, and Edith Cowan. The

findings of these interviews suggested that many of the participants had experienced

increased accountability since 1990. A large percentage (44-52%) of the respondents

believed the increased accountability requirements to be internally generated; the

remaining respondents suggested the pressures for increased accountability were

derived from external sources. Vidovich and Currie were able to further breakdown

these responses according to position. They found that senior managers perceived

the accountability requirements to be externally sourced, while junior staff believed

them to be internally sourced. In this study it was found that accountability for

teaching was measured using course evaluation surveys. Interviewees, however,

expressed validity and reliability concerns about using surveys to measure their

performance. Accountability for research, on the other hand, was reported to be

measured by the number of publications. Many study respondents suggested these

reporting requirements had increased significantly and as a result expressed anger


71

and resistance. The second issue discussed was autonomy. Staff expressed serious

concerns over both the autonomy of teaching and research.

Lafferty and Fleming (2000) wrote a paper in 2000 investigating how the

restructuring of the Australian university system changed the work conducted by

academic staff. In this article they suggest that corporate managerialism and

increased competition has resulted in a more intense regulation of academic work.

In their study they concentrated, in particular, on how competition in the sector has

undermined Equal Employment Opportunity Initiatives. Using Commonwealth

data, various DEST reports, three case studies, and secondary literature they

demonstrated that women hold the lowest paid and least secure jobs in universities

in Australia. They claim that whilst there is significant performance management

occurring at the junior levels of universities (i.e. those positions mostly held by

women), senior levels remain relatively untouched by the initiatives.

In addition, two recent publications funded by DEST explore the use of

performance measures in the HES (Higher Education Council, 1998a; Higher

Education Division, 2000). The first paper titled The Characteristics and Performance of

Higher Education Institutions describes the use of performance indicators in the HES.

It states:

The indicators provide a measure of the common features of higher education institutions as well as their diversity. They also reveal a number of aspects of the student experience at higher education institutions and assess the performance of institutions in several areas that are relevant to the core purposes of higher education institutions. Other indicators, particularly those related to the financial performance of institutions, attempt to gauge the resource available to institutions.

(Higher Education Council, 1998a, p. 1)


72

This paper gave a brief overview of the higher education background followed by a

discussion of possible performance indicators aimed at increasing the efficiency and

effectiveness of universities. Indicators given in the paper include a selection of

broad context indicators, staff indicators, finance indicators, and outcome

indicators. The performance indicators were devised simply as a guide for

measuring teaching and research activities.

The second publication published by DEST titled Benchmarking: a manual for

Australian universities (McKinnon, Walker, & Davis, 2000) was written for three

reasons: to provide senior management with the tools to measure the performance

trends of the university; to provide groups of universities wishing to compare

performance with comparable measures; and to allow universities to compare their

position with other universities. The objective of the manual was to identify the

most important aspects of university operations and to benchmark those aspects. In

all, 67 benchmarks were included in the manual covering a range of topics including

governance, planning and management, external impact, finance and physical

infrastructure, learning and teaching, student support, research, library and

information services, internationalisation, and staff.

This section presented the literature on performance management. It was shown

that whilst there is increasing emphasis on performance management in higher

education, few have studied how these systems came to be fashioned and how they

operate, in particular in the Australian HES. As an integral component of the ACSs,

this thesis seeks to document how and why the performance management system

came to exist in the subject organisation. More specifically, it will determine how


73

performance is measured, the type of measures that are used and finally, whether

these have been developed to support strategic initiatives and other recent changes.

2.3.5 Behavioural Implications

This new academic environment (which, it was argued, has been imposed on staff) was, as intended, considerably more managerial and bureaucratic than before, this at a time when there was a rapid rise in student enrolment numbers. These two aspects of the reform process, have, it is suggested, put increasing strain on university staff. (Taylor, 1998, p. 256)

As suggested in the previous quote, the staff or employees of the universities have

been subjected to enormous amounts of pressure from the changes in higher

education institutions (Taylor, 1998; Taylor et al., 1998). For the most part, as will

become obvious in later chapters of this thesis, this change stems from increasing

pressures to become more commercial.

In the last few years, academics have raised concerns over time, workload and

morale pressures, performance pressures, professional standards and accountability

pressures, staffing policy pressures, specialised academic work pressures, and the

pressures from a blurring of academic roles (Coaldrake & Stedman, 1998; see also

Langtry, 2000). With some exception, these pressures are thought to originate from

Federal Government policy to commercialise the education sector. Clearly, senior

personnel (i.e. the Vice-Chancellor, Pro-Vice-Chancellor) need to manage their

human resources during periods of change and uncertainty, if changes are to be

accepted in the organisation (for a discussion, see McInnis, 1998). It is widely

acknowledged that the management of personnel is especially important in a

university environment because of the fact that universities are labour intensive and


74

because of the perceived separation between the performance of employees and the

performance of the organisation as a whole (Coaldrake & Stedman, 1998).

McInnis, Powles, and Anwyl (1995) carried out a study in 1993-1994 to investigate

how academics viewed the changes occurring within the sector since 1988. Over

half of the respondents (63%) disagreed that the reforms had increased the

efficiency and effectiveness of the sector. More importantly, perhaps, the study also

revealed that morale tended to be low amongst academics. This according to

Bessant (1996) could be attributed to a decrease in working conditions including

low salaries, increased workloads, and the increased employment of casual staff.

McInnis (1998) conducted another study in May 1996 to gauge the difference in the

perceptions of administrative staff and academics with reference to the rapidly

changing university environment. The 1996 study surveyed administrative staff on

the following topics: educational backgrounds, the values and motives that influence

their work roles and outlooks, their views of the work activities, their opinions on

the major purposes of the universities, and their positions on current issues in

higher education. The results of this study were compared with the results of a

previous study conducted by McInnis in 1993 (see, McInnis, 1995 for details of this

study). The general indication of the results was that administrators were more

satisfied with their work environment than were academics (for specifics see,

McInnis, 1998, pp. 164-167). McInnis identified the real source of tension within

the university to be the differing perceptions between administrators and academics

on the work conditions and styles of academics. For instance, McInnis recorded

that 47% of administrative responses indicated that they believed that academic


75

attitudes were a hindrance to more effective management styles. Not surprisingly,

only 28% of administrators agreed that the relationship between administrators and

academics was positive. Overall, McInnis concluded that most administrators tend

to view their relationships with academics as negative. This he (McInnis, 1998)

states is an issue of great concern because of “their key influence in the capacity of

universities to transform themselves in the face of declining public funding and

increasing exposure to competitive market forces” (p. 170).

Taylor et al. (1998) also carried out a crucial study that examined staff perceptions

of the HES reforms. This study focused on staff perceptions at three universities:

Adelaide University, Monash University, and Canberra University. Participants in

the study were asked to complete a questionnaire covering three specific issues:

quality, teaching and research, and academic freedom. The researchers received

negative feedback for the quality of teaching, research, and the standard of final

award students. Pivotal reasons given for a decline in quality were increased student

enrolments and decreased resource and funding arrangements. Similar responses

were received about the status of teaching. Again, reasons given tended to reflect

mass education, fewer resources, and increased administrative tasks. Responses to

the degree of research opportunities also suggested there was dissatisfaction with

the current state of research in the universities surveyed. Taylor et al. (1998, p. 263)

claim that some participants had commented that competition for resources for

research was not always healthy, and had at times reduced their ability to carry out

research. Furthermore, Taylor et al. found that some respondents were finding it

difficult to find time to fill out grant applications, let alone to carry out research as

well as a full teaching workload. Finally, participants rated poorly questions about


76

their academic freedom. Participants responded that economic pressures and

university management has reduced their academic freedom. The authors concluded

that universities need to address a range of concerns remaining from the reform of

the sector including improving the status of teaching, the need for increased

academic freedom and less time consuming collegial decision making, the need for

management flexibility, and also the need for an improved quality of teaching.

In 2000 Winter, Taylor, and Sarros published a paper detailing a study conducted to

assess the positive and negative impact of managerialism in Australia. In this study,

Winter et al. designed a survey to provide for an understanding of the relationships

between and among academics’ demographic characteristics, work environment

perceptions, and work related attitudes. They distributed the survey to 319 full-time

academic staff at Chevron University in southeast Australia. One hundred and

eighty-nine responses were received. The evidence highlighted several positive

aspects about the quality of academic work life including high levels of task identity,

autonomy and job challenge, and academic role clarity. Conversely, low levels of job

feedback, role stress, increased workloads, time pressures, and resource constraints

were identified as the demoralising implications of managerialism.

Similarly, Meek and Wood (1998) claim the move to incorporate many of the

private sector management strategies has created a great deal of pressure among the

managers of the universities. Specifically, the results of their study suggest conflict

and alienation are some of the more serious problems faced by management. It has

been suggested elsewhere (McHugh & Brennan, 1994) that employees in the public


77

sector feel a sense of powerlessness and large amounts of stress from trying to cope

with the high levels of change in their organisations.

Changes to managerial roles have also added to this pressure. For instance, Meek

and Wood (1997) contend that the Office of Vice-Chancellor has strengthened

immeasurably, and there has been an increase in the number and roles of the Pro-

Vice-Chancellor (see also, Meek & Wood, 1998). Many universities have now

expanded their faculties and these faculties have had to become more responsible

for their financial and administrative responsibilities. This has resulted in increased

pressures for the Heads of Department who are now responsible for a wider range

of activities including staff supervision, budgeting, student recruitment, and quality

assurance (Meek & Wood, 1997, p. 3).

Following the above, Coaldrake (1999) suggests that the changes in the HES has led

to conflict between senior managers and administrative staff. The main source of

this conflict, he suggested are the different perceptions of the changes occurring

held by senior people (i.e. Vice-Chancellor, Pro-Vice-Chancellor, Dean, Heads of

School) and those held by the day-to-day administrators. According to Coaldrake,

there is no widespread solution that would overcome this problem, rather the

conflict must be addressed by individual universities allowing them to account for

their individual operating environments.

This section described some of the behavioural implications from the change in the

higher education environment. In particular, the literature review provided evidence

to suggest that the introduction of NPM technologies within the sector, whether


78

they were from direct coercive pressures such as government policy (i.e. Dawkins

reform) or from indirect pressures have not been widely accepted by staff. For

instance, almost all of the authors commented on the increased tensions between

academics and administrators and between senior administrators and their staff

from the change in technologies. What became apparent from this review is that the

findings tended to be generalised for a change in operating environments; the

authors did not highlight specific technologies and practices that had caused the

change in employee attitude. This study will investigate staff perceptions of the new

accounting technologies and interrelated control systems to gauge employee

reactions and attitudes towards their implementation. In this way, the study intends

to add to the existing research in the field. The view taken in this thesis is that one

cannot fully assess the impact of accounting technologies without considering the

behavioural responses of the information producers and users, in this case the

administrative and academic staff. This view is consistent with Guthrie and Parker

(1990).

2.4 Summary and Potential Research Issues

The literature review revealed several pressing issues. First, when studied, the ACSs

tended to be studied in isolation. This study will address this gap by studying the

ACSs as part of an interrelated control system. Second, many of the studies

reviewed adopted a quantitative approach, which did not allow for an in-depth

understanding of how and why the systems came to be designed and fashioned. In

particular, many studies were conducted so that findings could be generalised for

the sector. This suggests there is significant scope for qualitative approaches such as

the case study approach, which should allow for a more holistic analysis. Third,


79

most of the studies reviewed were set in the UK or the USA, few were found to be

conducted in an Australian context. Whilst, the trend for NPM is reported to be

international, the pressures are arguably specific to the needs, and culture of the

country. The literature review indicates therefore that there is opportunity for

studying the design and operation of the MCS in an Australian context. The

findings of the literature review have been summarised in Appendix 2.2.

In conclusion, the current field study will investigate the design and operation of the

ACSs in a single university, as part of interrelated MCSs. The reform of the HES

detailed in this chapter will be used in subsequent case analysis as background to the

study. The next chapter provides a description of the theoretical framework used in

this study to guide data collection and make sense of the research findings. Based

on a processual approach, the framework combines a number of organisational and

sociological theories such as institutional theories, strategic choice theories,

resistance theories, and power and political theories to provide a more complete

explanation of change. Each theory was chosen based on its ability to provide a

partial explanation for what was going on in the organisation.

80

TThheeoorreettiiccaall FFrraammeewwoorrkk

3.0 Introduction

Chapter 2 provided a description of the public sector and more specifically the

HES. It also provided an overview of the literature relevant to the study of the

management control system (MCS) in this context. The purpose of this chapter is to

develop a theoretical framework for use in understanding the research phenomena

in question. The framework draws on insights from multiple strands of

organisational and sociological theories: resource dependence theory, legitimacy

aspects of institutional theory, strategic choice theory, political and power theories,

and resistance theories. Such a framework is expected to help to tease out the

dynamics of the processes of change and encourage an understanding of the micro

processes of institutionalisation to emerge. Although much of the focus of the

chapter is on the intra-organisational dynamics, contextual pressures for change are

not dismissed. Irrespective of this, it should be recognised at the outset that the

researcher makes no claim as to this being the only, or even a superior theoretical

approach. However, it does provide a potentially useful framework for

understanding the design and operation of accounting control systems (ACSs) in an

organisation subject to incessant pressures for change.

3


81

This chapter is divided into four subsequent sections. The first section discusses the

role of theory in research. It describes the various approaches available and then

discusses the approach used in this study. The next section focuses on institutional

theories. First, it outlines the origins and underpinning assumptions of the old

institutionalism and the new institutionalism.29 The chapter then discusses how

institutional theories can be used to inform studies of accounting change. Following

this, limitations of the theory for informing this study are noted. Attempting to

overcome the limitations and criticisms of the old and new institutional theory, the

third section of the chapter outlines the notions of power, leadership, and resistance

to get a more complete picture of the change processes. Each of these theories was

chosen based on its ability to inform different aspects of change. The fourth section

outlines the framework used to make sense of how and why the ACSs were

fashioned, acknowledging the other interrelated systems in the subject organisation.

The final section justifies the theoretical framework utilised in this study.

3.1 The Role of Theories in Research

Theories play an important role in all sorts of research. They guide research, help

the researcher to understand and analyse phenomena, and provide a basis for

prediction (Hoy & Miskel, 1987; Schensul, Schensul, & LeCompte, 1999; Schwandt,

1993). Further to this, theories also allow the researcher to view phenomena from a

new perspective, possibly enabling them to capture data they may have missed

(Benson & Vidich, 1970). In their most basic sense, they determine which actions

29 It should be noted that while much attention in the social sciences has focused on determining the difference between the old and new institutional theories (see for example, DiMaggio & Powell, 1983; Scott, 1987, 1995) this chapter is concerned not with the differences between these theories, but rather with how their individual insights can be used as a basis for understanding organisational behaviour.


82

and events the researcher will focus on (Mills, 1993). From a qualitative research

point of view, Humphrey and Scapens (1996) define a theory as a “means of

interpreting or making sense of a complex and uncertain social world” (p. 97). Mills

(1993) uses a similar definition: “theory is an analytical and interpretive framework

that helps the researcher make sense of ‘what is going on’ in the social setting being

studied” (p. 103). Going further, Czarniawska (1997, p. 71) states, “Theories can be

seen as conversational devices, which facilitate conversation by imposing cohesion

and stability on interpretations that are being negotiated.”

When conducting a study the researcher has the choice of either drawing on

preordained theories, developing a theoretical framework using a variety of

theoretical perspectives and any information gained in the study, or building a new

theory during the study based on the analysis of data collected. Whatever the case,

Layder (1998) claims that most research contains elements of theory testing and

theory construction.

Some scholars argue that preordained theories can be more robust because they

have already been tested on prior occasions (see, for instance Layder 1998).

Notwithstanding, there are limitations to using such an approach. For example,

Eisenhardt (1989, p. 536) states: “preordained theoretical perspectives or

propositions may bias or limit the findings.” This occurs when theoretical

frameworks are forced on the data or when data is lost when it is filtered through a

theoretical framework (Ahrens & Dent, 1998; Glaser & Strauss, 1967). A further

limitation of using a preordained theory stems from the fact that theories are based

on ideological assumptions and therefore may be limited in their ability to capture


83

the complexity of the field (Flinders, 1993; Humphrey & Scapens, 1996). To sum

up the limitations of using a preordained theory we refer to Glaser and Strauss

(1967, p. 11) who state, “Some theories of our predecessors, because of their lack of

grounding in data, do not fit, or do not work, or are not sufficiently understandable

to be used and are therefore useless in research, theoretical advance and practical

application.”

A second way of conducting a study is to go into the field without a theoretical

basis with a view to build or develop a theory during the study from the data

collected (Strauss & Corbin, 1994, 1998). This approach, the grounded theory

approach, uses constant comparison and analysis of data to build complex theories

that closely resemble the data (see commentary by Eisenhardt, 1989; Glaser &

Strauss, 1967; Schensul et al., 1999). Similar to using the preordained theory

approach, this approach requires the researcher to test and retest theoretical

concepts and hypotheses to ensure a coherent representative model is developed.

One of the acknowledged advantages of this approach is that the theories

developed can capture the particular conditions surrounding the phenomenon of

study (Strauss & Corbin, 1994). Although it would seem this would provide a

superior explanation of phenomena, the method has been criticised on several

levels. First, some scholars argue that the researcher cannot enter the field without

some kind of theory (see for example, Hopper & Armstrong, 1991; Kaplan &

Norton, 1996; Marginson, 1999). This suggests that there is not a theory that is

capable of being built up from data alone, and that all theories are developed based

on pre-existing theories (Boston, 2000; Chua, 1986a; Schwandt, 1993; Van Maanen,

1988; Woods, 1985). Second, the approach has been criticised because few


84

researchers understand how to develop coherent frameworks from their data. As a

result, incoherent frameworks are developed that are not easily understood by other

academics and are thus limited in their explanatory power (Layder, 1994; Strauss &

Corbin, 1994). The time required to develop, test, and retest grounded theories

further reduces the appeal of adopting this approach (Layder, 1998).

One way to overcome the limitations from adopting a preordained theory or a

grounded theory approach is to bring multiple theories into the pilot study. This

approach, the theory triangulation approach, is built on the notion that the use of a

single theory or perspective produces a restricted view of organisational reality

(Gioia & Pitre, 1990; Marginson, 1999). Through the use of several theories one can

build a framework in the course of the study drawing on the relevant ideological

assumptions of each of the theories, and any additional evidence noted in the study

(Hoque & Hopper, 1997b; Humphrey & Scapens, 1996; Layder, 1993; Layder, 1998;

Strauss, 1987; Strauss & Corbin, 1994; Vaughan, 1992). This allows the researcher

to build and modify existing theories using data generated in their study so that the

resulting explanation more closely resembles the data. Humphrey and Scapens

(1996) contend that this approach is particularly important for case-based research

where the “research becomes driven by problems and issues relating to accounting

practice, rather than by the concerns of social theorists” (p. 100). Several accounting

studies have adopted a theory triangulation approach to provide an understanding

of accounting. For example, Ansari and Euske (1987) utilised three theoretical

perspectives: the technical rational, the socio-political, and the institutional theory to

understand the use of accounting information in a US military organisation.

Carpenter and Feroz (1992) used four theoretical perspectives: economic


85

consequence theory, rational-technical theory, power-political theory, and

institutional theory to explain the State of New York’s decision to adopt generally

accepted accounting principles (GAAP). Hoque and Hopper (1994) employed the

technical rational, the human relations, the interpretive theory, and the political

economy approach to explain the MCS in a large nationalised jute mill in

Bangladesh. Marginson (1999) too used four theories to analyse the processes of

control in a major British communications and information services organisation

including the management control perspective, the cybernetic perspective, the

organisational behaviour perspective, and the contingency theory perspective.

Presuming there is not a single theory of change and management control that is

capable of capturing the complexity of the field (Covaleski & Dirsmith, 1990), and

acknowledging that there is overlap in many organisational and sociological theories

(Ansari & Euske, 1987; Fielder & Deegan, 2002) theory triangulation offers

significant benefits over its counterparts in a study such as the one presented here.

In this study, it enabled the researcher to build on the accepted ideological

assumptions of various organisational and sociological theories such as institutional

theory and resource dependence theory, and use the empirical evidence captured in

the intensive phase of the study to develop a theoretical framework suited to the

phenomena of study. The result, the new institutional sociological perspective, is

believed to offer greater explanatory power than applying a single preordained

theory or building a new theory directly from data analysis (for a discussion see,

Archer & Otley, 1991; Marginson, 1999). The new institutional sociological

perspective developed in this chapter guided all facets of the study including data

collection, data analysis, and data reporting.


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The next section outlines the notions of the old and new institutionalisms.

3.2 Institutional Theories: Some Considerations

Scott (1995) proposes at least three strands of institutional theory from which a

researcher can focus their analysis: economic, sociological, and political. In keeping

with the research objectives and questions outlined in Chapter 1, this study adopts a

sociological flavour over its economic and political counterparts.

Before discussing the specifics of each strand of theory, two common underpinning

assumptions should be noted. First, institutional theories are built on the belief that

institutional environments are socially constructed: that is, they are a human

fabrication (Berger & Luckman, 1990; Brunsson & Sahlin-Andersson, 2000;

Carruthers, 1995; DiMaggio, 1991; DiMaggio & Powell, 1983; Meyer & Rowan,

1977; Orru, Woolsey Biggart, & Hamilton, 1991). Second, institutional theories take

the view that organisations are open systems. This suggests the external

environment and its participants help to shape organisational structures and

activities (for commentary on this view, see Scott, 1987; Selznick, 1957, 1966). Scott

(1998, p. 21) sums up this view:

Every organisation exists in a specific physical, technological, cultural and social environment to which it must adapt. No organisation is self-sufficient; all depend for survival on types of relations they establish with larger systems of which they are apart.

In tandem these views suggest that in order to understand the design and operation

of ACSs, these systems need to be studied in their organisational context

(Flamholtz, 1983). In doing so, Burns (2000, p. 566) suggests this should allow for

an understanding of the complexities of the accounting change processes that could


87

otherwise be dismissed by more conventional static approaches (see also, Burns &

Scapens, 2000). The next section describes the old and then the new

institutionalism.

3.2.1 Old Institutional Theory: A Sociological Approach

Based on sociology literature efforts by Cooley, Hughes, Durkheim, Weber, Berger,

and Luckmann (cited in Scott, 1995), the sociologically based old institutional

theory is most commonly associated with the work of Selznick (1957, 1949),

Gouldner (1954), and Parsons (1956) (for a historical review see, Abell, 1995;

DiMaggio & Powell, 1983; Scott & Christensen, 1995).

Institutional theorists believe that society identifies organisations by the norms and

values they exhibit. More recently these belief patterns, norms, and values have

been collectively referred to as the ‘organisational culture’ (for example, see

definitions by Eldridge & Crombie, 1974; Frost, Moore, Reis Louis, Lundberg, &

Martin, 1985; Louis, 1980, as cited in Brown, 1998). Old institutional theorists claim

that organisations incorporate community norms and values into their social

systems to render a sense of symbolic meaning and offer alternative reasons for

existing beyond the technical and economic (Selznick, 1957). The adoption of

accepted norms and values also acts to defend the organisation’s behaviours.

The process by which societal norms and values become infused with value is

defined as institutionalisation. Selznick (1957, p. 16) describes this process:

It is something that happens to an organisation over time, reflecting the organisation’s own distinctive history, the people who have been in it, the


88

groups it embodies and the vested interests they have created, and the way it has adapted to its environment.

Consequently, the process of institutionalisation is also thought to explain why

organisations continue to use outdated or ineffective behaviours and actions

(Pfeffer, 1981). The old institutional theory was developed based on the

understanding that the degree to which norms and values become institutionalised

is dependent on the internal dynamics of the organisation, such as the level of

specialisation and technical design (Selznick, 1957). A further assumption of this

theory is that in order for norms and values to be institutionalised, those in a

position of power (i.e., the leaders) must uphold them and reinforce them in their

own actions and behaviours. Hence, the leader has been described as the “agent of

institutionalisation” (Selznick, 1957, p. 27). To be sure, it is also the leader’s

responsibility to define and defend the organisational norms and values as well as to

ensure they remain consistent with those of the natural community. Thus, the

leaders are critical to maintaining the organisation’s identity. In order to maintain or

preserve organisational identities and to retain power, institutional theories posit the

notion that the leaders draw on devices such as specialised academics and selective

recruiting (see commentary by Selznick, 1957).

Once institutionalised, the norms and values then become a guide for employees

indicating what is considered acceptable behaviour (Simon, 1957). An organisation’s

actions are then seen to be manifestations of institutionalised rules and procedures.

In summary, the old institutional theory is concerned with understanding what

values matter, how organisations adapt or change their culture and structure to


89

embody socially accepted values, and how those values are weakened or

deinstitututionalised (Selznick, 1996). Thus, while there is some discussion on the

influence of the external environment, for the most part, the old institutional theory

is concerned with explaining the institutionalisation of the normative controls such

as belief patterns, values, and norms (Hirsch & Lounsbury, 1997; Mizruchi, 1999;

Scott & Christensen, 1995; Selznick, 1957).

3.2.2 New Institutional Theory: New Insights and Shifts in Focus

In recent years, institutional theories are said to be “experiencing a renaissance

throughout the social sciences” (DiMaggio & Powell, 1991, p. 2; Scapens, 1994, p.

303). This resurrection of the theory was pre-empted by a series of papers written

by Meyer and Rowan (1977), Zucker (1977), DiMaggio and Powell (1983), and

Meyer and Scott (1983).30 Collectively, these papers provide the basis for what has

been labelled the new institutionalism. These papers draw on the contributions of

earlier institutional theorists (Mizruchi, 1999), however, they also offer some “fresh

insights” and “interesting shifts in focus” (Selznick, 1996, p. 273).

Several new institutional perspectives are said to exist with the new institutionalism

(Carruthers, 1995; DiMaggio & Powell, 1991; Peters & Pierre, 1998; Scott, 1987).

These perspectives differ on the basis of their macro (see for example, DiMaggio &

Powell, 1991) and micro focus (Zucker, 1988) and also their regulative, cognitive,

and normative assumptions (DiMaggio & Powell, 1991; Scott, 1995; Scott &

Christensen, 1995). Acknowledging the vast array of perspectives covered by the

30 For further commentary see Perrow (1979) and Scott (1995, 1998).


90

new institutional theory, some scholars argue that the theory should be viewed as a

theoretical orientation and not as a tightly bound theory (Scott & Christensen, 1995,

p. 302).

The new institutionalism is grounded on the understanding that external pressures

such as the pre-existing socio-cultural norms, the relationships that exist between

organisations, or the political pressures imposed by governments provide pressures

to change organisational routines (Burns & Scapens, 2000; Dacin, 1997; DiMaggio,

1991; Scott, 1995; Scott & Christensen, 1995).31 Alternatively, changes in the

composition of individuals in an organisation is also thought to provide pressures

for change (for commentary see, Peters & Pierre, 1998).

According to the new institutional theory, organisations comply with those

procedures and practices considered to be the socially accepted rationalisations of

how to structure the organisations operations (Meyer & Rowan, 1977). These

conceptions of rationality evolve and change over time providing some insight to

why organisations change (Fogarty, 1996). New institutional theorists take the view

that rational rules and routines are adopted by organisations to ensure they are

perceived as legitimate, rather than for reasons of efficiency. This infers that rules

and routines are not adopted to control behaviour in organisations, instead they are

adopted to secure external stakeholder confidence in their operations (Pfeffer &

Salancik, 1978). Integral to such arguments is the possibility that those organisations

will then go to great extremes to ensure institutionalised rules and routines remain

31 Burns and Scapens (2000) defined routines as, “the patterns of thought and action which are habitually adopted by groups of individuals” (p. 6).


91

visible to their external constituents (Scott, 1998). For example, Covaleski et al.

(1985), amongst others, suggest that organisations can change budget systems to

dramatise commitments to efficiency and rationality even when internal systems do

not foster such objectives. Theoretically, this conformity with social expectations

for improved efficiency and rationalisation is thought to improve the organisation’s

ability secure resources, reduce the likelihood of their conduct being questioned and

improve their survival prospects (Abernathy & Chua, 1996; Covaleski, Dirsmith, &

Samuel, 1996; DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Scott, 1987;

Tolbert & Zucker, 1983).

Early contributors to the new institutionalism suggested organisations could

produce one of four responses when faced with institutional pressures: (a) to

conform (see, for example Berger & Luckman, 1990; Giddens, 1984; March &

Olsen, 1989), be perceived as legitimate and improve the survival chances of the

firm at the same time reducing the efficiency of the firm; (b) to resist and run the

risk of cutting off the organisation’s resources and support; (c) to separate the

public perception of the organisation from its actual workings; and (d) and to

promise reform. Regardless of the response, these contributors suggested the

existing institutions act as constraints to the implementation of a particular response

(Scapens, 1994).

Unlike the old institutional theory, early versions of the new institutional

perspective were less concerned with the institutionalisation of particular rules as

with understanding why organisations tend to become homogeneous or


92

isomorphic.32 DiMaggio and Powell (1983) suggest the process of isomorphism

occurs within institutionally defined fields. This perspective suggests the

institutionalised myths (i.e., products, services, and policies) existing in the field of

interconnected organisations provide pressures for change (Meyer & Rowan, 1977;

see also, Scott & Meyer, 1994).

DiMaggio and Powell (1983) developed a classification scheme for identifying

mechanisms that drive organisational homogenisation or institutional isomorphism

in their seminal paper, “The Iron Cage Revisited: Institutional Isomorphism and

Collective Rationality in Organisational Fields.” According to this paper,

homogenisation of organisations occurs from coercive isomorphism, mimetic

isomorphism, or normative isomorphism.

DiMaggio and Powell (1983) suggest coercive isomorphism occurs when an

organisation changes in response to pressures exerted from another organisation

from which the organisation is dependent on for resources and support. Similarly,

Tolbert and Zucker (1983) contend that when organisations operate within a wider

organisational network, legitimised changes in the more powerful organisation

provides the impetus for change in other dependent organisations. More relevant to

this study, it has been suggested that the pressures to conform to other institutions

is particularly evident in the public sector where organisations are dependent on the

resources and support of other government departments for their survival

(DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Morgan, 1990). For example, a

32 The process whereby organisations change to become similar to their external environment is referred to as isomorphism (see DiMaggio & Powell, 1983).


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university may change their MCS to comply with Federal Government policy.

Insofar as the MCS is perceived to represent rational control practices, the

organisation will be viewed as legitimate and continued funding support received.33

The second category, mimetic isomorphism, occurs when organisations are faced

with high levels of uncertainty. Organisations will homogenise or imitate themselves

on other organisations perceived to be legitimate or successful in order to survive

and to reduce uncertainty (Baldridge, 1977; DiMaggio & Powell, 1983; Fligstein,

1985; Tolbert & Zucker, 1983). A key example of mimetic isomorphism according

to Abernathy and Chua (1996) was the transfer of zero-based budgeting from the

private sector into the public sector during the Carter administration in the USA.

Finally, normative isomorphism, the third category of institutional isomorphism, is

based on the premise that organisations change from the process of

professionalisation. This can occur through formal education or the creation of

professional bodies that embody certain social expectations (DiMaggio & Powell,

1983). For instance, within the accounting profession, there are preferred methods,

practices, and principles. Accountants manage organisations using the methods they

learn from their training within the profession. Consequently, it is expected that an

investigation of a diverse number of organisations employing accountants should

reveal the use of similar techniques. This, it has been proposed, is because of the

socialisation of members within the profession.

33 For further discussion on coercive isomorphism, see Bealing (1996).


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Quite clearly, this strand of theory has taken a macro-focus concerned with

understanding the external pressures for change rather than the internal dynamics

of that change. The next section explores accounting from an institutional point of

view.

3.2.3 An Institutional Perspective of Accounting Change

Burchell et al. (1980) and Miller (1994) claim that accounting has been

institutionalised at both a societal and organisational level. This line of thinking

stems from the fact that accounting procedures, considered rational and efficient by

society, are often used to legitimise organisational operations and secure their

survival (Ansari & Euske, 1987; Burchell et al., 1980; Carruthers, 1995; Covaleski et

al., 1996; Edwards et al., 1995; Markus & Pfeffer, 1983; Miller, 1994). To further

explain, to cope with uncertainties some accounting scholars suggest that by

adopting textbook accounting practices, organisations can improve societal opinion

of the organisation. In this sense, accounting systems are seen to be symbolic and

ritualistic (March & Olsen, 1989; Meyer & Scott, 1983). Be that as it may, the

introduction of textbook systems may have dysfunctional consequences for the

practice of accounting. Mouritsen (1994) for example, suggests conformity with

textbook systems can hinder the development of accounting. He (Mouritsen, 1994)

states that the adoption of textbook accounting systems can “prevent organisations

from learning, from experimenting, and from developing into new and better

systems” (p. 194).

In another sense, accounting systems are used to provide structure or cohesion in

the form of routines to organisational activities offering a sense of stability to


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organisations (Scapens, 1994). In this regard they constitute expected forms of

behaviour and establish the relationships between various groups in the

organisation. This suggests that accounting techniques are essential to the control

and coordination, or the management of organisations (Burns & Scapens, 2000;

Scapens, 1994). Extending this perspective, accounting scholars suggest that

accounting can shape and be shaped by other institutions in the organisational

environment (Mouritsen, 1994).

The institutional notion that institutional environments are socially constructed

lends to the view that actors in the organisation construct accounting practices.

Going further, it also suggests that accounting practices and systems can be changed

by the behaviours of actors (for a discussion, see Covaleski et al., 1996; Scapens,

1990).

In its most basic sense, accounting change represents a change in accounting

routines. Institutional theories suggest that new accounting techniques are

introduced by managers and accountants in response to changes in the external

environment. More specifically, Burns and Scapens (2000) argue that often these

changes can be made to satisfy concerns for efficiency and cost control. Through

the process of institutionalisation, accounting techniques become routine in the

organisation and as such become an accepted form of management control

(Scapens, 1994).

Numerous education and accounting studies have found the institutional

perspective useful for informing their findings. This would suggest that the


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institutional theory is a suitable approach from which to make sense of the findings

presented here. The following section explores the use and benefits of adopting

such a theory in detail.

3.2.4 Previous Institutional Research

In recent years, sociological theories such as institutional theory have permeated

into the literature of all disciplines. These theories provide a basis for understanding

issues of social control and coordination (Covaleski & Dirsmith, 1990; Covaleski et

al., 1996). To date, several studies have adopted versions of institutional theory for

understanding education institutions. For example, Czarniawska and Wolff (1998)

used a new institutional perspective to explain how two universities created around

the same period and subject to the same institutional pressures could lead to the

survival of one and the demise of the other.

An earlier study conducted by Rowan (1982) investigated isomorphism and the

addition and subtraction of administrative positions in Californian School districts.

Using a reconstruction of the natural histories of institution building, diffusion, and

stabilisation, this study reinforced previous claims (e.g., Parsons, 1956) that

organisations become isomorphic with the institutionalised societal norms and

values.

Building on the traditional institutional arguments of Scott (1987), Gates (1997)

investigated elements of isomorphism, homogeneity, and rationalism in university

retrenchment. Gates (1997), for instance, found evidence to suggest that all three

isomorphic pressures led to the retrenchment of state university staff. Similar to


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other new institutional sociologists (see, for example, Abernathy & Chua, 1996;

Brint & Karabel, 1991; DiMaggio & Powell, 1991; Lawrence, 1999; Meyer &

Rowan, 1991; Mouritsen, 1994; Orru et al., 1991), Gates’ conclusions supported

previous arguments that organisations are less concerned with efficiency and

effectiveness and more concerned with legitimising their operations to key external

resource providers.

By the same token, Kraatz (1995) also used an institutional framework as a theory

of adaptation to investigate how the interorganisational network of liberal arts

colleges in America affected college strategic responses to environmental change. In

his study, Kraatz investigated 230 colleges over a 16-year period, concluding that

colleges imitate other colleges they perceive to be performing well over larger

esteemed colleges.

Brint and Karabel (1991), on the other hand, used institutional theory as the

theoretical framework for explaining the institutional origins and transformation of

American Community Colleges. This study provided evidence to suggest that power

centres play a significant role in shaping organisational structures and activities.

Finally, Meyer, Scott, Strang, and Creighton (1988) used institutional theory to

inform their study of the changes in the organisational system of public schools in

the United States. Specifically, Meyer et al. used reports prepared by individual

States to describe the expansion of bureaucracy within public schools.


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The widespread use of institutional theory in the education sector suggests this

theory is a rational basis for developing an appreciation of the existence of the MCS

in an Australian higher education institution. Institutional theory has also been

widely used in accounting research. Accounting studies taking an institutional focus

are discussed in turn.

Covaleski and Dirsmith (1988a, 1988b) used institutional theory to examine how

budgeting practices were modified during periods of organisational decline and

identified those participants involved in the change process. Specifically, the studies

focus on how organisational actors were able to create and enforce institutional

pressures within their respective organisations. Ansari and Euske (1987), on the

other hand, used institutional perspectives to examine the use of cost accounting

data in a public sector context. Abernathy and Chua (1996) carried out a recent

study adopting an institutional theoretical orientation. This study argued the

organisation’s technical environment as well as its institutional environment

influence the type and use of management control devices in the organisation.

Bealing and Riordan (1996) drew on institutional theories to explain how a

university was able to secure and increase funding in a State University during a

period of contracting fiscal resources. Quite apart from this, but relevant to

institutional theory Hoque and Alam (1999) used institutional theory to account for

the external market pressures that influenced Total Quality Management adoption

and a change in the management accounting system of a New Zealand Construction

firm. More recently, Hussain and Hoque (2002) used institutional theory to inform


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a field study of the non-financial performance measurement practices used in four

Japanese banks.

Consistent with previous studies, Scapens (1994) argues that institutional

frameworks can be used to gain an understanding of accounting practices because

they offer researchers an insight into the relationships that exist between accounting

and other social institutions. This view is also echoed by Mouritsen (1994), who

believes that institutional theories are vital to accounting research: “accounting

operates in complex institutional settings where the location and context of social

interaction is important for explaining and understanding it” (p. 196). Burns and

Scapens (2000) claim the there is value in using institutional theory in studies such

as the one presented here, because it enables the researcher to answer the how and

why questions of accounting evolution and acceptance in organisations. These

arguments would suggest institutional theory should provide a relevant framework

from which to focus the analysis.

This section explored an institutional perspective of accounting change. Next, the

limitations of institutional theories for explaining processes of accounting change

are examined.

3.2.4.1 Criticisms and Areas for Advancement in the New Institutional Theory

In recent years, with substantial developments in theory, the oversimplified view of

organisational change put forth by the new institutional theory has come under

much scrutiny from a vast array of scholars (Christensen, Karnoe, Pedersen, &

Dobbin, 1997; Kraatz & Zajac, 1996; Peters & Pierre, 1998; Selznick, 1996). In


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particular, the new institutional theory has been criticised for taking on a macro-

focus (see, for example, Hirsch and Lounsbury, 1997) and for neglecting or being

insensitive to the role of organisational actors, power, interests, and organisational

change (Boons & Strannegard, 2000; Brint & Karabel, 1991; Carruthers, 1995;

Czarniawska & Sevón, 1996; Hirsch & Lounsbury, 1997; Norus, 1997; Scott, 1995).

This suggests that the theory does not give adequate consideration to actors and

their ability to influence and shape the organisation. In its defence, Meyer, Boli, and

Thomas (1994) suggest the focus of theory at this time was to “abandon the

fascination with the individual and turn to other ‘actors’ in the social system” (p.

13). Hirsch and Lounsbury (1997) warn the problem with this is that “most

empirical efforts have focused on environmental changes that are not effectively

linked to the activities of individuals and organisations” (p. 411).

Meyer and Rowan (1977) also acknowledged several limitations of the institutional

theory. The theory, for example, was not able to explain a difference or

inconsistency between the perceived formal organisational structure and the actual

operating structure. Moreover, it was not able to provide pertinent explanations for

how organisations deal with conflicting pressures from multiple sources: they could

not imitate or conform to all of these pressures.34 Finally, the theory did not explain

how organisations respond to highly generalised pressures (the nature of these

makes them difficult to integrate into the organisation’s operations).

34 The argument that organisations are faced with multiple conflicting pressures to which they must conform also has implications for arguments that organisations tend to be homogenous within their field.


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These shortcomings combined with the fact that the new institutional theory

proved insufficient for explaining the findings of the pilot study conducted at the

research site suggest that other organisational and sociological theories are necessary

for a more complete understanding of the complexities of change. This view is

consistent with that put forth by Humphrey and Scapens (1996) who suggest that

“the researcher may need to refocus, regrind or reshape the chosen lens and even

combine it with other lenses in order to secure a coherent theoretical framework”

(p. 91). It also supports an underpinning assumption of the case study approach,

that the explanation should emerge from the case and not from a theory inflicted on

the case (see Scapens & Roberts, 1993 for some discussion on this point). Based on

these views this study adopts a theory-triangulation approach to explain the

complexities of ACSs design and operation. The theories used to inform the

findings include institutional, resource dependence, strategic choice, leadership,

resistance and political-power. These theories were chosen based on their ability to

offer partial explanation for what was occurring at the subject organisation: some

theories provided different levels of analysis, some provided explanations of the

internal dynamics of change, and some provided strategies for managing change.

The next section outlines the characteristics of these theories to provide a more

complete explanation of MCSs change.

3.3 Understanding the Processes of Change: Theoretical Orientations of the New Institutional Sociological Perspective

This thesis seeks to understand the processes of revolutionary change in ACSs at a

university. This involves the conscious choice to move from one archetype of


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control to another, involving significant disruption to established or institutionalised

routines and structures.35

In order to understand the how and why of change one must ask questions such as,

what motivates organisations to change existing archetypes, how do organisations

respond to pressures for change, who decides how they respond to change and how

is that change managed? The perspectives outlined here provide insight into the

processes of change leading to the institutionalisation of accounting control

practices.

There is the common view that change cannot be understood as a sequence of

events occurring within a specified time period (Dawson, 1994; Greenwood &

Hinings, 1996). This infers a processual approach should be used to understand

why and how new forms of accounting developed in the subject organisation.36

Consequently, three phases were identified to explain the process: conception of the

need to change, organisational transition, and institutionalisation. The following

sections discuss each of these phases utilising the theories mentioned in the

previous section.

35 Burns and Scapens (2000) suggest that revolutionary change occurs from major external change. For further discussion on revolutionary change, see Greenwood and Hinings (1996) and Scapens (1994). 36 The study of accounting utilising a processual approach infers that accounting change should be understood as a process occurring over time and not merely as an outcome. This allows the researcher to observe a continuity of accounting processes or the institutionalisation of particular techniques and practices. For further discussion on this use of this approach, see Covaleski, Dirsmith, and Michelman (1993) and Burns (2000).


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3.3.1 Conception of the Need to Change

Organisational change literature suggests organisations change for many reasons.

For example, change can occur as a response to external sources (i.e., market

pressures, governments laws, technology, consumer expectations, social, or political

change) or internal pressures (e.g., a change in the power dynamics of the

organisation, a change to deal with a process or behavioural problem, or a change in

the size and complexity of the organisation) (Carruthers, 1995; Ivancevich &

Matteson, 1990; Scott, 1998). Alternatively, changes can be made in pursuit of

organisational strategies (Fligstein, 1990; Lawrence, 1999). This would suggest that

organisations do not always wait for legitimacy to be conferred; rather, they can

make a conscious choice to be perceived as legitimate. Dawson (1994) contends

that there may be multiple pressures for change that may be interdependent (see

also, Deegan, 2002). As an example he (Dawson, 1994) wrote, “a push for change in

technology may result from competitive pressures or from the exposure of local

engineering personnel of the benefits of new developments in capital equipment”

(p. 14).

3.3.2 Organisational Transition

The process of determining an organisational response and managing the change

process is referred to as the organisational transition. The following section looks at

this process in greater depth.

3.3.2.1 Organisational Response

Although external pressures may prescribe templates or archetypes for organising,

they do not guarantee a set response from organisations. Whilst they can provide


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pressures for homogeneity or diversification, they do not provide the motivation or

direction for change.37 Instead, the various power and interest conflicts within the

organisation determine how they respond to institutional pressures. That is, political

actors or leaders within the organisation interpret pressures for change and then

mobilise power sources to control or influence the organisational response as well

as to cope with the outcome of that response (Finstad, 1998; Galaskiewicz, 1991;

Jepperson, 1991).38 Previous claims for institutional conformity or the diffusion of

institutions have then been set aside in favour of the argument that not all

organisations succumb or strictly conform with institutional pressures for change;

instead, organisations display a variety of responses driven by actors interpretations

of a number of factors such as a need to comply with legal requirements, economic

rationality, changing community expectations, threats to organisational legitimacy,

or corporate crises (Abernathy & Chua, 1996; Hardy, 1996; Kurke, 1988; Oliver,

1991; Scott, 1983; Scott, 1995, 1998). Notwithstanding, institutional theories posit

the notion that organisations tend to base their change on the imitation of perceived

successful business practices rather than new and innovative approaches (DiMaggio,

1991). The types of organisational response are elaborated upon next.

According to Oliver (1991), organisational responses to institutional pressures “will

vary from conforming to resistant, from passive to active, from preconscious to

37 Marginson and Considine (2000) suggest that the Government can act as a homogeniser; however, this does not guarantee the response of those institutions dependent on Government funding will be homogeneous. This perspective acknowledges the scope for choice in organisational response (see pp. 175-178 for a discussion on this point). 38 Implicit in this assumption is the belief that actors in management positions do not always determine the outcome of change; thus, leadership and power are not always synonymous with hierarchical structure. Instead, informal systems created and maintained by powerful actors shape the actual outcome of change (Selznick, 1957; Finstad, 1988). The power of actors not holding the authority to change is derived from personal characteristics such as popularity, competency and sensitivity (for some discussion, see Pfeffer, 1997).


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controlling, from impotent to influential, and from habitual to opportunistic,

depending on the institutional pressures toward conformity that are exerted on

organisations” (p. 151). This view is further supported by Clegg (1979) who claims

that the institutionalisation of organisational rules and routines reflects the power of

the organisational actors’ translations and use of social expectations. More

specifically, Powell (1991), Scott (1995), and Brignall and Modell (2000) suggest that

in order to understand a variation in organisational response, consideration should

be made of the variation in resource environments, differences in the structure of

industries, differences in how the organisations relate to the State, overlapping

responsibilities, organisational interpenetration and systems of partial or fragmented

governance, variation in the direct coercion of government requirements, variation

in the occupational and professional projects, and the capability of organisations to

shape or influence the nature of institutional expectations. This view is consistent

with the new institutional theory suggesting that existing institutions will always

restrict or constrain an organisations ability to bring about change (Pfeffer, 1981).

Oliver (1991) proposes five strategic responses or behaviours to institutional

pressures: acquiescence, compromise, avoidance, defiance, and manipulation (for

further discussion, see also, Goodstein, 1994). Table 3.1 lists these responses.

Briefly, acquiescence refers to the conformity to institutional pressures. This

conformity may take several forms including habit, imitation, or compliance. Oliver

(1991) suggests compromise occurs when the external institutional pressures and

the internal pressures for efficiency clash and therefore organisations balance,

bargain, or pacify their response to the pressures (Oliver, 1991). Similar to


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acquiescence, three forms of compromise exist including balancing, placating, and

negotiating.

Table 3.1: Strategic Responses to Institutional Processes

Response Tactics Examples

Acquiescence Habit Imitate Comply

Following invisible, taken-for granted norms Mimicking institutional models Obeying rules and accepting norms

Compromise Balance Pacify Bargain

Balancing the expectations of multiple constituents Placating and accommodating institutional elements Negotiating with institutional stakeholders

Avoid Conceal Buffer Escape

Disguising nonconformity Loosening institutional attachments Changing goals, activities or domains

Defy Dismiss Challenge Attack

Ignoring explicit norms and values Contesting rules and requirements Assaulting the sources of institutional pressure

Manipulate Co-opt Influence Control

Importing influential constituents Shaping values and criteria Dominating institutional constituents and processes

SOURCE: From “Strategic Responses to Institutional Processes,” by C. Oliver, 1991, Academy of Management Review, 16(1), p. 152. Avoidance, the third type of response deals with the concealment of

nonconformity. Organisations can choose to display one of three forms of

avoidance: concealment tactics, buffering, or escape. A critical assumption of this

response is that organisations can disguise their operations using formal structures

and mechanisms such as inspection and evaluation (Meyer, 1977). There is the view

that organisations can mention institutionalised structures and techniques in

accounts provided to external stakeholders to legitimise their activities, even though

the internal operations may not always reflect those accounts. The process whereby

the organisation is able to separate the public perception of the organisation from


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the internal behaviours is termed ‘decoupling’. Several accounting studies support

this notion (Covaleski & Dirsmith, 1988a; Covaleski & Dirsmith, 1988b; Dirsmith,

Heian, & Covaleski, 1997; Scott, 1995).

The fourth type of strategic response is defiance. Oliver (1991) argues that

resistance to change is more purposive at this level. Organisations defying

institutional demands can do this on three levels; dismissal, challenge, and attack.

Oliver (1991) claims that organisations dismiss or ignore institutional pressures

when those pressures are low or when they are inconsistent with the organisational

objectives. It is important to realise that organisations may also challenge or contest

institutional pressures when they believe the expected changes are not rational.

Organisations attack, the most extreme form of defiance, when they believe their

rights, privileges, or autonomy is at stake.

The final type of strategic response is manipulation. Organisations that manipulate

institutional pressures are said to display the highest level of resistance. By using

influence tactics or controlling tactics- the former being the manipulation of values

and norms, the latter being the demonstration of power over external constituents-

organisations can manipulate the institutional environment (Oliver, 1991). This view

is further supported by Peters and Pierre (1998) who claim that organisations can

choose to respond to pressures for change or develop a strategy to redefine

(manipulate) the reality perceived by others in that field.

Utilising Oliver’s strategic responses, Greenwood and Hinings (1996) developed a

model (see Figure 3.1) based on a new institutional perspective, to explain how


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organisational responses are determined. In essence, the model looks at how

organisational actors translate and respond to contextual pressures for change.

As a starting point, Greenwood and Hinings’ model takes the institutional view that

internal and external pressures can propel change in organisations, however, they

cannot explain how and why organisational responses are determined: this requires

an understanding of the intraorganisational dynamics.

In order to gain an appreciation of how contextual pressures are interpreted into the

organisational response Greenwood and Hinings focus on the political dynamics of

intraorganisational behaviour.

The model suggests that two types of intraorganisational dynamics must be

mobilised in order for change to occur: precipitating dynamics and enabling

dynamics. As can be seen in Figure 3.1, interest dissatisfaction and value

commitments form the precipitating dynamics and power dependencies and a

capacity for action form the enabling dynamics.

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CONTEXT CHANGE CONTEXT

d

b

j

h

g

e

x

MARKET CONTEXT

INSTITUTIONAL CONTEXT

INTEREST DISSATISFACTION

VALUE COMMITMENTS

POWER DEPENDENCIES

CAPACITY FOR

ACTION

ORGANISATIONAL CHANGE

CONTEXT -Market -Institutional

a

f

i

c

INTRAORGANISATIONAL

Figure 3.1: Model for Understanding Organisational Change

SOURCE: From “Understanding Radical Organisational Change: Bringing Together the Old and New Institutionalism,” by R. Greenwood and B. Hinings, 1996, Academy of Management Review, 21(4), p. 1034.

Precipitating Dynamics Enabling Dynamics


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The precipitating dynamics are those intraorganisational dynamics that motivate

organisational change. Pressures for change can be exerted from the market or

other institutions (e.g., national governments, professional bodies, trade unions).

The organisation’s need to be viewed as a legitimate organisation may alter the

interests and values held by key organisational actors leading to a change in the

organisation (see for example line a and b). Importantly, the model also suggests

interest dissatisfaction will result in a change in value commitments and vice versa.

This relationship is represented by line c. Thus, competing value commitments or

interests act as reasons to change existing archetypes (Greenwood & Hinings, 1996;

Peters & Pierre, 1998).

Greenwood and Hinings suggest the precipitating dynamics do not however

provide the direction for change. The enabling dynamics (the power dependencies

and the capacity for action) determine the direction. Those individuals holding

significant power in the organisation based on resource dependencies determine the

direction of change. It is their interests and values that are factored into the decision

making and transition phases. This relationship is illustrated using lines e and x in

the model. The model also depicts a strong relationship between the power

dependencies and the interest dissatisfaction (line k) and value commitments (line

d). Here, Greenwood and Hinings suggest that powerful actors are able to shape

their environment through their actions. That is, these actors or interest groups are

able to create an environment to which others must acknowledge and respond.

Greenwood and Hinings (1996) claim that a change in the power dependencies will

create interest dissatisfaction in key interest groups and actors. Conversely, power


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dependencies and value commitments have a reciprocal relationship: meaning that a

change in value commitments can bring with it a shift in power dependencies or a

change in power dependencies can bring with it a change in value commitments.

Finally, Greenwood and Hinings (1996) suggest that if change is to be substantive

and not merely a cosmetic then leaders must have a capacity for action to be able to

effectively manage the transition. This capacity for action is defined in terms of the

availability of skills to manage the change and the mobilisation of skills (also called

leadership). In tandem, Greenwood and Hinings suggest these intraorganisational

dynamics lead to organisational change which in turn flows onto the market and

institutional context and the cycle begins again (Greenwood & Hinings, 1996;

Peters & Pierre, 1998). This cycle is perhaps best explained by March and Olsen

(1989, p. 46) who state:

When environments are created, the actions taken in adapting to an environment are partly responses to previous actions by the same actor, reflected through the environment.

Although it would seem this model would provide a suitable basis for

understanding organisational change, the model has one obvious limitation, it only

explains how organisational response is determined: it does not explain complexities

of the transition process or the processes that take place leading to the

institutionalisation of particular norms, values, and behaviours. In light of this, the

following section reviews leadership, power, and resistance theories to provide a

more complete picture of change.


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3.3.2.2 Managing the Transition: A Closer Look at Power, Leadership, and Resistance

In order for successful change to occur there must first be a clear understanding of

the archetype or template that the organisation hopes to adopt. The transition phase

then involves a series of complex tasks required to bring about a change from one

archetype to another. As suggested in the previous model, the leaders of

organisations or key interest groups use their power to not only determine the

organisational response to pressures for change, but also to deal with the outcome

of change (French, 1956). The next section outlines the role of leadership and

power in managing the transition to new archetypes.

Leadership39 theories focus on the role of managers in the change process. Selznick

(1957) claims that leadership is necessary to reconcile the organisation’s internal

endeavours with environmental pressures. In similar manner, Bennis and Nanus

(1985) contend that leadership is essential for developing the necessary visions to

bring about change in organisations. In order to understand how organisations are

managed one needs to understand the leader’s values. Bass (1990) suggests a

leader’s values are determined by a variety of factors including education, cognitive

style, personal considerations, and societal developments (see, p. 141-142 for

further discussion). It is important to note that these interests are not always aligned

with the goals of the organisation. This self-interest serves to modify the

organisational response from strict compliance with the organisational strategy or

external conceptions about how best to structure the organisation. The outcome of

39 Leadership is defined in the literature as: “the process whereby one or more individuals succeeds in attempting to frame and define the reality of others” (Smircich & Morgan, 1982, p. 258).


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change can then be explained as a product of the values of key interest groups

holding positions of power and the organisational interests and goals.

All leadership theories comprise at least two consistent themes (Shamir, 1999). First,

they all view the leaders as change agents. Second, many of the theories suggest that

leaders are wary of their operating environment and the need for adaptation when

changes arise in this environment. Based on this, leadership theories adopt the view

that for change to be successful, organisational culture must be changed or

modified to reflect the change (Dawson, 1994; Schein, 1992; Shamir, 1999). Schein

(1992) suggests that there are six ways that leaders can bring about a cultural change

within the organisation. These include attention, the leader’s reaction to crisis, role

modelling, criteria for resource allocation, allocation of rewards, and criteria for

selection and dismissal. These ways have been summarised in Table 3.2, along with

examples of each.

The first way to bring about change is attention. This refers to the leader’s

communication with his/her employees about the priorities, values, and concerns of

the organisation. According to Schein (1992), the leader’s reaction to crisis also can

play a large role in shaping the organisational culture when the leader is able to

communicate to the employees what values and priorities are important. The

observed criterion for resource allocation refers to the use of greater participation

during budget planning. At this time, leaders are able to shape the organisational

culture using select criteria that demonstrate the organisational values to the

employees. Role modelling, the fourth way to shape an organisational culture occurs

when the leader’s behaviour reflects those behaviours he/she would like to see


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displayed in employees. Schein also suggests that leaders can communicate to

employees the importance of certain values, norms, and behaviours using rewards

(intrinsic and extrinsic). Finally, the criteria for selection and dismissal can play a

large role in shaping organisational culture when communicated to employees

because it provides a guide for them of the organisation’s expectations (Schein,

1992).

Table 3.2: Ways a Leader Can Bring About a Change in Culture

Ways to bring about change

Description Examples

Attention Leaders can bring about a change in culture by directing their own behaviours to specific areas requiring attention.

Casual remarks or questions aimed at a certain area.

Reaction to crisis The manner in which the leader reacts to crisis creates new norms and values.

Support for employees during periods of decline can signal a commitment to employees.

Role modelling, teaching, and coaching

Leaders are able to change organisational culture by educating and coaching their employees.

Video tapes outlining philosophies Involvement with all aspect of the organisation Questions Lectures Demonstrations

Criteria for resource allocation

The process of budgeting can change organisational culture by allowing for greater participation and by demonstrating organisational values and norms using select criteria.

Criteria such as innovation and a certain amount of dollars for research and development can shape the organisational culture.

The allocation of rewards

Employees learn from the allocation of rewards what the company values.

Promotions Performance Appraisals Discussions with the leader

Criteria for selection and dismissal

The hiring of a particular type of person can shape an organisations culture.

The hiring of tough, independent people creates a certain culture.

SOURCE: Developed by the author from Organisational Culture and Leadership (2 ed.), by E. H. Schein, 1992, San Francisco: Jossey-Bass.


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Political40 and power41 perspectives are relevant to the study of ACSs change (for

some commentary on this point see Ansari & Euske, 1987; Burns 2000). There are a

number of theories that have emerged as possible analytical tools for understanding

and conceptualising issues of power. These theories suggest that there are two ways

that a researcher can conceptualise power: (1) that which stems from the individual;

and (2) that which is explained by direct attention to conflict and domination. The

view that an individual can possess power and use that power to negotiate a

consensus underpins the interpretive and functional perspectives such as the

resource dependence perspective (Pfeffer, 1981; Salancik & Pfeffer, 1974) or the

institutional theory perspective (DiMaggio, 1991; Meyer & Rowan, 1977). On the

other hand, the view that society is rife with conflict and modes of domination and

the disbelief in a consensus view of society accords with critical perspectives.42

Whilst power is impressed in critical perspectives such as Foucault (1972, 1977,

1978), Habermas (1968, 1976), and Latour (1978, 1993, 1996), and it is

acknowledged that such theories have the potential to make significant

contributions to our understanding of accounting, the research objectives of this

study state that one objective of the thesis is to examine the role of the individual

actor in the processes of change and to understand the ways that intraorganisational

dynamics such as power, interest, and values influence the types of change. This

view tallies with interpretive theories which focus on “discrete units of analysis”

40 This thesis adopts Pfeffer’s (1981) definition of politics: “the less rational-appearing interplay of power and political strategy, occurs when power and control are dispersed” (p. 87). 41 For the purpose of this thesis power is defined as “the specific mechanism operating to bring about changes in the action of other units, individual or collective, in the process of social interaction” (Parsons, 1967, p. 299). 42 For an excellent discussion of the different treatments of power and their use in prior research, see (Covaleski, Dirsmith, & Samuel, 1996).


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rather than critical theories which focus on the “modes of organization” (Burrell &

Morgan, 1979, p. 311).

Power perspectives are important for understanding how and why ACSs are

designed and implemented from the conflict and negotiation of key individuals and

groups (Burns & Scapens, 2000; Carruthers, 1995; Dirsmith, 1998; Markus &

Pfeffer, 1983). Moreover, integrating political and power perspectives is required to

understand how new practices and techniques arise through a process of

negotiation and the influence of competing organisational subcultures (Brown,

1998). Scott (1995, p. 141) sums up this view:

Generalised models-beliefs, norms, and scripts-flow ‘down’ through the various levels, carried by socialisation, social construction, and sanctioning powers. These codes are carried and reproduced, but also modified and reconstructed, by the interpretations and inventions of subordinate actors: individuals, organisations, and fields.

One should be aware that political and power perspectives are interrelated in the

literature, most scholars suggesting that politics cannot be understood without

conceptions of power (Mintzberg, Quinn, & Voyer, 1995; Pfeffer, 1981, 1992a,

1997). In order to understand these concepts management literature is reviewed.

Researchers interested in change often highlight politics as a key factor of change

providing both the conception of a need to change and the direction of change

processes (Burns, 2000; Carruthers, 1995; Dawson, 1994; Pfeffer, 1981). Pfeffer

(1981) suggests that politics play a dominant role in deciding organisational change

when power is dispersed throughout the organisation. This suggests that when there

are numerous parties or individuals holding similar bases of power, the outcome of


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change is negotiated through the behaviours and actions of those actors (Pfeffer,

1981). Carruthers (1995) suggests the response is determined by the group or

person holding the most power.

The political perspective is built on an understanding that power is distributed or

shared in the organisation to influence employee reactions to change. For instance,

Bass (1990) suggests that when large numbers of individuals are involved in the

decision making and planning processes of change other employees are more easily

influenced by their decisions and less likely to resist the change.

Political perspectives suggest even the slightest change in the organisation can bring

about changes to the balance of power in the organisation and subsequently

changes in the organisation (Baldridge, 1971; DiMaggio & Powell, 1991; Stacey,

1993). For instance, staff implicated by a change such as involvement in new

functions or management processes, can affect the distribution of power in an

organisation, regardless of their participation in planning the change (DiMaggio &

Powell, 1991). The change in the balance of power often leads to changes in the

degree of value placed on existing norms and behaviours, especially when new

power bases are constructed that hold different interests and priorities to those held

by current management. If existing norms and behaviours are to persist, the leaders

and key interest groups must reinforce the value placed on those norms and

behaviours. If, on the other hand, the organisational norms and behaviours are not

consistent with individual norms and behaviours, over time the existing norms

become deinstitutionalised when less value is placed on them and their

reinforcement is discontinued. At the same time, those in positions of power will


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institutionalise new behaviours and norms consistent with their belief and value

systems. Successful change therefore relies on the ability of those in power to infuse

value in the new activity or rule so that employees perceive it to be a positive

change for the organisation (Boons & Strannegard, 2000). Such views suggest that

power by itself will not bring about change; instead, individuals must act to change

the organisation.

Organisational theories suggest that power is required in order for organizations to

function productively and effectively (Pfeffer, 1992b). Implicit in this is the view

that power is required to understand and explain organisational choices such as

resource allocation, administrative succession, structures, and strategic choice

(Pfeffer, 1981). Pfeffer (1997) suggests that when power is ‘legitimated’ or

‘authorised’ as part of the structure the exercise of power is expected. Hardy (1991,

see p. 135) suggests that power serves two purposes in organisations: (1) it is used

to defeat the opposition, and (2) it is used to prevent resistance to change.

Traditionally, institutional theories have drawn on resource dependency theory to

explain the issues of power and change in organisations (see for example,

Galaskiewicz, 1991). The resource dependency theory focuses on explaining the

inter- and intra-power relations of organisations. This perspective, primarily

developed by Pfeffer and Salancik (1978), suggests that organisations comply with

institutional pressures when resources are at stake.43 From an organisational

perspective, these resources include such items as raw materials, labour, capital, or

knowledge. To provide an example, according to the theory the Federal

43 For further discussion on power and dependency, see Hardy (1991).


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Government as a key provider of resources to universities has the capacity to exert

significant power over them (Slaughter & Leslie, 1997). The theory suggests the

degree to which the organisation conforms to institutional demands is dependent

on the degree of resource dependency: an increase in resource dependency will lead

to greater conformity to institutional pressures and vice versa. This perspective also

assumes that when an organisation controls resources, it has a power over those

organisations that depend on it deploying those resources for their survival.

The resource dependency perspective is however limited in its analysis of the other

types of power that can be used to change organisations. It does not for example

explain why change occurs when resource dependence is not vital for organisational

survival or why organisations persist with particular institutions despite their

reliance or dependence on other organisations that control resources. In order to

address these limitations power theories were reviewed to find alternative

explanations for informing the complexities of ACSs change. Table 3.3 presents the

findings of this review. After careful analysis of the pilot study data, Hardy’s (1996)

power types were deemed to have direct relevance for explaining the complexities

of accounting change in a large, decentralised organisation comprising many groups

holding similar degrees of power in the political processes. It should be noted at the

outset, however, that Hardy’s work draws on and combines variations of the

traditional power theories developed by Bass (1960), French and Raven (1960), and

Clegg (1975).


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Table 3.3: Types of Power

Author Date Dimensions of Power Descriptions

French and Raven 1960 Legitimate Power Power defined by the hierarchical structure.

Bass

1960 Reward Power Coercive Power Expert Power Referent Power

Power from the ability to reward. Power to punish. Power derived from the leaders expertise. Power derived from the leaders personal traits.

Hardy 1996 Power of Resources Power defined by the ability to deploy resources.

Power of Process Power of individuals and groups to restrict access to decision making.

Power of Meaning Power to use symbols and meanings to legitimate a process.

Power of System Power of unspoken norms and rules of the organisation.


Hardy (1994, 1996) claims that power is multi-dimensional. Specifically, she

identifies four dimensions of power. These are summarised in Table 3.3. The first

dimension is related to the power of resources. This dimension, similar to the

resource dependence perspective suggests that managers are able to control or

modify their employees’ behaviour by deploying resources. Specifically, Hardy

(1994, 1996) claims that this power comes into play when organisational actors are

dependent on specific resources such as information, expertise, political access, or

monetary rewards (for further commentary, see Burns, 2000; Scott, 1998). To

reduce employee resistance to change, key organisational actors deploy such

resources. This view is reinforced by Bourgeois (1991) and Vecchio (1997) who


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contend that managers are able to pressure their subordinates to comply with their

demands on the basis that they control key organisational resources.

The second dimension, the power of process, refers to the power of individuals and

groups to restrict or enable access to organisational decision-making. This power

derives from the symbolic sources (i.e. hierarchy). This power is usually mobilised

to reduce conflict and to legitimise outcomes so they are readily accepted in the

organisation (Hardy, 1991; Hardy, 1994, 1996; in education, see, Miller, 1995).

The third type is the power of meaning. Bradshaw (1998) explains this power as a

deep-cultural power that is related to reality. It is believed that if managers are able

to use symbols and meanings to convey to their subordinates that the change is

legitimate and those employees believe that the change is legitimate then resistance

to the change will be limited (Hardy, 1991). Viewed from such a perspective, those

that are able to define the reality have considerable power over those who accept

the reality as their own (Alvesson, 1992; Bradshaw, 1998; Hardy, 1985; Massey,

2001; Smircich & Morgan, 1982). Galaskiewicz’s (1991) case study found evidence

to support this perspective, concluding that conscious efforts to infuse value and

meaning in norms and activities can be effective for changing the organisational

behaviour (see p. 310).

The fourth dimension is the power of the system. This power underlies all of the

organisation’s actions and behaviours. This power dimension is the most difficult to

change because it involves the unspoken rules and norms of the organisation that

drive and provide stability to all of the organisation’s activities (Boonstra &


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Bennebroek Gravenhorst, 1998; Burns & Scapens, 2000). Hardy (1996) suggests

that in order to bring about change managers need to mobilise all of the types of

power mentioned here. To do this, managers need to investigate the first three types

of power (i.e., those that can be consciously modified) and develop strategies with

each of the power types in mind.

Pfeffer (1992, 1997) stresses the difficulties with measuring the concept of power

in organizations. He suggests that in order to understand power, evidence needs to

be provided of intentional effects on outcomes and the ability to manage resistance.

Using Hardy’s types of power, this suggests that evidence can be collected through

the observation of efforts to deploy or withhold resources such as those described

above, the conscious effort to include or deter others from participating in decision

making processes or the introduction of visible symbols in the organization.

So far in this section the focus has been on the role of the leaders or actors in

positions of power. Political and power perspectives suggest that powerful actors

must align their actions and behaviours with the organisational context to minimise

adverse ramifications. Next, the framework takes a different focus concentrating on

employees and how they are implicated by management’s decision for a change in

archetype. This suggests that employee and occupational concerns may act as

further mediators of the response process. Following this, strategies for overcoming

resistance are discussed to provide a more complete picture of how successful

change can be managed. It should be noted that the integration of discussions of

resistance to accounting change with models of change is consistent with previous


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efforts to understand the processes of change (see Quattrone & Hopper, 2001 for

some discussion on this point).

Regardless of management reinforcement of new institutions, conflict and

resistance are synonymous with processes of change (Bass, 1990; Hardy, 1991;

Kotter & Schlesinger, 1979; O'Connor, 1993; in accounting, see Scapens, 1994;

Vasu, Stewart, & Garson, 1998). This is why organisational theorists stress the

importance of power to overcome resistance (Pfeffer, 1992a, 1997). Employees

most adversely affected by the change tend to resist change the most (Bovey &

Hede, 2001). For example, when employees feel threatened or when confronted

with unexpected shifts in power, actors or groups of actors resist change for fear of

a loss of their power and influence in the organisation (Bass, 1990). At lower levels,

Vasu et al. (1998) claim that employees may resist changes to the MCSs when the

change is viewed as a ‘tightening’ of control procedures.

From an institutional perspective, resistance is explained through the infusion of

value in the existing archetype. Institutionalists suggest that when management

discards institutionalised activities and behaviours and takes on new values and

beliefs, subordinates may still operate with the old values and belief systems creating

a resistance (Gouldner, 1954; Greenwood and Hinings, 1996; Selznick, 1957). This

suggests that it is only when existing institutions are challenged that change

becomes possible (Scapens, 1994). The magnitude of change and the degree of

institutionalisation of the prevailing norms and values determines the level of

resistance (Brown, 1998). As suggested above, when change supports the current

value and belief systems, resistance is less likely to occur (Burns, 2000; Kraatz &


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Zajac, 1996; Oliver, 1992). Trice and Beyer (1993) among others claim that it is

much easier to accomplish change when employees believe that some of their

existing values remain intact. New values and norms are then seen to build on or

improve these values rather then to destroy them (see p. 404 for a discussion). In

his book Organisational Culture, Brown (1998) elaborated on these views highlighting

at least five sources of resistance: selective perception, habit, security, economic

status, and esteem.

Selective perception, according to Brown, occurs when the employee’s defined

reality of the organisation is at risk of being changed. Another source of resistance,

habit, occurs when employees are forced to discard institutionalised behaviours.

Brown further contends that employees resist change when their psychological

security is threatened or when change is perceived to diminish their economic status

(i.e. pay, bonuses). Finally, perceived changes in the status or esteem encourage

individuals to resist organisational change.

In light of this, O’Connor (1993) and Hardy (1991) contend that managing

resistance to change is the most important aspect of the change process. Leaders are

faced with the challenge of redefining the organisational reality or organisational

culture so that it is conducive to the change (Trice & Beyer, 1993). Trice and Beyer

(1993) state, “Members are unlikely to give up whatever security they derive from

existing cultures and follow a leader in a new directions unless that leader eludes

self-confidence, has strong convictions, a dominant personality, and can preach the

new vision with drama and eloquence” (p. 163).


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Kotter & Schlesinger (1979) suggest six strategies that can be used to overcome

resistance problems and to infuse value in new actions and behaviours: education

and communication, participation and involvement, facilitation and support,

negotiation and agreement, manipulation and co-optation, and explicit and implicit

coercion (for further discussion, see Vasu et al., 1998). From an institutional

perspective, these strategies can be used to redefine organisational reality, at the

same time alleviating apprehension arising from uncertainties and reinforcing those

values and beliefs conducive to bringing about change.

3.3.3 Institutionalisation

As suggested in the previous section institutionalisation is the process whereby new

archetypes become part of the organisation’s normal operations and they exist as

part of the organisational culture. Scapens (1994) suggests that accounting practices

are institutionalised when they become taken for granted by actors in the

organisation and thus become a basis from which decision making occurs. The

degree to which accounting practices are institutionalised in an organisation

depends on how those practices are accepted by organisational actors. Acceptance

by organisational actors is dependent on the socialisation of information to

subordinates, the continued commitment and reinforcement in the behaviours of

managers in the organisation, and the adaptation to environmental circumstances

(Cummings & Worley, 1997). Dawson (1994, p. 40) suggests it is in the

institutionalisation phase that the outcomes of change can be studied and compared

with the system before the change.


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Institutional theories suggest the process by which actions and behaviours become

institutionalised (i.e. common to all organisational members) is through

reinforcement of those activities and behaviours by those in positions of power.

That is, when existing accounting systems are no longer supported or reinforced

and the values and belief systems of new archetypes reinforced, accounting change

occurs (Burns, 2000).44

Up to this point, the chapter has been concerned with reviewing organisational

literature. From a comparison of data with the theories presented in this chapter a

framework emerged. This framework allows for an understanding of the intra and

extra-organisational pressures for change as well as the power and political

processes embedded in the change process itself. The following section outlines the

theoretical framework used to understand accounting change.

3.4 Integration of Theory: A Framework for Understanding the Dynamics of Accounting Change

This study examines the how and why of ACSs design and operation in a university

environment in light of the sweeping reforms of the HES in Australia. In keeping

with the research questions outlined in Chapter 1, this section provides a framework

for understanding the processes and context of change leading to the

institutionalisation of a particular value or behaviour. Based on a processual

approach, the framework draws on insights from strands of institutional theory and

other organisational and sociological perspectives to provide an explanation of the

44 Accounting change does not equate to the institutionalisation of accounting techniques. Burns (2000) suggests there is a potential for routinisation and institutionalisation to occur, but this is not always the case.


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interaction between organisational context and behaviour. This study focuses on

four formal components (strategic planning, governance, budget, and performance

management). However, several other informal factors including the external

environment and the organisation’s culture (i.e. power and politics, values and

interests) are used to explain the existence of the ACSs.

Figure 3.2: Model for Understanding the Dynamics of Management Control Systems Change

EXTERNAL CONTEXT

Conceptions of a need to change

Organisational Transition

Acquiescence, Compromise Avoid, Defy, Manipulate

Institutionalisation

C

H

A

N

G

E

INTERNAL CONTEXT

EXTERNAL CONTEXT

Governance Budgeting

Performance Management

MARKET INSTITUTIONAL

POWER

I NTERE S T S

VA LUE S

POLITICS

Strategic Planning

Management Control System


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Figure 3.2 diagramatically represents the relationships between organisational

context and behaviour leading to a change in MCS components and more

specifically a change in the ACSs. The framework is designed to look at change

from several levels (organisational, managerial, individual) using different theoretical

approaches to highlight different aspects of the change process and illuminate the

complexities of change. Acknowledging that not all aspects of change can be

studied, the framework highlights some important aspects of the change process

that should be considered. These are now discussed in more detail.

Changes to the operating environment of an organisation undoubtedly have

implications for the practice of management control. In the present case, as

described in Chapter 2, universities have been faced with pressures such as

government reform, changing community expectations, and market pressures.

These pressures are aimed at improving the efficiency and effectiveness of

operations as well as discharging accountability in individual institutions. These

changes warrant change in the design and structure of organisational operating

systems for those systems to function as designed (Anthony & Govindarajan, 2001;

Otley, 1994). Pressures for change prescribe rationalised ways to structure and cope

with the demands of the environment. Each pressure offers different and unique

conceptions of how best to structure the organisation (Scott, 1991). This study

acknowledges that there is not a perfect structure of control available (Berry,

Broadbent, & Otley, 1995c), and therefore seeks to understand the choice and

design of the MCS by exploring the interplay of intraorganisational dynamics such

as power, politics, interests, and values. These are discussed in turn.


129

Politics and power are considered central tenets of the framework; they are useful

for understanding the organisational response to change, the management of the

transition to the new archetype, and the institutionalisation of new behaviours and

activities. These dynamics act to facilitate MCSs change. This study will investigate

the various power centres of the organisation to understand the political processes

that are used to facilitate and institutionalise new accounting and management

systems. The insights provided by Hardy’s framework of power mobilisation will

help to identify the types of power that might be used to manage the transition

process and infuse value in new behaviours and activities.

Institutional theories suggest the design of the MCS and its influence over the

behaviours of organisational actors is determined by the values, norms, and beliefs

held by a particular organisation (Meyer & Rowan, 1977). These values, norms, and

belief systems are thought to originate from the organisational context. When the

environment changes, institutional theories suggest the organisation will respond or

change to ensure they are perceived as legitimate. There is the widely accepted view

that organisations can display a variety of responses to institutional pressures; some

requiring change others the persistence of existing behaviours (Oliver, 1991). This

suggests that when faced with the same pressures, not all managers will perceive a

need to change the organisation. The insights provided by Oliver’s strategic responses

will help to identify the responses displayed by the subject organisation.

When an organisation’s environment changes, the alignment of the MCS and external

pressures is likely to be problematic. Often it leads to conflict and politics. This

occurs because of the inconsistency between the prescribed structures and the values


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and beliefs embedded in the organisational culture or subcultures (Carruthers, 1995;

Scott, 1995). Throughout the processes of change, institutional theories suggest

existing norms, values, and interests act as resistance to new behaviours and ways of

structuring organisational activities. Scapens and Roberts (1993) suggest that an

understanding of resistance to the processes of accounting change requires a

contextual approach. Consequently, this study will seek to understand the

implications of changes to the MCS, especially where discrepancies exist between

inherent cultures. Besides this, the study will explore how change was managed

amongst groups in the organisation to reduce resistance and to deinstitutionalise

group values and belief systems so they support new archetypes. In doing so, the

study seeks to emphasise the importance of organisational values and belief systems

for creating and supporting new practices and techniques. Insights used from Schein’s

leadership theories will be used to help identify the ways leaders in the organisation

managed the transition of archetypes.

ACSs offer a number of roles for organisational control: they collect and manipulate

information for decision-making; they can be used to change the performance of

individuals and outcomes; they can be used to reward individuals; and they can be

used to enhance the legitimacy of individual and group activities (Markus & Pfeffer,

1983, see p. 206-207; see also Roberts & Scapens, 1985). Whatever the case, they

provide a set of institutionalised routines from which to deal with complexities

(Scapens, 1994). The introduction of new accounting techniques and behaviours

can be justified on the basis that they constitute rational procedures for increasing

efficiencies and in turn profits (Covaleski et al., 1985). What follows, however, is a

set of new values into the organisation which have implications for other forms of


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control (Christiansen & Skæbær, 1997; Covaleski et al., 1985). As discussed earlier,

when accounting techniques and procedures become widely accepted and adhered

to they are described as institutionalised (Burns & Scapens, 2000). At this stage, they

can also be described as an integral feature of the MCS, providing a guide of

accepted forms of behaviours. This thesis focuses on two components of the ACSs,

the budget and the performance management system.

Budgeting is a central process of control in the ACSs. The budgeting process offers

a number of controls including authorisation of expenditure, communication and

co-ordination, and performance evaluation (Berry, Broadbent, & Otley, 1995a;

Bruns & Waterhouse, 1983). These controls are essential for management pursuits

of efficiency (Covaleski et al., 1985). The study will investigate the role of the

budget to get a better understanding of how ACSs are designed and operate in a

higher education environment.

According to Scapens (1994), “organisational performance is reported, both

internally and externally, according to accounting rules and conventions” (p. 313).

Performance management systems are an integral part of the ACSs. Furthermore,

organisations rely on performance appraisal and accountability for effective

management control. In the public sector, performance management systems are

designed to discharge accountability requirements to a wide range of stakeholders;

that is, they are used as a legitimacy device (Nelson, 2002c). These systems are

believed to be essential for the pursuit of efficiency and effectiveness (Smith, 1995).

In a general sense, performance management systems can be viewed from two

perspectives: those that are designed for external stakeholders and those that are


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used for internal management control. This study will investigate the role of

performance management systems in the organisation focusing on the ways in

which methods of accounting are used to symbolise the adoption of rational

techniques suitable for pursuing efficiency, effectiveness, and accountability.

In this study, the ACSs are studied in view of their contextual relationships. This

suggests the design and operation of ACSs cannot be understood without

considering how these systems interact with other management processes and the

wider social context (Hopper & Powell, 1985; Hopwood, 1983; Humphrey &

Scapens, 1996; Roberts & Scapens, 1985). Furthermore, it is argued that to operate

effectively, ACSs should be designed in concert with other MCSs (Flamholtz, 1983,

p. 160). It is for this reason that the study of the design and operation of accounting

controls has been extended to consider other management control structures,

namely strategic planning, and governance and accountability structures.

Universities have been encouraged by Government reforms to implement strategic

planning to deal with the new competitive environment. It is important also to realise

that a discussion of strategy and related plans is an integral component of the

educational profile submitted to the Department of Education, Science and Training

(DEST) annually. Strategic planning systems have also been linked to structure,

budgetary systems, and performance management. For instance, the Hoare Report

(Higher Education Management Review Committee (Australia), 1995a, 1995b)

suggests that in order for strategic planning to be effective, there must be resources

deployed in line with the strategic plan. In addition, the Hoare Report suggests there

be performance monitoring and reporting on the progress of the institution for


133

meeting its objectives. This is consistent with management literature that suggests an

effective control structure is designed and operates with the organisational strategy in

mind (Anthony & Govindarajan, 2001). This study will explore the strategic planning

processes in the subject organisation to understand how these processes implicate and

are implicated by the design and operation of the ACSs.

In their review of university management systems, governments over the past

decade have focused on the way that universities are governed (Nelson, 2002c).

Governance structures have been changed in universities to cope with changes in

their size and operating activities. Governance structures are often linked with

accounting practice. In many cases accounting provides the institutional basis that

determines how organisations will be structured (Mouritsen, 1994). In doing so,

they render a sense of meaning to chosen structures, offering rationale for why

organisations are designed in a particular fashion (Scapens, 1994). In this study

governance systems were included to understand how and why the accounting

systems existed at the subject organisation.

It is argued that the above theoretical framework derived from the perspectives

outlined in this chapter is a pertinent means from which to focus the analysis of

findings. Using a triangulation approach will benefit this study in two ways. First,

the approach will allow the researcher to develop a wider explanation of

phenomena (Ansari & Euske, 1987; Hoque & Hopper, 1997b). In this study the

framework focused on a number of aspects of the change processes including the

drivers of change, the motivation for change, the political processes of change, and

strategies of change. Clearly, all of these aspects could not be studied using a single


134

theoretical approach. Moreover, these aspects are useful for pinpointing, processing,

and analysing large amounts of complex data offering useful data categories from

which to start the analysis and to tease out the relationships between these

dynamics. Second, the approach allows the researcher to test numerous plausible

explanations offered by the different theoretical approaches (see Hoque & Hopper,

1997b for a discussion). In this way, the method adopted allows explanations to

emerge from the case, reducing the chance of the researcher imposing one

particular theory on the observations (Humphrey & Scapens, 1996). In addition to

this, the framework lends to the case study approach: the case study and the

framework described takes as its focus the individual organisation as the unit of

analysis; the framework incorporates many immeasurable concepts such as power,

interests, and leadership only capable of being understood by the case study

approach; and the case study approach offers the flexibility required to understand

the complex relations between the organisational environment and the

organisational behaviour. These reasons would suggest the framework is consistent

with the methodological assumptions described in Chapter 4.

Utilising insights from a number of complimentary organisational and sociological

theories the framework described in this section provides an attempt to overcome

several of the noted limitations of the new institutionalism. In particular, this

framework reintroduces the role of the actor into processes of change using

resource dependence, power, and leadership theories. In doing so, the framework


135

offers a theoretical contribution for explaining the complexities of ACSs design and

operation, as suggested in Chapter 1.45

3.5 Conclusion

Seen as a vehicle for improving the state of the Australian economy, in the past two

decades the HES has witnessed enormous changes, many as Chapter 2 highlighted,

instigated by government reviews. Government policies have been spewed out,

dictating a need for improved efficiency and effectiveness, and strengthened

systems of accountability. As suggested in Chapter 1, private sector techniques such

as devolved management, strategic planning, budgeting, and performance

management have been thrust forward as a means by which these objectives can be

achieved (Wanna, 1997). Universities have responded to these pressures to ensure

the Federal Government’s continuous support for their operations. This study

provides an attempt to understand the changes to the ACSs of a single higher

education institution in this context. Consequently, an institutionally and

contextually derived framework was chosen to inform the findings.

It is argued that the institutionally and contextually derived theoretical framework

presented in this chapter provides a suitable analytical approach for understanding

the interactions between the contextual and intra-organisational dynamics leading to

the institutionalisation of new organisational phenomena. Although no theory is

capable of providing a full explanation of organisational phenomena, this

framework provides a useful analytical tool from which to focus the analysis of

45 It is recognised that the robustness of the framework is determined by its ability to inform future studies of change.


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findings. Each of the theories can be viewed as complementary, each offering a

partial explanation for what was going on in the organisation. Each perspective was

chosen based on its ability to provide a unique but practical explanation for

different aspects of the change process. Where the observations contradicted

theory, new theories were used to explain empirical findings (Humphrey & Scapens,

1996). The theory contains multiple themes: legitimacy, power, competing values,

and formal and informal structures, all of which have direct relevance given the

broad focus of research questions. It is argued that a multi-perspective approach is

necessary for understanding the complexities of ACSs change.

Chapters 5 to 9 use the framework described herein to inform the observations: to

tease out how and why the ACSs existed in the fashion they did at the subject

organisation. Consequently, the framework outlined in this chapter contributes to

institutional literature addressing criticisms for the neglect of power, interests, and

individuals and offering an alternative explanation for understanding organisational

change.

When conducting a study, one has to be sensitive to the methodological

assumptions emanating from the choice of a particular theoretical approach. To

understand and highlight the complexities of ACSs change in an individual

organisation requires an approach that lends to capturing the institutional context as

well as the multi-dimensional processes of change. It is argued that a longitudinal

approach is necessary to witness the change processes leading to the

institutionalisation of accounting control practices and techniques (for a discussion,

see Burns & Scapens, 2000). Consistent with this view, this study was conducted


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using a case study approach conducted in an ethnographic fashion. The next

chapter deals with this methodological issue and the research process utilised in the

study to gain a rich description of the ACSs and interrelated control systems in the

subject organisation.

138

RReesseeaarrcchh MMeetthhoodd

4.0 Introduction

The purpose of this study is to understand the design and operation of accounting

control systems (ACSs) as part of an interrelated control package in an Australian

higher education institution. The view taken in this study is that “Accounting is

neither a static nor homogeneous phenomenon” (Hopwood, 1983, p. 289). This

implicitly assumes that the ACSs must change over time in response to their

organisational environment. Furthermore, the suggestion that accounting is not a

homogeneous phenomenon infers that ACSs are as diverse as the organisations in

which they operate. As noted earlier, such views of accounting lend to the

longitudinal case study approach which allows accounting systems to be studied in

their natural context (Covaleski & Dirsmith, 1990; Scapens, 1990). Moreover, from

the discussion of the new institutional sociological perspective provided in Chapter

3, it can be argued that the case study framework is a suitable research methodology

for understanding the processes and not merely the outcomes of change. The

purpose of this chapter is to discuss the methodological issues of the case study

approach as well as to describe the methods or plan of action utilised in the study.

The remainder of the chapter is divided into four sections. First, the chapter

outlines the philosophical foundations underpinning the current study. This section

is provided to justify the choice of the case study methodology. The next section

4


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discusses the case study approach to research with a particular focus on its

application within the accounting discipline. Section three discusses the specific

methods used for gathering data, analysing data, and ensuring reliability and validity

of the data. The final section summarises and concludes the chapter.

4.1 Assumptions, Beliefs and Biases: The Qualitative Methods of Inquiry

The choice and adequacy of a method embodies a variety of assumptions regarding the nature of knowledge and the methods through which that knowledge can be obtained, as well as a set of root assumptions about the nature of the phenomena to be investigated. (Morgan, 1980, p. 491)

This extract infers the choice of particular method of inquiry should not be

determined by a researcher’s commitment to a particular strategy (Hopper &

Powell, 1985). To defend a chosen method of inquiry one must outline the

underpinning assumptions.

The study presented here is built on the understanding that realities exist as a social

product of human interaction, symbolic discourse, and creativity (Blumer, 1969;

Burrell & Morgan, 1979; Colville, 1981; Denzin, 1983; Hopper & Powell, 1985;

Humphrey & Scapens, 1996; Morgan, 1980, 1988; Morgan & Smircich, 1980;

Patton, 1980; Tomkins & Groves, 1983). This suggests the researcher needs to

consider the wider social environment for understanding a phenomenon (Bryman,

1989). The view taken in this study is that the ACSs, the phenomena of study, is

socially constructed and therefore subject to a variety of social, economic, and

political pressures (Berry et al., 1985; Burchell et al., 1980; Hopper, Cooper, Lowe,

Capps, & Mouritsen, 1986; Hoque & Hopper, 1994; Miller, 1994; Mizruchi, 1999;


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Tinker, 1980). Adopting this view infers that in order to get a full appreciation of

how and why the ACSs were designed and operate a strategy must be chosen that

also considers the context of that change. Appropriately these ontological,46

epistemological,47 and human nature48 assumptions would suggest that an

interpretive method of inquiry is the most appropriate for understanding how

control is exercised as a creation of shared meanings, and how particular meanings

can be attributed to accounting, requiring a change or persistence with techniques

and procedures (Chua, 1986a; Hopper & Powell, 1985; Morgan & Smircich, 1980;

Otley & Berry, 1994). Qualitative methods have the ability to provide this

understanding.

There are several advantages to adopting a qualitative approach. Das (1983) and

Patton (1987) suggest that qualitative methods offer a broader and more holistic

perspective to research than qualitative methods.49 In particular, qualitative methods

involve closer involvement of the researcher with the phenomenon of study. In

addition to this, the qualitative research approach permits the study of phenomenon

in its context. To further explain, the qualitative method of inquiry encourages the

reader as well as the researcher to get a more intimate understanding of how

variables interact with other features essential for their functioning (Bryman, 1989).

Similarly, Covaleski and Dirsmith (1990, p. 544) claim that qualitative studies are

46 Ontological assumptions relate to a researcher’s beliefs about the physical and social reality. For example, is reality external to the individual, is it objective, or is it the product of human cognition? These beliefs influence the epistemological assumptions (for a full review, see Burrell & Morgan, 1979; in accounting, see Hopper & Powell, 1985). 47 Epistemological assumptions are a set of criteria and processes used to determine the truth (see Burrell & Morgan, 1979; Chua, 1986b; Crotty, 1998). 48 Human nature assumptions determine the relationship between humans and the environment. For instance, are human beings a product of their environment or are they the creators of their environment? (Burrell & Morgan, 1979; Hopper & Powell, 1985). 49 For further commentary, see Miles (1979) and Miles and Huberman (1984).


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beneficial for the following reasons: (1) they provide rich descriptions of the events

and the behaviours and actions of people; (2) they facilitate exploring unforeseen

relationships; and (3) they reduce researcher’s induced retrospective distortion and

unsupported inferential leaps. Bryman (1984, p. 78), on the other hand, perceives

the advantage of this research strategy to be the fact that one can find “novel” or

“unanticipated” findings using such flexible approaches. He (Bryman, 1984) also

suggests qualitative methods are more “sensitive” to complex environments than

quantitative methods and that qualitative strategies can give a better understanding

of the processes or sequence of events. This is particularly important for a study

such as this, which seeks to use a processual approach to understand how and why

ACSs are designed and operate.

Qualitative research can be carried out using a wide variety of strategies such as in-

depth interview, case study, projective techniques, role-plays, life histories, or focus

groups.50 In order to choose an appropriate research approach, one must consider

the purpose of the study and the research question(s), and match these with the

available strategy (see Table 3.1 in Marshall and Rossman, 1999, p. 41). The type of

strategy then determines possible data collection techniques. Marshall and Rossman

(1999) suggest the type of strategy is dependent on the informational adequacy of

particular strategies, the efficiency of the strategy, and any ethical considerations

emanating from the choice of a particular strategy (see also, Zelditch, 1962). In this

study the chosen research strategy is a longitudinal case study, discussion of which

follows next.

50 Discussing each of these approaches in detail is beyond the scope of this chapter. For details on these approaches see Bryman (1984), Das (1983), and Marshall and Rossman (1999).


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The remainder of this chapter is comprised of three sections. The first section takes

an in-depth look at the case study as a research strategy. This is followed by a

description of the methods and procedures used in this study. The concluding

section summarises the findings of the chapter and then outlines the research

findings chapters.

4.2 The Case Study: An Ethnographic Approach

The term case study is often used interchangeably with ‘field research’, ‘qualitative

research’, ‘direct research’, ‘ethnographic studies’, or ‘naturalistic research’ (Ferriera

& Merchant, 1992).51 The main advantage from adopting this research strategy

stems from the fact that it enables the researcher to gain an intimate understanding

of organisational phenomena (Atkinson & Shaffir, 1998; Patton, 1987). Yin’s (1994,

p. 13) definition of the case study is most commonly cited for describing the case

study method:

A case study is an empirical inquiry that: • investigates a contemporary phenomenon within its real life context, especially

when • the boundaries between the phenomenon and context are not clearly evident… • copes with the technically distinctive situation in which there will be many more

variables of interest than data points, and as one result • relies on multiple sources of evidence, with data needing to converge in a

triangulating fashion, and as another research • benefits from the prior development of theoretical propositions to guide data

collection and analysis. The case study research method is distinguished from other research methods by

several unique characteristics. First, unlike other research methods such as surveys

51 Some scholars argue there is distinction between these terms. In this study, all of the terms are assumed to apply the same research method and as such the study makes no effort to reconcile differences (Kerlinger, 1986; Scapens, 1990).


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there is no set formula or set of steps required for carrying out a case study

(Atkinson & Shaffir, 1998; Ferriera & Merchant, 1992; Yin, 1994). Consequently,

the case study is very flexible. For example, McCutcheon and Meredith (1993)

wrote, “The research scope can be expanded as necessary, the focus shifted, or

other sources sought as the study progresses” (p. 243). Another important

distinguishing factor is that a case study occurs in a natural setting (i.e. an

organisation) that is not created purely for the purpose of carrying out research

(Birnberg, Shields, & Young, 1990; Ferriera & Merchant, 1992; Yin, 1994). This

enables the researcher to experience reality how others experience it (Atkinson &

Shaffir, 1998; Yin, 1994) and also allows the researcher to capture the unique

differences of the environment of study (Patton, 1987). Finally, the case study

method is distinguishable from other methods because it usually involves a small

sample (Ferriera & Merchant, 1992; Patton, 1980; Yin, 1994).

Yin (1994) believes the case study method of research is preferred when the

researcher poses ‘how’ and ‘why’ questions over real life organisational

phenomenon of which they have little or no control. Based on this, scholars have

argued that the case study is particularly useful for understanding how and why

accounting operates in organisations (see for example, Dey, 2001). In this sense, the

case study strategy befits the research questions and objectives outlined in Chapter

1. The study presented here also takes an ethnographic approach as its focus. This

means that all human behaviour is framed in the context of the organisational

culture52 (Dey, 2001; Van Maanen, 1979).

52 For a full description of the ethnographic approach see Fetterman (1998).


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Notwithstanding, the limitations of the case study must be acknowledged if the

findings of the study are to be considered credible (Abdel-khalik & Ajinkya, 1979;

Denzin, 1978a, 1978b; Lillis, 1999; McKinnon, 1988; Patton, 1987; Yin, 1994). It

could be argued that the most common criticism of this method is the validity and

reliability of the researcher's information. These concerns stem from two sources:

(1) the fact that the researcher is not able to remain independent and neutral from

the research setting (Ryan, Scapens, & Theobold, 1992), and (2) the fact that the

case study approach is extremely messy and highly interpretive (Allan, 1991). For

instance, Birnberg et al. (1990) suggest that validity may be reduced because the data

collection methods involve the researcher participating in the research setting. As an

example they suggested the case study method requires intervention with

participants, including informing employees about changes in the organisation to

point out the purpose of the study (see p. 40). This is believed to bias participant

response. More generally, Allan (1991) counter argues, “those who favour

qualitative approaches would accept that the perspective a researcher brings to the

research does influence the resultant ‘findings’, but that the flexibility of the

methods, their time span and the quality of data collected allows for a far greater

reflexivity about the theoretical and conceptual assumptions” (p. 182). There are

numerous ways a researcher can demonstrate credibility of the research findings.

Creswell and Miller (2000) identify nine procedures that can be used to overcome

validity and reliability concerns.53 These are presented in Table 4.1.

53 Creswell and Miller (2000, p. 126) suggest that these procedures are not exhaustive, however, they do include those most commonly used in case study research.


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Table 4.1: Procedures Used to Improve the Credibility of Case Study Research Validity Procedure Description

Triangulation The researcher can use multiple data sources, theories, methods, and investigators to search for consistency in information.

Disconfirming evidence This approach involves the researcher searching for consistent themes and categories and then involves the process whereby the researcher attempts to disconfirm this evidence.

Researcher reflexivity This involves the researcher describing the ontological, epistemological, and human nature assumptions assumed in the study. This is necessary to inform the reader why particular theories and research methods were adopted.

Member checking This process involves the researcher returning to the research site to verify the credibility of information.

Prolonged engagement in the field

This validation procedure allows the researcher to spend prolonged periods in the field to improve rapport with participants so that they feel comfortable disclosing information to the researcher. It also allows for methods and sources to be triangulated.

Collaboration This involves the participants becoming co-researchers in the research process.

The audit trail Validation concerns can be diminished if the researcher provides documentary evidence of research decisions and processes.

Thick, rich description A study can improve credibility by providing thick, rich descriptions of the setting, participants, and themes of study.

Peer debriefing This validation procedure involves person familiar with the research of phenomenon of study reviewing data and research activities.

SOURCE: Developed by the author from “Determining Validity in Qualitative Inquiry,” by J. W. Creswell, and D. L. Miller, 2000, Theory into Practice, 39(3), 124-130. First, the researcher can use several sources (i.e. participants), theories,54 methods

(i.e. interview, observations, archival documents),55 or investigators56 to improve the

credibility of information presented. This approach, referred to as triangulation, is

built on a military navigation strategy that suggests that one should use multiple

reference points to pinpoint an object’s location (Jick, 1979, see p. 602). Many

54 Chapter 3 discusses the treatment of theory triangulation in more detail. 55 These methods are described in greater detail in subsequent sections of this chapter. 56 For further discussion on using multiple investigators to improve the credibility of information, see McCutcheon and Meredith (1993).


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accounting studies recommend the use of this approach for improving the

credibility of research (see, for example, Abdel-khalik & Ajinkya, 1979; Hoque &

Hopper, 1997b; Lillis, 1999).

The second method uses a similar approach to triangulation. It involves the

researcher identifying research themes and categories. Once these have been

identified, the researcher then looks for negative evidence.57

The perspectives and perceptions of the researcher are shaped by their respective

value and belief systems (Denzin, 1978b; Denzin & Lincoln, 1998). These systems

are believed to bias data collection and interpretation. In order to reduce bias, the

researcher needs to maintain a degree of objectivity about the situation on hand. In

addition to this, scholars suggest one of the most important procedures used to

improve the validity and reliability concerns involves the researcher disclosing their

assumptions and beliefs to the reader. This is required for the reader to understand

why particular methods and theories were chosen and interpretations made

(Creswell & Miller, 2000; Hopper & Powell, 1985; McCutcheon & Meredith, 1993).

Member checking was the fourth procedure identified to appease credibility

concerns. This procedure involves the researcher returning to the research site to

discuss and check the validity of data and interpretations. Many scholars argue that

when an agreement is reached between the researchers and the participants of the

57 See also Miles and Huberman (1994) for further discussion on this point.


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study that the findings are valid and that credibility concerns are appeased (Bloor,

1997).

Creswell and Miller (2000) also suggest it is necessary for the researcher to spend

prolonged periods in the field in order to produce credible findings. In similar vein,

McKinnon (1988) suggests that the validity and reliability of findings can be

improved when considerable time is spent in the field because observer-caused

effects are able to be reduced, observer bias can be reduced, and threats from data

access restrictions can be diminished.

Another way the researcher can enhance the credibility of findings is to collaborate

with participants of the study. Creswell and Miller (2000) suggest this may involve a

participant becoming a co-researcher in the study. This participant can be used to

reinforce that the findings or conclusions drawn are valid and reliable.

The credibility of a study can also be improved through the audit trail. When a

researcher provides documentation of research decisions and processes as part of a

paper or thesis an external party can assess the validity and accuracy of the findings.

Thick rich descriptions can also be used as a procedure for establishing credibility in

a study. According the Creswell and Miller (2000, p. 128), these descriptions should

include the setting, the participants, and the themes of the study.


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Finally, peer debriefing can be used to improve the credibility of findings. This

involves the researcher reviewing the data and research activities based on their

familiarity with the research or phenomena of study.

Academics cite the inability to generalise as another of the main limitations of case

study research (Baldridge, 1971; Bryman, 1989; Otley & Berry, 1994; Yin, 1994).

This is because of the fact that case studies are usually carried out on a single site or

on few sites; the population is therefore not large enough to make a statistical

generalisation (Ryan et al., 1992). Despite this criticism, Hagg and Hedlund (1979)

argue that the knowledge obtained from a case study can be interesting and is

particularly useful for primary theory construction. Scapens (1990) also supports the

use of such theories. He argues that case study findings allow for theoretical

generalisation instead of statistical generalisation and on this basis they can be

useful.

A further criticism of qualitative research such as the case study stems from the fact

that the methods of analysis are not well formulated. Compared to a quantitative

research method, this can make qualitative studies less appealing as a research

method (Miles, 1979).

The following procedures were used to improve the reliability and validity of

findings in this study: triangulation, disconfirming evidence, researcher reflexivity,

member checking, prolonged engagement in the field, audit trail, and thick rich

descriptions. Subsequent sections elaborate further on how these were used in this

study. First, however, the types of case study are explored in greater detail.


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4.2.1 Research Objectives, Questions, and Contributions of the Case Study Method

As discussed Chapter 1, this study sought to contribute to the accounting literature

by developing an understanding of the design and operation of ACSs in an

Australian higher education institution. In this thesis it is argued that to get a better

understanding of how and why the ACSs took a particular form required a broad

research strategy capable of monitoring the external and institutional environments

influence on these systems. As a result, the open-ended case study approach was

chosen as the principal research strategy.

From an accounting research point of view, Ryan, et al. (1992) suggest five types of

case studies. These are descriptive case studies, illustrative case studies, experimental

case studies, exploratory case studies, and explanatory case studies. The descriptive

case study is used to describe accounting in practice. It details the accounting

techniques and practices used to manage the organisation. Kaplan (1986) suggests

that descriptive case studies are particularly useful for three reasons. First, they can

investigate interesting organisations or interesting practices. Second, descriptive case

studies can highlight areas for further research. The third benefit of a descriptive

case study noted by Kaplan (1986) stems from their use in teaching. Kaplan

suggests descriptive case studies are a useful tool for communicating particular

practices to students. Whilst from a different perspective, Ryan, et al. (1992) claim

that the descriptive case study method is particularly useful for explaining the

difference between accounting theory and accounting practice. The illustrative case

study method is used to demonstrate new and innovative practices. Experimental

case studies, on the other hand, can be used to analyse and evaluate newly


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developed techniques and procedures for companies looking to implement new

accounting procedures and techniques. The fourth type of case study method, the

exploratory case study, is used to investigate the reasons behind the adoption of a

particular accounting practice. This method of research is used to generate

hypotheses that can be tested at a later date.58 Finally, the explanatory case study

method is used in the accounting discipline to explain the reasons for accounting

practice and technique adoption.59

The current study can be classified as both descriptive and explanatory. It is

descriptive for its attempt to describe the practices of the MCS and more

particularly the ACSs in a university setting. It is explanatory due to the fact that the

study seeks to explain the reasons for the adoption of particular accounting

techniques and methods, and the roles these play in the organisation.

Case studies can be designed using a single site or multiple sites (Eisenhardt, 1989;

Yin, 1994). Again, the choice of either the single or multiple case study design is

dependent on the research questions (Yin, 1994). The single case study method is

deemed appropriate when the case represents an extreme or unique case, when

there is a revelatory case or a critical case (Yin, 1994, p. 47). In contrast, the multiple

case study approach to research is adopted for a cross-site comparison (Hussain &

Hoque, 2002). There is the view that generalisations from the multiple cases are

more robust (Leonard-Barton, 1995; Yin, 1994). The current study adopted a single

case study approach. A university was chosen as the site of investigation. The single

58 For further discussion of the relationship between the case study method and hypotheses, see Hagg and Hedlund (1979). 59 For further details on this literature, see also Scapens (1990).


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case study approach was chosen over the multi-site approach to allow the

researcher to get an in-depth understanding of the ACSs at a single institution and

not just a general overview of how they operated in several institutions.

Furthermore, the pilot study revealed some rather unique findings that suggested a

single case study would be most appropriate.

So how is the case study carried out? The next section deals with the intricacies of

this approach.

4.2.2 Methods of Generating and Collecting Data

There are several methods available to those conducting case study research. These

have been classified into three broad classes: interview, participant observation, and

enumerations and samples (Zelditch, 1962). It is important to realise that the

researcher must enter the field and interact with people in their natural environment

in each of these classes (Patton, 1987). A fourth class that is often found in the

literature is the review of documentation (see Bryman, 1989; Marshall & Rossman,

1999). Zelditch (1962) contends that this category is inclusive in the three broad

classes, however for the purpose of this thesis the review of documentation has

been distinguished from these classes.

4.2.2.1 Interview

Yin (1994, p. 84) believes, “interviews are one of the most important sources of

case study information” (see also, Fetterman, 1998). The interview process is aimed

at recording the opinions, feelings, emotions, and accounts of others. Interviews

provide the opportunity to put into context the events the researcher has witnessed


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and they provide an opportunity for understanding culture through language and

expression (Fetterman, 1998). There are several types of interview including face-to-

face verbal interview, face-to-face-group interviewing, or telephone surveys. This

section will focus on face-to-face interviewing, as this is the most common method

employed (Fontana & Frey, 1994).

Interviews offer several benefits to case study research. To begin with, they enable

the researcher to gather large in depth amounts of data in a short span of time. Put

another way, the interview process permits the interviewer to use their knowledge

of specific topics to ask questions that derive more than the typical ‘yes’ or ‘no’

response (Lofland, 1971). In addition, Marshall and Rossman (1999) claim that the

researcher is able to immediately clarify any points not understood.

Notwithstanding these benefits, the interview as a data collection method poses

several challenges to the researcher. The first challenge is to decide whom to

interview. In answering this question, the researcher needs to consider two factors:

is the respondent knowledgeable and is the respondent able to report precisely on

the phenomena under study? (Pearsall, 1970; Zelditch, 1962). Once this is decided

the researcher faces the further problem of getting the chosen participants to

cooperate (Marshall & Rossman, 1999). More generally, the researcher must also

consider the quality of the data derived from the interview process. This can be

affected in several ways. First, due to the nature of the interview, the behaviours of

both the interviewer and the interviewee may be modified to represent socially

acceptable behaviours (Denzin, 1978b). Additionally, the interviewee may modify

his/her responses to the interviewers questions to those he/she believes the


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researcher is expecting (Blum, 1970). A third concern noted by Denzin (1978b) is

the fact that the conversation between the parties is not natural. Rather, this

conversation covers a diverse number of topics and is organised in such a manner

so that the interviewer displays a certain amount of control over the respondent.

Finally, the length and nature of the interview pose a further problem for recording

data reliably. To some extent, however, this problem can be overcome by recording

the respondent’s answers using devices such as tape recorders and video cameras

(Fontana & Frey, 1994; Patton, 1987).

There are several types of interviews available to the researcher: the schedule

standardised interview, the non-scheduled standardised interview, and the non-

standardised interview (Denzin, 1978a, 1978b; Patton, 1987; Richardson,

Dohrenwend, & Klein, 1965). More recently, these interview types have been

referred to as the ‘standardised open-ended interview’, the ‘general interview guide

approach’, and the ‘informal conversational interview’ (Patton, 1990). These

interview types are distinguished by the degree of structuring or standardisation

(Richardson et al., 1965). The data obtained from the interview process usually

consists of quotations from respondents about personal experiences, knowledge,

opinions, and feelings (Patton, 1987).

The schedule-standardised interview is the most highly structured. This type of

interview technique is commonly used when the interviewer has large groups of

people to interview. The schedule-standardised interview is conducted in the same

way for all the respondents. This means that all of the questions are worded in such

a manner so that they convey the same meaning to each of the respondents and


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each question is given in the same order for each of the respondents (Denzin,

1978a; for further commentary, see Fontana & Frey, 1994). For the schedule

standardised interview to be successful, the group of people interviewed must be

homogenous for the questions to convey the same meaning to all (Benny &

Hughes, 1956). This type of interviewing is based on the premise that any variation

in response is not because of the instrument. Instead, the differences in response

represent a divergence in opinion. A further assumption of the scheduled

standardised interview is that the questions are pretested during the pilot study to

ensure that the above assumptions are met (Richardson et al., 1965).

The second type of interview, the non-scheduled standardised interview or the

general interview guide approach, is relatively unstructured. The questions

employed in this type of interview are designed to capture similar information from

each of the respondents, however, the questions are tailored to reflect the individual

characteristics of each of the respondents (Fontana & Frey, 1994). By doing this, it

is believed that each of the respondents is subject to the same stimuli and thus their

answers are a direct response to the questions and not the instrument. Furthermore,

this type of interview offers significant benefits over its counterparts when time is

limited and specific issues need to be explored (Patton, 1987).

The third type of interviewing technique identified by Richardson et al. (1965),

Denzin (1978a, 1978b), and Patton (1987) is the nonstandardised interview. As

suggested above, this is also referred to as the informal conversational interview

(Patton, 1987). This interview is highly unstructured, and is much more like a

general conversation. This means that the interviewer does not have a preselected


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set of questions and that the questions are not asked in a specific order. In many

cases, the respondent may not be aware that they are being interviewed (Patton,

1987). The benefit of using such a device is that the researcher has the freedom to

delve into many areas of interest during the course of the interview and the

questions can be personalised. According to Patton (1987), the downfalls of this

type of interview are the fact that it can take large amounts of time to get systematic

information and the information can be difficult to organise and analyse. This type

of interview is most suited for exploratory studies (Maccoby & Maccoby, 1954).

This study uses the non-scheduled standardised interview approach: questions were

worded according to organisational position taking into account the expected

knowledge and experience of the individuals (i.e. management, academic,

administrative staff).

4.2.2.2 Participant Observation

Participant observation occurs when the researcher participates in the daily life of

the subject of study (Becker & Greer, 1957). This means the researcher is able to

explore the functioning of an organisation beyond its formal structures and

procedures (Bryman, 1989). Observation therefore requires firsthand involvement

in the field of study: it requires the researcher to systematically record events,

behaviours, and the social setting throughout the duration of the study (Bryman,

1989; Marshall & Rossman, 1999; Patton, 1987).

The key benefit of using observation as a data collection technique is that the

researcher is able to gain firsthand knowledge of the phenomena of study. In


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particular, the researcher is able to improve their understanding of the context

within which the phenomenon occurs. A further strength of observation is that the

observer may see things that participants in the study may overlook. Observation

also allows the researcher to investigate topics or issues that the participants may be

unwilling to disclose in an interview (Patton, 1987). Most importantly, observation

can be used to overcome validity threats because it tends to have fewer reactivity

effects: it focuses on actual behaviour not perceptions (Birnberg et al., 1990).

The data obtained during observation commonly includes descriptions of programs,

behaviours, feelings, and knowledge. The descriptions depict what has happened,

how it occurred, and who was present (Patton, 1987). The records, also known as

field notes, can be very broad in the form of checklists or highly specific

descriptions of events and behaviours (Marshall & Rossman, 1999; Patton, 1987).

They should include everything the researcher believes to be important (Patton,

1987). Marshall and Rossman (1999) claim that observation is a critical component

of all qualitative studies.

The researcher can take on one of four roles in the field: the complete observer, the

complete participant, the observer as participant, or the participant as observer

(Denzin, 1978b; Gold, 1958; Pearsall, 1970). The difference in these roles is

dependent on the extent to which the observer is disguised to the participants of

the study.

The complete observer or covert observer is concealed or disguised from the

participants of the study (Bryman, 1989; Denzin, 1978b; Patton, 1987). According


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to Erikson (1970), this role is rarely used in sociological studies because of its ethical

implications. The main benefit of the observer role is that it completely diminishes

any threats to validity and reliability from observer-caused effects (McKinnon,

1988). Despite this, when used the complete observer also runs the risk of losing

some of the verbally communicated information (Pearsall, 1970) and therefore also

runs the risk of misinterpretation (McKinnon, 1988).

The complete participant is also disguised to the participants of the study. In this

role the researcher is employed by the organisation to work for them. At the same

time, the researcher is collecting data for his/her study. According to Pearsall

(1970), there are two risks to being a complete participant. The first is that the

researcher may be exposed at any time jeopardising their ability to complete the

study. The second risk is that the observer could go, as Pearsall (1970, p. 342)

termed it “completely native” and accept the values and beliefs of the organisation

as their own.60

In the two remaining roles that the observer may take on, the participants are aware

of the observer. The observer as participant is concerned with observing a large

number of people. Pearsall (1970) suggests that this has a distinct advantage that

stems from the fact that people will often disclose certain views to an observer that

they would not to a manager. In addition to this, Pearsall claims that because of the

nature of the relationship between the observer and the participant there is little

chance of the observer going native. On the other hand, the participant as observer

60 See Denzin (1978b) for further discussion on this approach.


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is concerned with observing few people. By adopting this approach, the researcher

may collect more in-depth data. However, if this approach is to be adopted the

researcher must be aware that they run the risk of ruining their ability to remain

objective about the validity and reliability of the evidence collected.

Observation has been criticised for the following reasons. To begin with, many

question the researcher's ability to maintain analytical distance (Ryan et al., 1992). In

other words, observing the organisational actors without influencing the

organisational functioning. Despite this, it has been argued that the researcher must

interpret the subject matter from some standpoint and bias is therefore an inherent

part the observation process (Allan, 1991; Diesling, 1971). Diesling (1971) for

instance argues, “participant observation depends essentially on the creative use of

bias to discover things that would not otherwise be observable, so the minimising

of bias would destroy the method” (p. 280). Two solutions have been suggested to

overcome the researcher bias problem. The first is to use two researchers to

observe the phenomena. The second way to overcome bias is to check the

observational findings with employees in the subject being studied (Diesling, 1971).

In the study undertaken the researcher took on the role of observer as participant.

How this was done will be discussed in greater depth in subsequent sections.

4.2.2.3 Enumerations and Samples

According to Zelditch (1962), the third broad class of field methods is

enumerations and samples. Zelditch further defined this category to consist of

questionnaires, surveys, and repeated observations.


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Marshall and Rossman (1999, p. 129) suggest that questionnaires are used in

qualitative inquiry to discover the distribution of characteristics, attitudes, or beliefs

within a sample of a population. This method of data collection, similar to the

interviewing, is dependent on the accuracy and honesty of respondents for its

usefulness. Generally, questionnaires comprise several questions that are followed

by structured response categories. Some questions may also be open-ended. The

validity and reliability of questionnaires is usually tested prior to its distribution

using a small sample (Marshall & Rossman, 1999).

The use of surveys as a method of inquiry has received much attention in

sociological literature. The information that is collected in the survey process varies

depending on the purpose of the survey but commonly includes facts, opinions,

beliefs, attitudes, and behaviours (Abdel-khalik & Ajinkya, 1979). This information

can be useful for corroborating evidence obtained during the interview and

observation collection periods (Sieber, 1973).

Surveys are particularly useful in research when large amounts of data are required

and when the researcher wishes to make inferences about a population (Marshall &

Rossman, 1999). However, the downfall or criticism to using this research method

is that the information collected is somewhat superficial: the survey method does

not allow for an in-depth understanding of complex situations or phenomena such

as the MCS. Nevertheless, surveys are a useful tool for collecting information on

specific topics or populations (Marshall & Rossman, 1999).


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Surveys were not used as a data collection method in this study for several reasons.

First, the methods utilised in this study were chosen based on their ability to

provide personal perspectives on the changes occurring in the institution. It was felt

that the survey method did not lend to this objective. Second, when approached

about the possibility of carrying out a survey in the subject organisation,

management expressed concerns suggesting that employees were too busy trying to

get used to the new working environment and thus, carrying out a survey could be

disruptive to their environment. There was also some suggestion that previous

surveys conducted at the University for internal management purposes had in the

past received a low response rate.

4.2.2.4 Organisational Records

The collection of organisational records and archival evidence can provide unique

evidence to a case study that may not be discovered using other sources. Often

cited as a secondary source of information, documentation can be a valuable source

for corroborating other evidence obtained in the field or it can provide a different

level of analysis from other qualitative methods (Bryman, 1984; Marshall &

Rossman, 1999). Marshall and Rossman (1999) contend that a review of

documentation can provide the historical context to the field setting. For instance,

by reviewing documents such as the minutes of meetings, memos, announcements,

formal policy statements, and letters, the researcher may shed some light on how

and why changes occur. The benefit of this method of data collection is that it tends

to be less obtrusive to the participants of the study.


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Documentation collected in conducting a field study varies but may include such

items as administrative records,61 letters, memoranda, agenda, other formal studies

on the site under study, newspaper clippings, and other internet based sources62

(Calvert, 1991; Marshall & Rossman, 1999; Yin, 1994).

Documentation provides an important secondary data source in this study.

Administrative records were retrieved from employees as well as from the

organisation’s website.63 In addition, the researcher received staff emails and

newsletters.

Up to this point, the chapter has been concerned with providing an overview of the

case study approach. In the second section of this chapter, details of the research site

are provided along with a description of the methods used to gain access to the

research site.

4.3 The Research Site

The organisation investigated was Griffith University. Griffith University operates

as an autonomous institution, determining strategic plans and suitable governance

61 To be clear, the administrative information includes data such as minutes, statistical information, and annual reports. The information that is recorded by administrators of the organisation is considered routine and is used by the organisation in their functioning. Thus, it is expected that it would contain few errors and therefore is considered to be reliable (Hakim, 1983). One can learn a lot from these records. For example, Fetterman (1998, p. 58) suggests the budget can be used to understand organisational values or the annual report can provide an understanding of the image the organisation wants projected to external stakeholders. For an extended treatment of administrative records, see Hakim (1983). 62 Recently, the Internet has emerged as a medium for collecting evidence quickly, with minimum cost to the researcher (Fetterman, 1998; Nancarrow, Pallister, & Brace, 2001). Qualitative researchers can use real-time interactions such as conferencing, chat, and focus groups to collect data or they can draw on email, mailing lists, and usenet newsgroups as a source of evidence (Morris & Ogan, 1996; Nancarrow et al., 2001). Email, conferencing, and chat can prove particularly useful for mapping employee interactions and highlighting power sources (Fetterman, 1998). 63 The organisation can be found on the web at: http://www.gu.edu.au.


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structures, budgeting systems, and performance management systems appropriate

to its environment. Griffith University submits an educational profile64 and a

financial report, to the Department of Education, Science and Training (DEST) on

an annual basis to satisfy external stakeholder accountability requirements.

The University was first established under the Griffith University Act 1971, a State

Parliament Act. The Griffith University Act 1998 has since replaced this act. The

University was established as the third university in Queensland. It opened its doors

to students in 1975, serving a population of only 451 students (Quirke, 1996).

In 2002 Griffith University offered in excess of 150 courses to its 26,000-student

population (Griffith University, 2001a). These range from Nursing and Health

Sciences, International Business and Politics, to Music, Education, and Law. During

the period of study, university employed 2870 staff in various academic and

administrative positions.

Griffith University was chosen as the research site for the following reasons: (1)

management had made significant efforts to change its MCS, (2) its significance

politically and economically, and (3) accessibility of entry.

Interviews with several of the managers at Griffith University revealed that the

University had undergone significant changes, especially in relation to the budget.

Interviewees suggested the models or archetypes that were proposed and being

64 The educational profile is discussed further in Chapter 8 and 9.


163

implemented at the University was unique to the University and not being used by

other universities in Australia.65 This inferred that although Griffith operated under

the same pressures as other Australian higher education institutions, the University

operated as a heterogenous entity making choices that were not entirely consistent

with its counterparts. Based on this, there was an expectation and an impression

that this would provide an interesting case from which to get a better understanding

of ACSs change. Interviewees also indicated that other interrelated control systems

underwent change during this period. Consequently, the research focus was

broadened in this study to include strategic planning and the governance structure

on the grounds that changes in these systems may have had implications or been

implicated by the ACSs.

A second reason for choosing Griffith stems from the fact that it is one of the

largest 66 and leading Australian universities and thus, is of particular interest for its

significance politically and economically. The accessibility of entry provided a third

motivation for choosing Griffith. At the time of study, the researcher was a student

of the University and therefore had access to many areas an external party could

not. Being a student of the University also meant that the researcher was able to

build trustworthy relations with the participants of the study.67

65 The evidence of the Budget Review Group later supported this claim. The Budget Review Group carried out a review of the University budget process in 2002 and recommended a new set of budget principles. As part of the review they found that Griffith University was the only university out of 17 universities studied that makes the budget allocation directly to the School level (Griffith University Budget Review Committee, 2002). Budgetary systems are the subject of Chapter 8. 66 Currently, Griffith is ranked 9th in the Australian higher education sector based on total student load. 67 Bias occurring from the close relationship between the researcher and the chosen site was considered, however, the researcher was unaware of the changes going on prior to the study and did not know any senior managers at this time. The researcher was also conscious of the potential for bias when interpreting and reporting data.


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4.3.1 Access to Data

Getting access to an organisation is always a concern for the researcher (Baxter &

Chua, 1998). In this study the researcher sought access to three organisations: the

research site, Griffith University, and two contextual sites Education Queensland68

and the DEST.69

The Vice-Chancellor of Griffith University was approached using a formal letter

and an information sheet (see Appendix 4.1) proposing the aims of the study,

methods of research, information required, and extent of employee involvement.

Access was negotiated with senior management and also with the Griffith

University Human Ethics Committee. The two other organisations were

approached in a similar manner.

Contact at Education Queensland was also made using a formal letter and an

information sheet on the study. In addition, interview questions were provided. At

Education Queensland access was gained through the Strategic Policy branch of the

organisation, which carried out a formal evaluation of the study objectives,

68 The Queensland Office of Higher Education is an element of the State Department of Education in Queensland. They provide advice to the State government on all aspects of higher education policy, planning, regulation, financing, and performance. The Office assists the Minister for Education to fulfil her responsibilities for higher education in Queensland. The Office administers funds allocated to it by the State government for higher education and liaises with a range of bodies in performing its roles including universities, private higher education providers, the Commonwealth Government, and other State and Commonwealth agencies (DEST, 2002). In 2002 the Office of Higher Education employed 15 staff. 69 The Higher Education Division is an element of DEST, which is the Federal Government department responsible for policy development and programme administration in Education. In 2002 the Division consisted of three branches a Funding Branch, Quality Information and Equity Branch, and an Innovation Branch (see Department of Education, 2002 website for a more indepth discussion of the roles and responsibilities of these branches).


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contribution, and confidentiality practices.70 The manager of Higher Education

Division at the DEST was also approached via a formal letter to get access to

employees and government documentation on their role in the sector. After

discussions with the manager of this division it was suggested that information

about DEST could be best obtained through the website and also written responses

to interview questions. Unfortunately, despite efforts71 by the researcher to get

written responses from DEST, these were never received.

The third section of this chapter provides an overview of the research methods and

procedures used to collect, analyse, and interpret data.

4.3.2 The Data Collection Methods Applied in this Study

In ethnographic case studies it is common to use interviews to collect data

(Hammersley, 1981; McCutcheon & Meredith, 1993). Notwithstanding, utilising a

single approach for data collection can lead to misunderstandings. Because of this,

Hammersley (1981) wrote:

The interview should be understood in context of other aspects of the respondent’s life. This is one reason why ethnographers tend to combine interviews with participant observation, rather than relying on interviews alone… The ethnographer must attempt to discover what actually occurs, and not be taken in by ‘official’ or preferred accounts. (p. 211)

For this reason, multiple data collection methods or data triangulation were used in

this study to overcome the limitations of using a single method and to complement

the strengths of each of the individual methods (Birnberg et al., 1990; Fetterman,

70 All studies on education institutions in Queensland must submit a formal application to the Strategic Policy branch of the State Education Department before access will be granted. 71 The Manager of DEST was emailed at his request on four separate occasions to remind him to answer the survey questions and to send the responses to the researcher.


166

1998; Lillis, 1999; McKinnon, 1988). Interviewing and observation were the primary

methods of data collection in this study. These methods allowed the researcher to

build up a picture of the processes of change taking place in the University using

the perspectives and viewpoints of the active observers and the participants of

change (i.e., the managers). Secondary data sources used in the study included a

review of documentation such as the annual reports, strategic plans, business plans,

internal memos, emails, legislation, and policy documents. The following section

describes the phases of study and then takes a more detailed look at the methods

used in the study.

4.3.2.1 Phases of the Study

This study was conducted in two phases: (1) pilot study, and (2) intensive study. The

pilot study took place over a five-month period during 2000. Six interviews were

conducted during this phase with employees in management positions. The research

questions were devised during this phase with the hope that they would be better

suited to the problems facing the organisation (Hopper & Powell, 1985). The

intensive study was carried out between November 2000 and September 2002. The

organisational period of interest was between 1994 and 2002; this period coincided

with a number of significant changes in the organisation including the introduction

of strategic planning, devolved formulae based resource allocation processes, and

the activity log.

4.3.2.2 Face-To-Face Interviews

In this study, all employees at Griffith were approached via email and then sent a

letter and an information sheet on the study. Participation was voluntary. This


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meant that the data collected was limited to those employees willing to participate.

Notwithstanding, a sample size at the subject organisation of forty-two face-to-face

interviews (see Table 4.2) was used to overcome the likelihood of data being missed

or misinterpreted (Appendix 4.2 provides a full list of the individuals interviewed).

The rationale for choosing a sample of this size stemmed from the fact that by the

fortieth interview no new data was emerging from participants. A sample of this

size also allowed for differences in perception to be identified.

In addition, five informal interviews were conducted with employees at the subject

organisation not willing to be subject to the formal interview process and one

phone interview was conducted. These informal interviews involved discussions on

a number of issues including strategic planning, structural changes, budgeting,

performance management, and changes to the higher education environment (i.e.,

government policy, reviews, changes in other institutions, enterprise bargaining

agreements).

Table 4.2: Formal Interviews

Position Number of

Interviewees Executive Management * 5 Academic Management** 19 Support Service Staff (including Managers)***

10

Academics**** 8 Outside Parties (NTEU, Education Queensland)

4

Total 46 * Executive management included the Vice-Chancellor, Deputy-Vice-Chancellors and Pro-

Vice-Chancellors and senior managers of administrative departments. ** Academic management included Deans and Heads of School. *** Support staff included School Administrative Officers and School Secretaries. **** Academics included Professors, Senior Lecturers, and Lecturers.


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As indicated in Table 4.2, the interviews were conducted with executive managers

(Deputy Vice-Chancellor, Pro-Vice-Chancellors, Deans),72 academic managers

(Heads of School),73 and administrative department managers in accordance with

the research objectives. In addition, numerous interviews were carried out with

various other employees of the University such as lecturers, general staff, and

school secretaries. These interviews were used to corroborate management

positions on changes in the University and to get a better understanding of the

implications of change. Participants at this level were selected on the basis of their

knowledge of the changes, their knowledge of the antecedents and the

consequences of the changes, their ability to report the changes and the antecedents

accurately, and their willingness to cooperate74 (Glick, Huber, Miller, Doty, &

Sutcliffe, 1995). All of the interviews were carried out in the offices of the interview

respondents. Most interviews went for one to two hours, a few exceeded three to

four hours. Follow up conversations were conducted with the respondents where

necessary to clarify previous comments.

In addition, one interview was conducted with a National Tertiary Education

Union75 (NTEU) representative employed by the University to get an understanding

72 Interviewees at this level ranged in age from 45-60 years old. All participants had professorial credentials. Four of the five interviewees at this level were male. 73 Interviewees at this level ranged in age from 45-60 years old. Credentials held at this level ranged from Dr. to Professor. Three of the 19 interviewees were female. 74 Volunteer participants can affect external validity. In this study threats were extinguished as the volunteer group were equivalent to the target population (for a discussion on this point, see Birnberg et al., 1990, pp. 44-45). 75 The NTEU is a union representing universities, TAFE colleges, Research Institutes, Adult Education providers, Student organisations, University and College Companies, and commercial arms and independent post-secondary education providers. The organisation is registered under the Workplace Relations Act 1996. The principal activities of the NTEU include: representing members in the workplace and industry-wide negotiations with employers and employer organisations; representing members before Industrial Relations Commission; State industrial tribunals and other courts and tribunals on matters relevant to workplace issues; providing information to members


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of the role of the NTEU in the sector. This interview was also conducted in the

office of the participant. The participant was chosen based on her position within

the NTEU and her association with the subject organisation.

As explained above, interviews were also conducted with government departments

to get an understanding of their role in the sector and to determine if they had

influenced any of the decisions made to change the MCS at the subject organisation.

Three interviews were conducted with managers at Education Queensland.

Interviewees at Education Queensland were chosen based on their understanding

of the role of the department and their knowledge of government reform. The

sample size was limited to three based on these factors. These interviews were

conducted in the office of the individuals interviewed. All interviews were taped and

transcribed at a later date.

Each of the participants was provided with an information sheet detailing the

purpose of the study, research questions, research procedures, and how employees

would be affected by choosing to participate in the study in the weeks leading up to

the interview. At the interview those participants were then required to sign a

consent form stating their willingness to participate in the study and their

understanding of the study’s objectives (see Appendix 4.3). This was required

because of the sensitive nature of the study. This study was conducted with the

about their employment and related rights and obligations; lobbying State and Federal Government and other relevant bodies about matters of concern to members and their families in relation to employment; publicising to members and to the community issues of concern to members and proposals to address these concerns; conducting research and other activities in order to enable the Union to effectively carry out these functions; and providing members and their families with access to a range of services on favourable terms. (National Tertiary Education Union, 2002)


170

approval of the Human Research Ethics Committee at the University. This means

the study was conducted in accordance with the National Statement on the Ethical

Conduct of Research Involving Humans. Participant names will remain anonymous to

reduce the risk of any harm to the participant because of their involvement.

Notwithstanding, positions will be referred to, to signify the views given by

particular levels of management to make the findings more meaningful.

To put participants at ease at the beginning of the interview process the researcher

engaged them in chatter about their position, length of service, other positions held,

and the history of the organisation. This was necessary to ensure the participant felt

comfortable speaking to the researcher. Once this was done, the researcher

employed a scheduled semi-structured format for collecting data. The questions

were designed based on pilot study results, a review of higher education and

management literature, and various sociological and organisational theories. The

main themes discussed were change, strategic planning, the structure, the budget,

and performance management. Despite the fact that all of the questions asked

converged around the same topics, the questions were worded in a manner suitable

to the respondents characteristics (i.e. in accordance with their position) to enhance

the researcher’s ability to get the best response possible. The questions were devised

prior to the interview to ensure that they were phrased in an appropriate manner

and also to ensure that all relevant topics were discussed. Most of the questions

were open ended to allow the respondent to answer as they see fit. For example, the

questions were worded in the following format: why do you think…what do you

see…how do you feel…or what is your opinion….(see Patton, 1987). Appendix 4.4

presents copies of the interview questions. This encouraged facts and the employee


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opinions to emerge in the course of the interview (Yin, 1994). Where the

interviewer was not satisfied with the response, additional questions were asked in

the interview process to probe for more in-depth answers. The interviews were

recorded on a dictaphone with the consent of the participant (in 41 cases). These

were later transcribed verbatim.76 The researcher also made notes during the

interview and directly after the interview to ensure that data was not lost due to the

unreliability of technology and to account for any additional observations that were

not captured on tape. These notes followed a similar format to Miles and

Huberman (1994).

4.3.2.3 Observation

In addition to observing employee behaviour during the interview process, the

researcher attended a number of management meetings, discussion and information

sessions, and other university events. This enabled the researcher to gain firsthand

knowledge of the how the organisation functioned. Observation of these events

also allowed the researcher to acknowledge and observe things that could have been

missed by other methods such as interviewing or data collection. For example,

observation of management meetings helped to clarify the power centres of the

organisation and identify conflict between campuses as well as the general employee

reaction to how changes were managed.

As mentioned earlier, the researcher took on the role of observer as participant in

collecting this data. This reduced the chance of the researcher going native and

76 Yin (1994) suggests that tapes can provide a more precise account of the interview than any other method. See Seidman (1998) for further discussion on the use of dictaphones for improving the reliability and validity of findings.


172

accepting any of the participant views as hers. All of the participants were aware

that the participant was observing the event or situation on hand, satisfying any

ethical concerns. Data collected in the observational phases of the study took the

form of field notes. At minimum these notes were dated at the time of data

collection and described the situation on hand, where the situation occurred, what

the setting was like, how the situation came about, who participated in it, where

possible what was said, and also the researcher’s opinions and feelings towards the

situation. The notes revolved around these topics to reduce threats of validity and

reliability from observer bias (McKinnon, 1988).

4.3.2.4 Documents and Archives: A Secondary Source of Information

Documents were used as a secondary data source. Similar to the primary methods

of data collection, the purpose of collecting data from these sources was to

collaborate findings. Document collection included such items as staff memos, the

Griffith University Act, emails, annual reports, budgets, the Griffith Gazette

(newspaper), and Higher Education policies and legislation (a summary of the

internal documents collected can be found in Appendix 4.5).

4.3.3 Data Analysis

Data analysis involves processes of ordering and making sense of large quantities of

data (Marshall & Rossman, 1999). Qualitative data has been criticised in the past

because analysis is focussed on words, which are subject to interpretation (Lillis,

1999; Marshall & Rossman, 1999; Miles & Huberman, 1984). Although there are a

large number of techniques available for the analysis of data, little has been written

on how to apply them (Ferriera & Merchant, 1992; Lillis, 1999; Miles, 1979; Turner,


173

1981). Nevertheless, data analysis techniques identified in the literature included the

transfer of data to index cards, the coding of data, methodological notes, case

summaries, charts, and dummy tables. Unlike their quantitative counterparts there is

no single technique that is professed to offer better analysis (McCutcheon &

Meredith, 1993; Tesch, 1990). Thus, how one researcher goes about analysing their

data may be completely different to how another colleague may analyse the same

data. The choice of techniques is however driven by the research questions (Baxter

& Chua, 1998; Robson, 1993), the research strategies, the theoretical framework

(Glaser & Strauss, 1967), methods and data traditionally used in such a study, the

availability and accessibility of data, and the resources at the researcher’s disposal

(Layder, 1993, p. 107).

It was explained earlier that one of the ways that concerns for reliability and validity

were dealt in this study was by using a number of methods of data triangulation

(Robson, 1993). This ensured that during data reduction phases the researcher did

not to draw conclusions too hastily or to dismiss useful data (Miles, 1979; Weber,

1990). This also allowed for a consistent picture of events to emerge (Yin, 1994).

Different analysis techniques were also used for the different data types collected.

In this study data were analysed manually using a similar approach to that described

by Marshall and Rossman (1999). The approach involved six general phases of

analysis: (a) organising the data; (b) generating categories, themes, and patterns; (c)

coding the data; (d) testing the emergent understandings; (e) searching for

alternative explanations; and (f) writing the report. The first three of these phases

are concerned with data reduction, the latter two with interpretation. It is important


174

to note that phases (a) to (e) occur on an ongoing basis throughout the study and

cannot be divided into separate neat, timeframes (Huberman & Miles, 1994;

Robson, 1993). Details are provided of how the researcher carried out each of the

phases next.

4.3.3.1 Organising the Data

In the first stage of analysis data are considered raw and highly descriptive but not

very meaningful. This means that data is not in a suitable form for analysis. The

purpose of this phase therefore was to organise the data into a format suitable for

further analysis.

Data collected in the interview process were transcribed verbatim in this phase of

analysis. The interview transcripts were printed on different coloured paper

according to positions (i.e., senior management- green paper, general

administration- yellow paper, Finance and Business Services- pink paper, Heads of

School- white paper, academic staff- grey paper, external parties- blue paper). By

doing this, the researcher was able to identify information according to the level of

management or staff positions. In addition, the transcripts were analysed and key

points were highlighted using contact summary forms (for further details see Miles

& Huberman, 1984, p. 53). This process was carried out within a day or two after

the interview to allow the researcher to make additional notes while they were still

fresh in her mind. Similarly, the field notes written during observation were

organised in a form under the headings: date, time, event, participants, description

of events, where the event occurred, how it came about, what was said, and the

researcher’s opinion and feelings. Finally, the contents of the documents collected


175

throughout the study were condensed in a document summary form (see Miles &

Huberman, 1984 for an example). The purpose of this form, similar to the contact

summary form, was to summarise the document and assess its ability to corroborate

interview evidence.

4.3.3.2 Generating Categories, Concepts, Themes and Patterns

Yin (1981) suggests that in order to analyse qualitative case evidence in a meaningful

and productive manner the researcher should arrange their narratives around the

concepts or topics of interest.77 In this study, the contents of interview transcripts

were organised under the following categories: strategic planning, governance and

accountability structures, budget, and performance management. Each of these

headings was predetermined by the study objectives and researcher assumptions,

which suggest that ACSs should be studied as part of an interrelated control

package.

4.3.3.3 Coding the Data

The third phase of analysis of data required the data to be coded. This involved a

refinement of the categories created the previous stage or a further reduction in data

(Marshall & Rossman, 1999; Miles & Huberman, 1984). This technique was carried

out manually in this study to identify the processes of change. Consistent with the

theoretical framework the categories used were: conception and motivations of

change, processes of change, institutionalisation, characteristics of change, and

behavioural implications. By doing this, the researcher was able to address the

77 The process by which the data is assembled together according to categories, themes, and patterns is referred to as content analysis (Patton, 1987; Seidman, 1998; Tesch, 1990; Weber, 1985; Weber, 1990).


176

research questions. For example, data were now available on why the organisation

adopted a new budget archetype, how it managed the transition to the new

archetype, the characteristics of the new archetype and any subsequent implications.

4.3.3.4 Testing the Emergent Understandings

In this phase, the researcher developed an in-depth understanding of the data. To

begin with, the coded data were arranged in folders according to the codes

developed in the previous phase. This involved a process of cutting and filing the

interview transcripts. Observation documents and archival sources were also added

to the folders in accordance with their contents and the folder code. Data was then

analysed based on the quality of data and its ability to contribute to answering the

research questions set out in Chapter 1. Specifically, the contents of the transcripts

were compared to see where answers converged (i.e. data triangulation). The

findings were then compared with observation and documentary sources to see if

any of the information was validated by other methods. Where variations existed

between data from different sources, alternative data was sought to try and test its

validity (Patton, 1987; Yin, 1994).

4.3.3.5 Searching for Alternative Explanations

In this phase the researcher reviewed her understanding of the phenomena by

testing explanations of what had occurred in the organisation against the

organisational and sociological theories outlined in Chapter 3. During this phase the

researcher looked for alternative explanations for the recorded events and

behaviours other than those originally formed (Glaser & Strauss, 1967; Marshall &

Rossman, 1999). The purpose of this phase was to determine the most plausible


177

and empirically grounded explanation for the phenomenon. Essentially, the patterns

identified in the data were compared or matched with the predicted theoretical

patterns to test their validity (Glaser & Strauss, 1967; Yin, 1994).

4.3.3.6 Writing the Report

The findings of the study are disclosed in Chapters 5 to 9 of this thesis. Direct

quotations and narrations are used to convey to the reader the respondent’s

emotions, views, and interpretation of specific issues and events (Ferriera &

Merchant, 1992). Documentary sources such as annual reports, Vice-Chancellor

reports, and Operating Budgets (see Appendix 4.5 for a full list) were also used to

corroborate this information. In a number of cases, information was also retrieved

from the subject website and has been included in the research findings chapters to

improve the credibility of findings. Observation data is also reported in the research

findings as a further source of information used to triangulate the findings and to

improve its validity.

4.4 Conclusion

This chapter outlined the research strategies applied to the study of the design and

operation of ACSs in a higher education setting. The chapter suggested that that the

choice of a particular strategy is dependent on the philosophical assumptions

underpinning the research questions and objectives. With this in mind, this chapter

argued that the study of ACSs requires an in-depth case study approach capable of

locating and capturing the complex relations between the accounting system, other

interrelated control systems, and the wider environment. Although the case study


178

method is limited in its ability to generalise findings, it is argued in this chapter that

this was not the intention or aim of the study.

The chapter revealed that Griffith University, a large Australian higher education

institution, had been chosen as the research site. Based on preliminary

investigations, it was expected that Griffith University would provide rich and

interesting data suitable for an equally interesting case study. The research methods

suggest that data triangulation methods were used to improve that validity and

reliability of research findings.

Up to this point, this thesis has outlined the research problems, the contextual

information of the study, the theoretical framework, and the research methodology

and methods. Next, Chapter 5 provides an introduction to the research site. This is

followed by the research findings.

179

HHiissttoorriiccaall BBaacckkggrroouunndd ttoo tthhee RReesseeaarrcchh SSiittee

5.0 Introduction

This chapter is the first in a series of findings chapters that describe the research

site, Griffith University. The chapter is divided into two parts. To place the

discussion of the management control system (MCS) in context, the first part

provides an overview of relevant history of the organisation focusing on the

external triggers for change and their immediate impact on the research site. The

chapter then moves to a discussion of the culture and sub-cultures of the

organisation. As suggested in Chapter 3, an understanding of the organisational

culture and sub-cultures is critical for understanding organisational change.

5.1 Dawkins Reforms

As indicated earlier, the Dawkins reforms (1987-1988) forced all higher education

institutions including Griffith University to amalgamate with other existing

institutions. Griffith University was forced to amalgamate with two Colleges of

Advanced Education (CAEs). The first of these, the Mt Gravatt campus of the

Brisbane College of Advanced Education (BCAE) merged with Griffith University

in January 1990. Later that year, the Gold Coast College of Advanced Education

(GCCAE) also joined Griffith University. In 1991 Griffith expanded further with

the amalgamation of the Queensland Conservatorium of Music (QCM). An

amalgamation with the Queensland College of Art (QCA) concluded the expansion

5

Chapter 5 – Historical Background to the Research Site

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of Griffith University in December 1990. In the years following the amalgamations,

management was then left with the task of how best to manage the multi-campused

university.78

5.2 Diminished Public Funding

Since the Dawkins reforms, the proportion of government funding to total funding

has continued to decline.79 Consequently, this has served to increase the

competition between and within80 universities for the funding available (Goodwin &

de Gouw, 1997). The impact of this has been stressed in several of the Vice-

Chancellor’s forwards to the annual statements over the last few years:

The University like all Australian universities, was required to find additional non-government sources of funds in the context of budget cuts… (1996, p. 2) Finite resources must stretch across multi-million dollar campuses, extensive research infrastructure and student populations often equaling those of medium-sized towns. (1998, p. 3) Highly constrained Commonwealth funding have heightened competitive pressures on public universities, forcing them to diversify their sources of funding and act as corporate entities in a competitive market. (1999a, p. 6)

These extracts suggest that diminishing government funds have had implications for

the management of the University including the search for new sources of income

to supplement government income, and pressures to adopt business like methods

to increase the efficiency of university operations.

78 This is consistent with the view put forth by Wilson (1997b) who argues that structures and the management of universities can be particularly challenging for managers of multi-campus universities. 79 See “Fact Sheet 3: The higher education contribution scheme & what it means for students and universities” by the Australian Vice-Chancellors' Committee (2001), for further discussion. 80 More will be said about the competition within the University in Chapters 7 & 8.


181

5.3 Growth in Student Numbers

The Dawkins amalgamations paved the way for an increase in student numbers (as

much as fivefold over the next five years) at Griffith University. Since the

amalgamations, the University has lobbied along with other universities in

Queensland and the Queensland Government to receive additional government-

funded places.

In 1995, the University received an additional 140 places from the Federal

Government. Between 1996 and 1998, the University received an additional 1,150

equivalent full time student unit (EFTSU) places from further lobbying to Federal

Government. Sixty percent of these places were allocated to the Gold Coast

Campus to address the population growth in that area. Interviewees and

documentation also revealed the University received a further 245 places as part of

the Federal Government Initiative Backing Australia’s Ability in 2002. Although there

has been a significant increase in the number of Federal Government funded

EFTSU places in the University, the student staff ratio gives some indication of the

financial pressures the University is under (see Figure 5.1).81 The student staff ratio

for 2001 was 21.79:1.

81 This was calculated based on total number of students/full time academic staff. As a comparison, Marginson (1997) suggest the average student-staff ratio for universities varied from 11.5-12.9 between 1961 and 1983.


182

Figure 5.1: Staff /Student Ratio

0

5,000

10,000

15,000

20,000

25,000

30,000

1994

1995

1996

1997

1998

1999

2000

2001

Student Numbers

Academic StaffNumbers

SOURCE: Developed by the author from Griffith University 1994-2001 Statistics in Brief. For details see http://www.gu.edu.au/ua/aa/pas/Brf_Stats/home.html

5.4 Introduction of a Sixth Campus

In 1994, following discussions with the Queensland State Government and the

Commonwealth Government, a working party was established to investigate higher

education in the region. The following year the party recommended that a new

campus be established; this time servicing residents in the Logan area. With the

assistance of State Government, a 56-hectare site was purchased in June 1996 for

the new campus (1996 Annual Report, p. 4). After extensive planning and building,

the Logan campus officially opened in 1998.

5.5 Enterprise Bargaining Agreements

Since 1995 Griffith University, similar to other universities in Australia (Marginson,

1997b; Sharpham & Harman, 1997), has been required to cover the cost of

increases in salary levels from the existing University operating grant. In 1995, the

University undertook negotiations with the Australian Liquor Hospitality and

Miscellaneous Workers’ Union (ALHMU), the Australian Services Union (ASU),


183

the National Tertiary Education Union (NTEU), and the Queensland Public Sector

Union (QPSU) on employee relations.82 At the close of the year, agreements had

been reached on the Academic Staff Procedure and the General Staff Performance

Management Scheme. This is referred to as the Enterprise Bargaining Agreement

(EBA). For the most part, this agreement was centred on increasing staff wages and

salaries. The academic salary increases are shown in Table 5.1.

Table 5.1 Enterprise Bargaining Academic Salary Increases

Date Salary Increase (%)

1 July 1999 2%

1 July 2000 2%

1 December 2000 2%

1 July 2001 2%

1 July 2002 2%

1 December 2002 1%

1 March 2003 1.25%

Total 12.25%

SOURCE: Developed by the author from the Griffith University – Academic Staff Certified Agreement 2000 – 2003.

In his submission to Council on the review of the Gold Coast Campus, Vice-

Chancellor Roy Webb (2000b, p. 4) suggested the EBA cost the University $1.25

million annually for each 1% unfunded salary increase. Arguably, this has added to

the financial pressures, necessitating a more effective and efficient management.

82 General staff are represented by all of the mentioned unions. Academic staff on the other hand are only represented by the NTEU.


184

This part has described the reform implications for the University.

In particular, the Dawkins reform and the EBA were shown to have significant

effects on the University management structures.

5.6 The Organisational Culture

The interest in organisational culture in this study derives from its noted influence

on the effectiveness of organisational control systems. To this end, this section of

the chapter provides context to the changes occurring to the MCS of the University,

which will be discussed in Chapters 6, 7, 8, and 9.

From the start, Griffith took an unconventional approach from the typical

Australian university choosing to develop its structure based on the American

tradition of faculties. Differences in the Griffith culture did not however stop there.

Quirke (1996, p. 8) for example, contends that Griffith University was the first

university who referred to non-academic staff as general staff. Further, the

University cultivated a unique environment to that period, where students opinion

was considered invaluable in planning the institution (Quirke, 1996). In the early

1970’s the Vice-Chancellor encouraged staff and students to mingle, setting up

common rooms to facilitate relationships between different members of the

community. Other differences in the culture included programs grounded in

interdisplinarity, a common foundation course for each degree program, and team

teaching (see Griffith University, 2002a, p. 2 for a discussion).

The 1980’s proved to be a period of growth and change in the University. Student

numbers escalated, there were changes in government, the introduction of a new


185

Vice-Chancellor, the retirement of founder Sir Theodore Bray, and an increase in

courses for ‘clients’ (Quirke, 1996). The new Vice-Chancellor, Professor Roy Webb,

took a different approach to the management of the University. He supported the

notion that universities should become privatised. Furthermore, Vice-Chancellor

Webb believed Griffith University management would be best served by senior

academic staff (Quirke, 1996). “Professors,” Quirke wrote, “were encouraged to

assume leadership roles in the University” (1996, p. 49). A review of the

demographic data of managers interviewed suggests the University continues to

adopt this approach, promoting only senior academics to management positions

such as Head of School, Dean, or Pro-Vice-Chancellor.

Traditionally, universities globally adopted collegial decision making approaches

(Baldridge, Curtis, Ecker, & Riley, 1977). A review of university documents revealed

that Griffith University also adopted this approach. In the Griffith University case,

the academics were held in high esteem and thus were invited to participate in

decision making (Baldridge et al., 1977). Other stakeholders were also invited to

participate in the decision-making processes and influence how the University

evolved. A number of students, for example, held seats on University Council

allowing them to participate in deciding how the University should operate. Thus,

decision-making at this time was not left to those in delegated positions of power.

Since the Dawkins reforms, however, Griffith University similar to other

universities in Australia (Marginson & Considine, 2000) have shifted from the

collegial approach to become more managerial to allow for quicker response time to

changes in the increasingly complex university environment. A review of Griffith


186

documentation, in particular A Guide to Committee and Meeting Skills, suggests that

Griffith University mirrored the trend occurring within the sector. Ramsden (1998)

reasoned universities are adopting more bureaucratic approaches because the

collegial approach tends to be a slow form of decision-making that it is inwardly-

looking (p. 23). Furthermore, he reasons that a more managerialist focus is

imperative for universities to compete in the sector.

Over the past decade the University has come to use many business practices,

several of which will be described in subsequent chapters, once only observed in

private sector enterprises.83 Given this shift to business practices chiefly derived

from private sector control systems it is not surprising then that the traditional

academic culture centred on teaching and learning is no longer perceived by

academics at Griffith University to be the overarching culture of the University.

Instead, a second more visible culture has emerged which has been characterised as

increasingly bureaucratic (Marginson & Considine, 2000; McNay, 1995; Ramsden,

1998). Built on the principles of economic rationalism, interviewees commented

that many of the underpinning themes of this culture conflict with the traditional

culture of the University. For example, the notion that courses or schools should

only operate if they are financially viable, regardless of their contribution to the

body of knowledge.84

83 In this thesis it is argued that the business practices have been imported from the private sector because the sector was traditionally characterised by collegial traditions. See also Pollitt (1990) or Alford (1997) for an in-depth discussion on private sector technique importation. 84 This issue is discussed in greater detail in Chapter 8, which investigates the budgetary system at the University.


187

According to Education Queensland participants, the issue of competing business

and academic values is commonplace in all higher education institutions. One

interviewee commented:

I think there is a very interesting fighting going on between the nature of an academic institution and the way that culture is so pervasive, which must run up against the principals of accountants all the time. For example, I knew an accountant working at Griffith who had prior to coming to Griffith been a manager at a department store. When he came to Griffith he could never understand why there was a research budget. If we are short of money why are we continuing to spend so much money on research?

Ramsden (1998) made similar comments on the conflicting nature of these cultures

in his book Learning to Lead in Higher Education. Specifically Ramsden wrote of

inconsistencies between the traditional collegial approach to management, and that

required by the new competitive environment. He remarked:

A higher education system whose institutions need to search for new funding sources, plan strategically, and compete with each other in a market with manifold clients no longer possesses the homogeneity and stability which can make collegiality an effective form of getting things done…. Ambitions for leadership, success in management and administration, a commitment to more efficient business operations –valued qualities in most organisations other than universities, even among professional employees– tend to be looked on with disfavour by most academics. The ‘two cultures’ of management and academic cross swords along the frontier defined roughly by the caricatured problems they have with each other. (p. 23- 27)

5.6.1 The Organisational Subcultures

It is widely accepted among organisational theory scholars, that organisations

operate not only with an organisational culture but also with various subcultures

(see commentary by, Brown, 1998; Cummings & Worley, 1997; Trice & Beyer,

1993). As such individuals may operate with different conceptions of reality

depending on their location in the organisation (Finstad, 1998). These subcultures


188

can either support or act as countercultures to organisational change (Cummings &

Worley, 1997).

At Griffith University, the most obvious sub-cultures were introduced with the

amalgamation of other colleges with the University. Prior to the amalgamation, the

University operated with a dominant organisational culture and few subcultures. For

the most part, it appears that this occurred because all employees worked on one

campus, Nathan campus. After the amalgamation with other higher education

organisations, however, subcultures emerged on the respective campuses. These

sub-cultures continue to exist today. It would seem that the sub-cultures represent

manifestations of the history of the respective campus, both prior and post

amalgamation. More specifically, the diverse locations of campuses, operation

within different communities and fields, and different leadership styles have

fostered the development of the diverse subcultures seen on the various campuses.

For example, one manager observed, “I can go from Nathan to Logan to the Gold

Coast and see three completely different universities. They might be under sole

governance but they interact differently.” Another manager suggested the

subcultures developed from the different leadership styles displayed by

management. He said, “Some people will be happy to stick to the rules, what the

University wants them to do and some people will be more prepared to show some

leadership and massage their responses to University rules to do what they believe is

best for the Campus, School, or Faculty.”

Other senior managers comments were similar. For example, at Nathan campus, the

subcultures still exhibit many of the same features they did last decade. It was


189

explained that, Nathan campus, the original campus still operates under many of the

rituals and norms created by the first Vice-Chancellor of Griffith University.

Students and staff on this campus are viewed as equals. Managers on this campus

explained that common rooms had been established by the first Vice-Chancellor to

foster staff and student interaction. No other campus has these shared facilities. The

Gold Coast campus, on the other hand, is referred to as a ‘closed campus’ because

of the lack of interaction between staff members in the various Schools and

between staff and students. This campus offers few facilities for staff to mingle with

students. It was suggested that Logan campus operates under similar norms.

Many of the senior managers interviewed claim the different subcultures have

induced infighting between staff on the campuses, or an ‘us vs. them’ mentality.

Senior managers also suggested the disparate disciplines in each of the Faculties,

encouraged sub-cultures to develop at a School level and not a Faculty level.

Duplicate schools, for example, tend to compete for students and budget dollars.85

5.7 Conclusion

In this chapter the consequences of the Dawkins reforms and EBA to the research

site, Griffith University, were first discussed. The changes noted from these reforms

included increases in the number of campuses, increases in student numbers,

decreases in student staff ratio, and increasing fiscal restraint. The second part of

the chapter described the culture of the University.

85 This issue is discussed more fully in Chapter 8.


190

Organisational literature suggests that for change to be effective it must be

supported by the organisational culture (see for example, Cummings & Worley,

1997; Ramsden, 1998). Chapter 3 presents the view that when changing the

organisation it is necessary to pay particular attention to how the culture needs to be

changed to support the change (Otley, 1987). It was argued earlier that if culture is

not adequately addressed this can lead to dysfunctional behaviours and other forms

of employee resistance. The chapter outlined two different cultures: one based on

the traditional notions of collegiality, teaching and learning, the other based on

bureaucratic controls in the form of economic rationality and managerialism. In

addition to this, the chapter identified the subcultures in the organisation. The

chapter argues that an understanding of the subcultures is required to understand

the processes of MCSs change in the organisation. It was explained that campuses

tended to have their own subcultures shaped by the particulars of their historical

backgrounds and the effects of previous changes on their campus.

The next four chapters comprise a discussion of the MCS at Griffith University.

Chapters 6, 7, 8, and 9 describe and analyse the research findings using the

theoretical framework outlined in Chapter 3. The theoretical framework identified

three phases in the change process: conception of the need to change,

organisational transition, and institutionalisation. Within these processes power,

politics, interests, and values are used to explain the change or stability of the

interrelated components of the MCS.

The view taken in this thesis is that the accounting control systems (ACSs) operate

as part of an interrelated control package comprising strategic planning processes,


191

governance and accountability structures, budget processes and methods, and

performance management systems. In order to understand the design and operation

of the accounting controls, it proved analytically useful to separate the control

systems into their own chapters. By doing so, the researcher was able build up a

clearer picture of how and why the other systems came into existence, or came to

be fashioned in the manner they did, and how they shaped and were shaped by the

ACSs. Chapters 6 and 7 describe two related control systems, the strategic planning

system and governance and accountability structures, respectively. Chapters 8 and 9

explore two components of the ACSs. Chapter 8 focuses on the budget and

Chapter 9 is concerned with the performance management system.

192

SSttrraatteeggiicc PPllaannnniinngg

6.0 Introduction

This is the first of four chapters describing the management control system (MCS)

at the University. This chapter focuses on one system of the total control package,

the strategic planning system. Strategic planning processes were studied in this

thesis to understand their effect on the accounting control systems (ACSs) given

their interrelated nature. Early on in the data collection phases, interviewees pointed

out the relationships between the budget, the performance management systems

and strategy. This is consistent with the literature in the area (Govindarajan &

Gupta, 1985; Mintzberg et al., 1995).

In this chapter the theoretical framework developed in Chapter 3 is used to provide

an explanation of how and why the University’s strategic planning processes came

to exist in the University. The chapter demonstrates the importance of strategic

planning for legitimising the organisation’s operations in the newly competitive

environment.

Strategic planning has been a central focus of Government reform efforts (Tilley,

1998). According to reviews such as the Hoare Review, universities must adopt

strategic planning processes to thrive in the newly competitive and commercial

environment.

6

Chapter 6 – Strategic Planning

193

The chapter is divided into two subsequent sections. The first section describes the

University’s strategic planning processes and the second section analyses how and

why these systems were introduced and the degree of institutionalisation.

6.1 Strategic and Operational Planning

According to Mintzberg et al. (1995), the mission statement is the first step in the

strategic planning process. Griffith University designed its first mission statement

alongside the Dawkins amalgamations (Griffith University, 2002b). At this time,

Australian universities were required to submit their mission statements in order to

receive funding as part of the education profiles process. Since then the mission

statement has been rewritten a number of times, the most recent being in 1993. The

current vision, mission, and values are presented in Table 6.1. According to the

recent Griffith Project, a strategic directions paper written by the Vice-Chancellor, the

main objective of Griffith is to be recognised as one of the top ten universities in

Australia. Such ranking is consistent with the aims of the government reform

efforts, which sought to increase competition in the sector.

It was not until 1994, however, that senior management decided the University

would benefit from preparing strategic and business plans. Documentation suggests

the model used by the University was “adapted from the commercial world”

(GIHE, 2002). For example, the 1995 annual report suggested that strategic

planning occurred with consideration of the vision and mission of the University as

well as the higher education environment. This is not surprising given that the

strategic tasks of the University tend to be like those of the typical business firm

(Doyle & Lynch, 1976).


194

Table 6.1: Griffith University Vision, Mission, and Values Statements Vision statement Griffith University, a multi-campus, learning-centered, research university, will be acknowledged as an outstanding university that combines the best university traditions and values with the innovation necessary for success. Ideally positioned for the 21st century in the fastest growing region in Australia, the University will build on its established reputation for responding creatively to local, national and global change by embracing diversity and nurturing innovation. Mission In the pursuit of excellence in teaching, research and community service, Griffith University is committed to:

Innovation Bringing disciplines together Internationalisation Equity and social justice Lifelong learning

For the enrichment of Queensland, Australia and the international community. Values Organisational conduct is driven by the following values:

Rigorous standards of scholarship Continuous quality improvement Commitment to individual rights, ethical standards and social justice Participatory decision-making and problem solving Lifelong learning and personal development Contributing to a robust, equitable and environmentally sustainable Australia Tolerance and understanding of diversity in society.

SOURCE: From Griffith University Annual Report 2000.

Comments from senior managers indicated that it was believed that the use of

strategic planning would enable them to get a complete picture of the University,

thus improving their ability to manage their affairs and compete in the new quasi

market environment.

Griffith University sets the direction of the University using a 5-year strategic plan.

The University Council must adopt this plan before it can be used in the University.

Senior managers suggested the plan is reviewed annually. The most recent plan

devised was the 1999 - 2003 strategic plan. Investigations of the current plan

revealed several strategic priorities including teaching and learning, research and

research training, community service, staff, and equity.


195

At the executive level, the strategic plans are implemented via the University

Teaching and Learning Management Plan, Faculty Teaching and Learning

Management Plans, University Research and Research Training Management Plan,

Faculty Research Strategy and Management Plans, University Equity Plan, Faculty

and Administrative Equity Plans, University Information Strategic Plan, Policy on

Internationalisation, Community Service Management Plan, and the University

Marketing Plan (see Strategic Plan, p. 12). Figure 6.1 illustrates the relationships

between these policy documents. For the most part, these plans describe various

objectives, provide strategies for achieving those objectives, and also provide a

range of performance indicators to aid in the control of those objectives.

The operational plan focuses on four areas: (1) teaching and learning, (2) research

and research training, (3) community service, and (4) staff. The purpose of the

operational plan is to foster the development of the strategies set out in the strategic

plan. In addition to outlining the goals, strategies, and objectives set out in the

strategic plan, the operational plan provides key performance indicators, university-

wide targets, and assigns the responsibility for achieving the target. For example,

one of Griffith University’s teaching and learning objectives is to achieve excellence

in student centred learning as measured by international standards and to be known

for leading innovations in teaching and learning. A strategy devised to help achieve

this objective is to conduct regular student and graduate evaluations of teaching,

learning programs, and courses. The performance indicator assigned to assessing

whether this strategy is being achieved is the development and implementation of

methods for collecting annual feedback from students and graduates (Griffith

University, 2001b). Analysis of the operating plan further revealed that the


196

University-wide target had been set at utilising student feedback for ongoing

improvement across all programs of the University. This responsibility was

delegated to the Deputy Vice-Chancellor and the Director of Griffith Institute for

Higher Education (GIHE).86

The Deputy Vice-Chancellor devises the University’s strategic plan and the

operational plan with consultation from the Deans and the Pro-Vice-Chancellors.

Interviewees at the senior management level suggested that strategic planning

provided the means by which they shape the direction of the University. In addition

to the view that an effective strategy should consider the organisational

environment and the organisation’s goals and objectives, senior managers took the

view that interaction within the senior levels of management was crucial for

ownership of the plans and for consensus of a common direction. Specifically, there

was a mention that Dean participation in this process is particularly important for

getting the Deans onside with the direction the University wished to pursue in the

following year. Furthermore, by involving Deans in the process, interviewees

suggested the University has seen greater linkage between the University strategic

and operational plans, and the Faculty operating plans.

86 The Operational Plans will be discussed further in Chapter 9.

197 SOURCE: Developed by the author.

Figure 6.1: Griffith University Strategic Plans Relationship with other University Policy

University Marketing Plan

Community Service Management Plan

Policy on Internationalisation

University Information Strategic Plan

Faculty and Administrative Equity Plans

University Equity Plan

Faculty Research Strategy and Management Plans

University Research and Research Training Management Plan

Teaching and Learning Management Plan Goals: Flexible Learning Internationalisation Course and subject evaluation Recognising and rewarding good teaching Strategies: Funding Schemes designed to promote activities at School or Facultythrough: Enhanced staff development; Enhancing the teaching and learning process; and Enhancing quality assurance processes Performance Indicators: Perceived teaching quality (Students) Satisfaction with Courses (Students/Graduates) Perceived Outcomes (Students/Employers) Perceived Teaching Quality (Graduates) Student Progress Rate Program Completion

Mission: In the pursuit of excellence in teaching, research and community service, Griffith University is committed to: innovation bringing disciplines together internationalisation equity and social justice lifelong learning for the enrichment of Queensland, Australia and the international community Values Organisational conduct is driven by the following values: Rigorous standards of scholarship Continuous quality improvement Commitment to individual rights, ethical standards and social justice Participatory decision making and problem solving Lifelong learning and personal development

University Strategic Plan

Operationalised

Through


198

More generally, the inclusion of the Dean in the planning processes was believed to

provide a feedback loop for evaluating whether the plans where realistic or not.

Thus, senior management explained that when the objectives set out in the

University plans were considered incoherent or not specific enough, Deans could

provide feedback to help clarify the goals and objectives to be pursued. For

example, they could give suggestions about how they could use the University plans

to achieve Faculty targets and make recommendations on the targets.

Since 1997, academic managers have continued to prepare a wide variety of plans to

guide their operations and to discharge accountability requirements. The desired

relationship between Griffith University strategic plans, operational plans, and the

academic management plans is shown in Figure 6.2. Figure 6.2 shows that strategic

planning occurs at three levels in the organisation: University, Faculty, and School

(business unit).

Figure 6.2: The Relationships Between Griffith Strategic, Operational and Academic Management Plans SOURCE: Developed by the author from Griffith University Staff Handbook.

Griffith University Mission Statement

Griffith University Strategic Plan & Supporting Plans

Unit Business Plans Faculty Research, Teaching and Learning, Equity Plans


199

6.1.1 Faculty Research, Teaching and Learning Equity Plans

Each of the Schools in the Faculty87 is tied to a Faculty Research, Teaching and

Learning Equity Plan and a business plan. Primarily created by the Dean, the

Faculty plans are designed to give direction to the teaching and research of the

Faculty. An analysis of Faculty plans revealed that the contents varied between the

Faculties but the following commonalities were found in all: the goals and

objectives of the Faculties, the strengths and weakness of the Faculties, the roles of

various management staff and support units with respect to the plan, teaching and

learning strategies, responsibilities (Dean, Heads of School, Subject Convenors,

individual staff), and funding sources (i.e. School or Faculty funded). The plans also

provided a general timeline for each of the teaching and learning strategies. In some

cases, Heads of School were required to report to the Deans on the responsibilities

delegated to them in the plan.

In the initial years of strategic planning, senior managers expressed concern over

the extent to which these plans were linked to the Schools plans, and also the

University strategic plan. Many interviewees recalled similar experiences to this one

by a senior manager:

When the new structure was put in place the Deans were initially asked to put together strategic plans for teaching and research and it was quickly realised that those plans were being developed in isolation from the Schools and the University plans because there were no linkages in them. So Deans were diligently writing up those strategic plans and nobody got to read them. Schools weren’t interested because they had no impact on their budget and the University wasn’t interested because they couldn’t see a linkage with the Dean’s plans.

87 Faculties generally comprise Schools with similar disciplinary interests. For example, the Faculty of Commerce and Management comprise the School of Accounting and Finance, the School of Accounting, Banking, and Finance, the School of Marketing, and the School of Marketing Management.


200

All in all, it appears that the lack of co-ordination between the strategic planning

documents at the University wide, Faculty, and School level resulted in a document

that required significant effort by management but had little impact on

management’s ability to improve the effectiveness of the organisation. It also

appears that the inability to reinforce the values and programmes written into the

Faculty plans was further exacerbated by the fact that the plan had no impact on the

School budgets. That is, Heads of School did not see the need to comply with the

plan because there was not a resource dependency relationship at stake. This is

consistent with Pfeffer and Salancik (1978) who claim that compliance is more likely

to occur when there is a degree of resource dependency. Eventually, senior

managers suggested the Faculty research, teaching and learning equity plans were

shelved.

Those involved with the Faculty planning process suggest the new Deputy Vice-

Chancellor resurrected the plans in 2001. The original process was reviewed by a

working party commissioned by the Deputy Vice-Chancellor. The findings of the

review and recommendations of the working party were presented to the Deputy

Vice-Chancellor. These are now in the process of being implemented. Under the

new arrangements, Deans are required to prepare Faculty plans addressing teaching

and learning, research, staff matters, community service, and internationalisation. In

writing those plans, Deans are now provided with the opportunity to bid for

funding from the Deputy Vice-Chancellor. It should be noted that there is only a

small amount of funding made available for this process. Channelled through the

Dean, funds can then be allocated to the Schools to encourage greater alignment

with Faculty plans and School business plans. To clarify, the purpose of attaching


201

funds to the issues addressed in the Faculty plans is to induce Schools to observe

Faculty plans in the preparation of their own plans and other behaviours. Senior

management has also put greater participation in the planning process forward as an

avenue the University could use to get staff committed to the various plans. What

remains to be determined is the level of involvement that is necessary for staff

ownership of the plans and what the appropriate level for staff is.

6.1.2 Business Planning for the Elements

As the core decision-making units at Griffith, in 1997 for the first time the School

and administrative elements were required to prepare business plans for their

respective elements. This was consistent with the devolved responsibility model88

adopted by senior management. There was a general consensus amongst academic

managers and academic staff that the purpose of introducing business planning at

Griffith University was to improve the strategic direction of the elements and to

improve the management of the various elements. With regard to the budget, it was

not until 1998 that the business plans were factored into the planning and budget

cycle.

The plans classify activities into teaching, research, or other activities. The activities

are examined in the business plan in terms of their strengths, weaknesses,

opportunities, and threats (GIHE Business Planning). The business plan outlines

the future goals and objectives of the School and identifies the resources necessary

to support the activities. For management purposes performance information is

88 The devolved responsibility model is discussed more fully in Chapter 7.


202

provided to support the achievement of the goals and objectives. At Griffith

University, the business planning process is designed so that the business plans

should then be integrated into the Faculty plans.89 The preparation of the business

plans had a further benefit of rationalising the Schools objectives to external parties

and other elements in the University. A representative School Business Plan is

shown in Appendix 6.1.

According to Senior Managers, Heads of School prepare the business plans with

appropriate financial consultants from Finance and Business Services. The Heads of

School also confirmed that they relied on Finance and Business Services staff to aid

them in preparing the plans. In particular, it was explained that Finance and

Business Services provide Heads of School with guidelines for business planning

and suggest possible initiatives. They also provide the channel for communicating

between the School and other support departments such as the Office for Research

and the Office of Technical Services. Power theory suggests that Finance and

Business Services hold a degree of power emanating from their ability to control the

information that Heads of School receive for business planning (Hardy, 1994,

1996). When prepared, the element business plans are submitted to the Vice-

Chancellor’s Planning and Advisory Group for review.

6.1.2.1 Perceptions and Problems of Strategic Planning

Interviewees suggested the implementation of strategic planning presented a

multitude of problems, which in hindsight could have been avoided. Now 5 years

89 Coulthard, Howell, and Clarke (1996) also suggest there should be integration between the plans at the senior management level and the lower levels.


203

into using strategic plans, they suggested there are many problems that still need to

be ironed out. The implementation and effectiveness of the business planning

process continues to be a controversial issue in the organisation. Heads of School

provided several examples as to why they did not feel the process, in its current

state, was effective.

Some Heads of School and administrative staff put forth the view that the business

plans were prepared to satisfy the Vice-Chancellor’s requests, not for use within the

Schools. “Why do we have to go through this process of the business plan when we

are told what we are going to do from the top?” was a typical response to the

preparation of business plans. Administrative staff corroborated this view. “It is not

something the Schools are keen to do,” one manager commented, “It is something

the Vice-Chancellor wants them to do.” A second manager made a similar

observation:

It is really a Finance and Business Services exercise rather than a Schools exercise…it is something the Vice-Chancellor requires.

As explained above, although the Heads of School prepared the business plan,

this was under the strong influence and direction of Finance and Business

Services staff. They claim they did not understand or see a purpose to using such

methods in the University environment. Similar views have also been recorded in

higher education literature. Miller (1995) for example, suggests that strategy

statements are not well accepted by academic staff because of the lack of

perceived control over the planning processes or even the outcomes of the

process.


204

Generally, the interview comments suggested that the business plans do not play

much of a role in the decision making process used by the Heads of School

either. Typical comments from Heads of School inferred that the business plan,

as it stands, acts to legitimise the operations of their respective Schools. One

staff member interviewed, for example, suggested their School was just about to

embark on an offshore program. She did not, however, see a link between this

initiative and the School business plan. Furthermore, she went on to suggest that

the decision to go ahead with the program had been made despite the fact that

the School had not undertaken a cost/benefit analysis of the program. She

explained that there seems to be a perception held in the School that because

offshore programs had proved to be profitable in other Schools in the University

that it too would be profitable for this School. More generally, the decision to

implement an offshore program may be interpreted as mimetic isomorphism, as

suggested by institutional theorists DiMaggio and Powell (1983); in this case, the

School imitated business decisions made by other Schools, regardless of the

School’s business plans. It is worth noting that the Head of School of this

particular School commented that the business plan provided general principles

or directions for the School but in no way were they seen as a control strategy.

“We only do it”, the manager said, “because it is a requirement by senior

management.”

A further problem reported by a number of Heads of School was that the School

business plans were prepared in advance of the University strategic plans and the

Faculty plans. This they commented led to some confusion as to why the University

was implementing strategic plans. There was the view held by respondents that the


205

plans could not be effective if they were not set from the top and linked into all

University processes. As one Head of School commented, “I thought the University

was supposed to set the direction for the University and then our plans were

supposed to fall in line under it.” Crebert (2000) also found this result in her pilot

study on the purposes and outcomes of planning at Griffith. In related vein, a lack

of understanding between each of the planning tools has reduced employee

confidence in the ability of strategic plans to deliver improved management. One

senior management summed up the problem nicely:

There is a structural issue there where there is a separation between the business planning unit and the strategic planning unit.

Another manager commented:

There are too many plans and not enough integration.

More seriously, those involved in the preparation of the business plans suggested

they did not consult any other plans when preparing the School business plan. One

Head of School explained, “to be honest nobody has ever discussed the University

strategic plan with me.” Those that confessed to linking their plans to the

University plans explained that this was only done in ‘a loose fashion’ or ‘vaguely’.

For example one Head of School commented:

I feel I have a sense of the strategic initiatives of the University and what they want in terms of flexible learning, research, teaching, and learning. It is fairly clear to me because you are often exposed to those things at Heads of School meetings, Faculty Boards, and the education committee. So it tends to be almost by osmosis.

The effectiveness of the University’s strategic plans was also linked with the

budgetary systems used in the University. Heads of School admitted that their


206

budgets were not as closely linked to their business plans as they felt they should be.

They explained that as the business planning process has become more refined and

familiar, the link with the budget has improved but still has a long way to go. One

Head of School maintained:

I felt in previous years it (the business planning process) had been adopted quite tenuously and I think that has been a criticism of the process.

He went on to explain that this year, for the first time, the links were much stronger

because of the pro forma given to Schools for the preparation of the plan. This he

described included the costing of certain initiatives, similar to the budget process.

While another Head of School suggested the discretionary income was too small to

effectively link it to meeting the School objectives set out in the business plan. This

was not an uncommon view among the interviewees at this management level.90

One employee sceptical of the business planning process posed the question as to

whether such private sector techniques are appropriate in a university environment.

After all, he pointed out, “we are not business units; we do not have any control

over our income and very little control over our expenditure.” He argued that in the

private sector, when current strategic initiatives were not working, you had the

option of changing your business. The traditional academic environment of

teaching and learning in comparison does not lend to such flexibility. It should be

emphasised, however, that business plans were viewed by senior management as

part of the private sector culture needing to be introduced into the University

90 This issue is discussed in greater detail in Chapter 8.


207

environment for effective resource allocation, and the management and control of

finances (see, 1997 Annual Report, p. 51).

6.2 Discussion

This thesis argues that change involves a number of processes that are not easily

distinguished into separate neat timeframes. Nevertheless three phases of change

have been described in Chapter 3 to provide a framework for understanding the

processes of change. These include the conception of the need to change, the

transition process, and the institutionalisation.

The conception of the need to change precedes the transition and

institutionalisation process. This process creates the readiness for change in the

organisation. It requires a conception that the status quo is not satisfying the

organisational objectives. There are a number of factors or triggers that explain why

Griffith University introduced strategic planning into the organisation. According to

the interview comments, Griffith management decided to introduce strategic

management in the organisation as part of their reform, intended to help the

organisation to prosper in the new competitive and commercially focused higher

education climate. A more in-depth investigation, however, revealed that Griffith

University, similar to other Australian universities, has only introduced strategic

planning since the Dawkins amalgamations.91 One could argue that it is hardly

surprising that the University introduced strategic plans given the government

efforts to reform the sector (Tilley, 1998). In particular, the chapter identified a

91 Crebert (2000) claims that strategic planning is one of the more visible outcomes of the managerialism in the Australian higher education sector.


208

number of government pressures that strongly advocated the use of strategic

planning processes. For example, the educational profile process requires Griffith

University to submit their vision, mission, and operational plans in order for funds

to be allocated. Based on this, it could be argued that although the Commonwealth

does not have a formal role in the preparation of strategic plans, they do seem to

guide the process by attaching funding to the preparation and use of these plans.

This infers that the conception of the need to introduce strategic planning in the

organisation appears to have come from government pressures that sensitised the

organisation to the funding repercussions that would occur should the process not

be implemented. In addition to this, subsequent reforms and reviews, including the

recommendations of the Dawkins White Paper (1988) and the Hoare Review,

strongly suggested that universities use strategic plans to enhance their ability to use

resources effectively and to discharge their accountability to the wider community.

According to institutional theory, together, these provided coercive pressures for

the implementation of strategic planning at the University (DiMaggio & Powell,

1983).

It appears that senior management designed the University’s strategic planning

model used at the University. Interviewee comments inferred that the business-

planning model utilised in the University was modelled on private sector techniques;

ideally, it should involve a number of integrated plans prepared at different levels to

guide the operations. The process was expected to begin with the organisational

mission and vision, which were translated into strategy. From here lower levels of

the organisation would prepare their own plans with consideration of the overall

organisational processes. This is consistent with textbook descriptions of effective


209

strategic planning processes (Mintzberg et al., 1995; Thompson & Strickland III,

1998). The evidence suggests that the University had few options but to imitate

private sector models of strategic planning because the process was relatively new in

the sector. This meant that it was impossible to copy existing public sector models.

Consequently, the organisational response can be categorised as acquiescence or the

conformity to accepted strategic practice (Oliver, 1991).

From another perspective, the level at which the response was determined, suggests

that the power associated with hierarchy plays an important role for determining the

manner in which the organisation implements new techniques and policy. This is

not surprising given that the power associated with the hierarchy is considered to be

legitimated power, and therefore subordinates in the organisation expect the

exercise of power, such as a decision to introduce new management tools, by those

holding positions of authority (Pfeffer, 1992b, 1997). These findings are consistent

with Hardy’s (1994) power of the process, which suggests that when key individuals

hold significant power they can reduce access to decision making and can also

pressure subordinates to comply with demands on grounds that resources can be

withheld without employee compliance (Bourgeois, 1991; Vecchio, 1997).

The top down approach suggests that for strategic plans to be effective, their

usefulness must be communicated to employees (Thomas, 1996). To put it another

way, employees should be informed of how the plans are to be used in the

organisation, why the plans are being introduced, and what consequences the plans

will have for them. This requires management to redefine the meanings given to the

current structure, to deinstitutionalise it and to infuse value in the new archetype


210

(Hardy, 1991). In Griffith’s case employees comments relayed in the chapter

suggested this did not occur. There was a general belief that all of the plans should

be linked to be effective, however, how they were linked remained a mystery to

most employees given the lack of consultation and consideration between the

managers at the various levels who were responsible for preparing the plans. For

instance, Finance and Business Services and Heads of School were involved in the

preparation of the plans for the Schools, but they were not involved or consulted in

the preparation of plans at any other level.

Based on this, one could argue that the business plans used at the University were

used to provide an image of the organisation to external constituents (i.e.,

government, industry, wider community) rather than for operational purposes. They

were used to give the impression of rational process (Thomas, 1996). Moreover, by

adopting strategic planning processes, the organisation was perceived to be

improving its operating processes and its competitive position. Perhaps most

importantly, the plans satisfied several of the educational profile criteria thereby

securing funding for the organisation. To put it in institutional terms, the

organisation was able to decouple the public perception of the organisation from its

internal behaviours. Other studies have found similar results that involve the

decoupling of organisational activity to receive funding (see, for example, Covaleski

& Dirsmith, 1988a; Covaleski & Dirsmith, 1988b; Dirsmith et al., 1997; Scott,

1995).

The institutionalisation of a new management tool or behaviour can be determined

by comparing the outcome of the change process with the proposed expectations


211

and with the proposed model. In this chapter it was shown that the business

planning process has not become institutionalised in the organisation: in some years

it has been used and others not. To put it another way, there has not been an

established pattern for its preparation.

Several issues were highlighted in the chapter. Perhaps the most important from a

strategic planning perspective is the cohesive integration of plans. The Griffith case

demonstrates that when plans are not integrated this has implications for the

acceptance and usefulness of those plans. Based on the observations of this case, it

is argued that for the plans to be effective they need to start with organisational

strategy and then feed into the subordinate plans.

Related to this, is the participation of staff in the process. The evidence presented

earlier suggests that when there is a separation between the planning staff and the

people who are expected to pursue the strategies the effectiveness of the strategies

is reduced. To clarify, it is argued based on the case evidence that consultation with

the employees expected to pursue the strategies in the planning stages would

improve ownership of the plans and improve the likelihood of employees directing

their behaviours accordingly.

A third issue that was illuminated in the chapter is the linking of the University’s

strategic plan to the budget. It is argued in this chapter that in order to infuse value

in the strategic planning process, the organisation needs to supply sufficient


212

resources. It has been shown that by not providing sufficient resources the

organisation is less likely to achieve their objectives.92

More generally, the chapter raises a number of issues about what devices and

training programs should be used to communicate and educate employees. In

particular, it emphasises the fact that communication is critical for providing the

motivation for change and overcoming resistance to change. It is argued that when

employees understand the need for change and its consequences they are more

likely to accept it (see Kotter and Schlesinger, 1979).

6.3 Conclusion

The purpose of this study is to understand how and why the ACSs were fashioned

as part of an interrelated management control package. Strategic planning systems

were nominated as an integral part of the MCS at Griffith University and on this

basis were included in this study for their connection to the design and operation of

the ACSs. This chapter focused on the University’s strategic planning processes

with the intention of providing an explanation of the introduction of strategic

planning systems at Griffith University. A processual approach was used to

understand the processes and outcomes of change.

Empirical evidence collected on the organisation suggests strategic planning

processes have only come to be used in the organisation in the past decade;

however, in the subject organisation these systems had yet to become

92 This issue resurfaces again in Chapter 8.


213

institutionalised because of implementation problems. The findings of this chapter

are consistent with Hardy (1991) who speculated that there would be problems with

the implementation of strategic planning in universities because of their nature (i.e.

goals are more ambiguous, power is more decentralised). Furthermore, the evidence

of the chapter suggested that these processes were implemented as a response to

pressures for a managerialist or corporate culture.

Chapter 7 presents a second component of the MCS, the governance and

accountability systems used by Griffith University. The chapter is concerned with

how these systems have changed to improve the efficiency, effectiveness, and

accountability of the organisation and how they are related to the design and

functioning of the ACSs. Following this, Chapters 8 and 9 describe and analyse the

processes of budgetary and performance management systems change, respectively.

214

GGoovveerrnnaannccee aanndd AAccccoouunnttaabbiilliittyy

7.0 Introduction

Management structures are not science; they are balancing acts, the search for a viable equilibrium between clear reporting lines, campus leadership, academic representation, a minimum number of managers but sufficient people to do the necessary work, unitary administration systems and local flexibility. The Vice Chancellor93 (Davis, 2002, p. 6)

This chapter is the second in a series of four chapters that describe different

components of the management control system (MCS). As alluded to in the above

excerpt, this chapter focuses on the governance and accountability structures used

at Griffith University. It was believed that an understanding of the governance

structures was critical for understanding resource allocation processes in the

University, particularly in view of the pressures to use resources more efficiently,94

and respond to changes in the environment more readily. Furthermore, the move to

a multi-campus university raises questions for the governance of the University.95

As presented in Chapter 3, the study uses the new institutional sociological

framework to determine the extent to which governance and accountability systems

have changed in the organisation under study. As will be seen in subsequent

93 Professor Glyn Davis was appointed the Vice Chancellor in 2002. He replaced Professor Roy Webb who served as the University Vice Chancellor from 1984-2001. 94 The linking of the budgetary system and governance structure in a higher education context has been pursued by Jones (1994). See the literature review in Chapter 2 for details of this study. 95 See Wood and Smith (1992) for further discussion on this point.

7


215

sections, the choice of governance and accountability structures at Griffith

University is related to the design and operation of the accounting control systems

(ACSs).

Governance has been one of the main concerns highlighted by government reform

policies. How university committees maintain control, who is on committees, the

size of committees and what their roles and responsibilities are continue to be a

central concern of the Government and has been the focus of many

Commonwealth Government reports (see for instance, Higher Education

Management Review Committee (Australia), 1995a; Senate Employment Workplace

Relations Small Business and Education References Committee, 2001). The Senate

Employment, Workplace Relations, Small Business and Education References

Committee (2001) suggest governance encompasses many things, “the role, the

values and the strategic planning of universities, together with decision-making

processes, resource allocation, patterns of authority and regulation or management

of all the intersecting relationships which the University forges with its

stakeholders” (p. 99).

The remainder of this chapter comprises five sections. The first section looks at the

relationship between the University, the government, and the community. This is

followed by a detailed discussion of the internal management of the organisation.

Specifically, this section describes the manner in which the governance systems exist

at Griffith University, focusing on the organisational committees and key positions

of power in the institution. A brief historical background is presented in the second

section leading up to the period of study. The purpose of this is to provide context

to the changes made during the period of study. From here attention is focused on


216

the restructure of Griffith University’s academic structure (the devolvement of

managerial responsibility to Heads of School) and the centralisation of

administration. An analysis and discussion using the theoretical framework

developed comprise the fourth section of the chapter followed by a conclusion.

7.1 Governing Bodies and Positions of Power

The University operates with a number of governing bodies or committees (Figure

7.1 shows the committees). These committees set the direction for the University

operations. The following section briefly outlines the roles of the main governing

bodies: the University Council, the Academic Committee, and the Vice-Chancellor

position. An understanding of these roles is required for understanding the source

of control of the changes that have taken place in the University.

7.1.1 Council

Griffith University Council is responsible for the governance and management of

the University.96 This means they are responsible for the management structures,

procedures, and policies used by the University. The Council is accountable to both

the Federal and State Government. Council functions and powers, similar to other

universities, are set out in a State act of parliament, in the present case the Griffith

University Act.

96 In all Australian universities the governance and management responsibilities are vested in the Council by legislation.


217

Figure 7.1: Griffith University Governing Bodies

The Griffith University Act 1998 empowers the Council to carry out three main

functions: to appoint the University’s staff; to manage and control the University’s

affairs and property; and to manage and control the University’s finances (Section 9

(2)). Investigations revealed that most of these functions have been delegated to

SOURCE: http://www.ua.gu.edu.au/ctte/uni_Council.pdf


218

senior officers in the University, in particular the Vice-Chancellor. Notwithstanding,

interviews with Finance and Business Services staff and other senior managers

revealed that reports are provided to Council monthly reporting on the activities

undertaken by the University. The purpose of these reports, they claim, is to

“provide commentary about the budget situation and related portfolios.” From an

institutional view, this would suggest the reports act as a legitimising device of

university operations (DiMaggio, 1991), subject to the scrutiny of council members.

In setting university policy, the Council usually relies on the recommendations of

sub-committees or on the recommendations of senior managers (e.g. Vice-

Chancellor or Pro-Vice-Chancellors). For example, senior managers may

recommend a reorganisation of the management structures or a change in the

responsibilities of key individuals. A review of the University Guide to Committee and

Meeting Skills, suggests the recommendations are made to Council in the form of

sub-committee minutes or commissioned reports.

Currently, the Council comprises 25 members. These members represent a range of

internal (40%) and external stakeholders (60%).97 Table 7.1 provides details of the

Council representation. The Council members come from a variety of backgrounds

such as academic and business professionals (a full description of Council members

backgrounds is shown in Table 7.2). Education Queensland staff explained that the

governance structures of universities are designed to have a fair representation of

the community so that they can make decisions reflecting community values and

beliefs. This suggests that the inclusion of external stakeholders in the Council lends

97 The terms of membership and criteria for Council Members is set out in the Griffith University Act (see sections 18, 19, and 20).


219

to the socialisation of community expectations and because of this the decisions

made by Council are viewed to be legitimate (DiMaggio & Powell, 1983; Scott,

1995).

Table 7.1: Council Representation

Position Number

Chancellor 1

Academic 1

Government Appointed 6

Other Appointed 6

Staff and Students 9

Co-opted 2

Total 25

SOURCE: From Higher Education Management Review: Report of the Committee of Inquiry. (Appendix 5), by the Higher Education Management Review Committee (Australia), 1995, Canberra: Australian Govt. Pub. Service.

Table 7.2 Background of Council Membership

Background Number

Politicians

Public Servants

Undergraduate Student

Postgraduate Student

General Staff

Academics

Executive Staff

Alumni

Business/Professionals

Community Representatives

Total

1

2

2

1

2

4

1

3

7

2

25

SOURCE: Developed by author from Meeting the Challenges: The Governance and Management of Universities, (p.51), by B. Nelson, 2002, Canberra: Department of Education, Training and Youth Affairs.

220

Education Queensland interviewees explained that although they played a part in

appointing members of governing councils in universities, they did not play a large

role in monitoring the universities governance systems. Interviews with academic

managers confirmed this. They suggested that Education Queensland did not

interfere with how Griffith was managed. Notwithstanding, one key interviewee

employed by State government mentioned the Office of Higher Education intended

to work on legislating the role of council. She stated:

The legislation is a bit limp about what the job description of Council is. One of the things that we are going to work on is to make a more precise statement of how the Council should work, what sort of work they should do, and how it might assess its own contribution.

7.1.2 Academic Committee

The Academic Committee at Griffith University keeps Council informed on

academic issues. The Griffith University Academic Committee currently comprises

49 individuals. As can be seen in Figure 7.1, the Academic Committee uses a

number of committees such as the Education Committee and the Excellence

Awards Committee to advise them in their decisions. The Academic Committee is

also responsible for the oversight of the strategic plans at the Faculty and School

levels (AVCC, 2000b).

7.1.3 The Vice-Chancellor

The University manages its academic processes using four managerial levels: Vice-

Chancellor, Group, Faculty, and School. Investigations revealed that this model is

consistent with those used by other universities in the State such as the University

of Queensland and the Queensland University of Technology (Davis, 2002). This is


221

consistent with the view that organisations operating in the same field tend to be

similar (DiMaggio & Powell, 1983).

The Vice-Chancellor at Griffith can be likened to the Chief Executive Officer of a

private sector entity. In fact the most recent version of the Griffith University Act

(1988) does this. It states, “The Vice-Chancellor is the chief executive officer of the

University and may exercise the powers and perform the functions conferred on the

Vice-Chancellor by this or another act or the Council” (Section 32 (4)). In Griffith’s

case, the Council has bestowed budget responsibilities to the Vice-Chancellor,

similar to a private sector organisation. Notwithstanding, Council must adopt

University policy designed by the Vice-Chancellor and delegated parties for it to be

validated. The Griffith University Act requires this. For instance, Section 59 of the

Act suggests that Council must recommend the budget for it to be formalised.

As suggested above, the day-to-day management of the University is the

responsibility of the Vice-Chancellor. To maintain effective governance systems, the

Vice-Chancellor in his capacity as the chief executive devolves responsibilities to

other managers including the Pro-Vice-Chancellors, Deans, and Heads of School.

7.2 Changing Management Structures

Flamholtz (1983) and Bourn (1994) suggest the structure of an organisation

constitutes a response for adapting the organisation to its environmental demands.

The following paragraphs will show that this has certainly been the case at Griffith.


222

In 1971 the structure of the University included four Schools: School of Modern

Asian Studies, School of Australian Environmental Studies, School of Humanities,

and School of Science. Since its inception in 1970, however, the University has

undergone several restructures, both in academia and in administration.

Earlier in 1990’s, the administrative structure was revisited and changed to deal with

lingering inefficiencies in the system from Dawkins amalgamations (Quirke, 1996).

In 1991 under the direction of the Vice-Chancellor and with the approval of

Council, the three administrative divisions were combined to form one division,

University Administration. In his commentary of Griffith history, Quirke (1996)

suggests several reasons for this change. First, the growth and complexity of

business made it impossible for the Vice-Chancellor to oversee all of the parts of

the organisation. Second, the Vice-Chancellor believed there were economies of

scale to be gained from a restructure. Coincidentally, Quirke claims that other

universities in Australia had adopted similar structures. Institutional theory explains

this as homogenisation within the field (DiMaggio & Powell, 1983; Meyer &

Rowan, 1977). Third, the structural archetype offered a flatter management

structure. Finally, the structure also proved useful for highlighting the importance

of the Office of Human Resource Management, the International Centre, and the

Office for University Relations: three areas considered to be of increasing

importance given the changes in the education climate.

Around the same time, student numbers grew exponentially from the amalgamation

of the Brisbane College of Advanced Education (BCAE), Gold Coast College of

Advanced Education (GCCAE), Queensland College of Art (QCA), and


223

Queensland Conservatorium of Music (QCM). In order to maintain control of the

broadened discipline base it was therefore necessary to restructure the University

academia. The resulting structure is outlined in Figure 7.2.

7.3 Restructuring the University Management Structures and Devolving Management Responsibilities: 1997

During 1996 senior management undertook a review of the existing structures and

control mechanisms and set about developing and planning a new structure. The

result of the review was a restructure of both academia and administration effective

on 1st July 1997. The new structure is shown in Figure 7.3.

As depicted in Figure 7.3, the most significant change from the restructure for

academics was the restructure of Schools and Faculties. The new structure was

designed to have university wide faculties in four groups – Arts, Science, Health,

and Business (Griffith University Annual Report, 1997).

Some of the other changes required under the new structure included the removal

of the Faculty of Humanities, the merger of the Faculty of Business and Hotel

Management and the Faculty of Commerce and Administration to form the Faculty

of Commerce and Management, and the Queensland College of Art and the

Queensland Conservatorium were placed in the Arts Group.


224

SOURCE: From Griffith University 1994 Annual Report, p. 43

Deputy Vice Chancellor Pro-Vice-ChancellorEquity

Deputy Vice ChancellorResearch

Pro-Vice ChancellorQuality Advancement

Asian andInternational

Studies

Commerceand

Administration

Education

EnvironmentalStudies

Health andBehavioural

Sciences

Humanities

Law

Science andTechnology

Deputy Vice Chancellor

DeanBusiness and

HotelManagement

DeanEducation and

the Arts

DeanEngineering andApplied Science

DeanNursing and

Health Science

Deputy Vice-ChancellorResearch

Pro-Vost andDirector

QueenslandConservatorium

Pro-Vost andDirector

Queensland Collegeof Art

AcademicAdministration

Office ofCommunity

Services

Office ofFacilities

Management

Office ofFinancial and

BusinessServices

Office ofResearch

Office ofUniversityRelations

Pro-Vice-ChancellorAdministration

Division ofInformation

Services

Library andInformation

LiteracyServices

Informationand Technology

Services

Griffith UniversityInternational Centre

Pro-Vice-ChancellorInformation and

International Services

Vice ChancellorFigure 7.2: Senior Management Structure Before the Restructure


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Deputy Vice Chancellor Deputy Vice Chancellor(Research)

Faculty of Arts

Faculty of Education

Queensland College of Art

Queensland Conservatorium

Centre for AppliedLanguages and Linguistics

Pro Vice Chancellor(Arts, Mt Gravatt, Nathan)

Faculty of Commerceand Management

Faculty of InternationalBusiness and Politics

Faculty of Law

Graduate School ofManagement

Pro Vice ChancellorBusiness

Faculty of Engineeringand InformationTechnology

Faculty of EnvironmentalScience

Faculty of HealthScience

Faculty of Nursingand Health

Faculty of Science

Pro Vice ChancellorHealth, Science, Gold Coast

Griffith FlexibleLearning Services

Information TechnologyServices

Library and InformationLiteracy Services

Pro-Vice ChancellorInformation Services, Equity

Academic Administration

Campus Life

Legal Services

Office of External Relations

Office of FacilitiesManagement

Office of Finance andBusiness Services

Office of Human ResourceManagement

Pro-Vice ChancellorAdministration

Vice Chancellor

Figure 7.3: Senior Management Structure After the Restructure

SOURCE: From Griffith University Annual Report, 2000, p. 9


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The restructure of the academic units also required changes in the academic board

to be representative of the new structure. Specifically, the board changed from 46

members to 49 members, including a change from 12 elected academic staff to 10

elected academic staff and 8 Heads of School (AVCC, 2000b).

At the same time as the restructure, the Vice-Chancellor instigated further changes

devolving management responsibilities to the Heads of School. This had significant

implications for Pro-Vice-Chancellors, Deans, and Heads of School management

responsibilities.98

The devolvement of responsibilities has been a common response by universities

nationally and globally for increased efficiency (Groves, Pendleburry, & Newton,

1994; Marginson & Considine, 2000; Wilson, 1997a). This would suggest that

institutions have become homogenous in their response to pressures for improved

efficiency (Meyer & Rowan, 1977). According to Hopwood (1974), large

organisations delegate authority to maintain control: to provide the capacity to cope

with increased size, to make the best use of local knowledge, for rapid decision

making, for innovation, for accountability, and for greater cost and revenue

consciousness.99 Essentially, devolved responsibility means management decision-

making occurs at the lower levels of the organisation. This allows management to

deal with problems and issues and make decisions that would better serve their

customers (Flamholtz, 1983). Notwithstanding, the degree of devolution varies

between institutions (Boston, 2000).

98 Sandbach and Thomas (1996) made a similar observation of devolved structures. 99 See also Bourn (1994) and Tomkins and Mawditt (1994) for further treatment of devolved structures.


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The next section discusses the change in management responsibilities and

accountability structures further.

7.3.1 Motivations and Rationales for the Restructure

Despite meetings being held with staff prior to the restructure about the restructure

and its intended effects, few staff held consistent views as to why this change was

necessary. Although now several years since the amalgamation, many staff,

including several senior managers, took the view that this restructure was triggered

by the Dawkins amalgamations. Growth launched by the Dawkins amalgamations

was one rationale offered. Those who took this view echoed comments similar to

the following senior management comments:

The 1997 academic and administrative restructure were triggered by government and the amalgamation from the late 1980’s. (Interviewee 1) The University restructured almost entirely because of the University having changed hugely through amalgamations between 1988 and 1992.

(Interviewee 2)

It is worth noting that Quirke (1996) offered a similar rationale for the

University restructure of the late 1980’s:

This restructuring was in direct response to the internal need to be more competitive and outwardly focused and to external pressures imposed by the Dawkins reforms. It was part of the Vice-Chancellor’s aim to take the University into the nineties in a strong position to cope with the changing educational climate. (p. 62)

Using institutional theory literature, these comments could be interpreted to the

effect that management used the external pressures for change to gain acceptance or

legitimise the new structure (DiMaggio, 1991).


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Heads of School interviewed also explained that the current structure was

inadequate for meeting the growth, especially on the Gold Coast Campus. One

participant took the view:

In the early 1990’s Griffith underwent major growth in its student population, in its programmes, and in its activities fuelled by government decisions, by government finance, and by government funded students.

As suggested in the above comment, an increase in the number of campuses was

seen as a second motivation for change. Management claims the current structure

had overlooked the complexities of managing the newly multi-campused nature of

the institution. This, they suggested provided a further motivation for a change in

structures. Another widespread view put forth was that the restructure occurred to

deal with the diminished funding from Commonwealth Government and that

greater efficiencies were required for the survival of the University. One Head of

School commented, “The University resources were diminishing. This was clearly

an outside factor that made the restructure absolutely necessary.”

On the other hand, others claim the restructure occurred to address a number of

concerns within the University resulting from changes to the institution in the past.

The main concerns highlighted throughout the interviews stemmed from

inefficiencies in the management of Faculties. One Head of School remarked,

“There was far too much of our resources going into management structures at the

faculty level and a lot of duplication across Faculties.”

Many other interviewees took the view that the budget provided the sole motivation

for the need for change in management structures. This view is consistent with that


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put forth by Glyn Davis (2002), the current Vice-Chancellor of Griffith University,

who made the following observation, “Often problems attributed to the University

structure are in practice a response to budget initiatives” (p. 2). In Griffith’s case,

the budget methodology used was viewed to foster competition between Schools

on different campuses leading to increased micro-political activity, especially in light

of the increase in student numbers and the decrease in the proportion of

government funding. On numerous occasions participants spoke of the competition

between Schools. They explained that similar Schools openly competed for student

places by developing similar courses and program structures. This view led some to

suggest that the University restructured to reduce competition between those

Schools. One Head of School explained that competition was particularly evident

between duplicate Schools on the Gold Coast campus and Nathan campus:

There were overlaps or competition across campuses in a number of cases particularly involving the Gold Coast campuses. We were one of those. Because the Gold Coast campus came in later and was originally set up as a CAE serving a region, it was an institution in itself in terms of its size. We found, and it was a major concern for the Vice-Chancellor that we were openly competing in our market, which made him feel quite silly. So he wanted to bring those elements together in a way that they weren’t before so he needed a restructure of some sort to do that.

Another senior manager reflected:

There were two Schools of Nursing, Education, Accounting, and Information Technology, and they hated each other.

A review of academic structures confirmed these comments. The duplicate Schools

are shown in Table 7.3.


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Table 7.3: Duplicate Schools at Griffith Before the Restructure

Nathan & Mt Gravatt Campuses Gold Coast Campus

• Accounting and Finance

• Marketing

• Cognition, Learning and Special Education

• Communication and Learning in the Arts

• Curriculum, Teaching and Learning

• Information Systems and Management Science

• Nursing

• Applied Psychology

• Accounting, Finance and Legal Studies

• Management and Marketing

• Education

• Information Technology

• Nursing

• Applied Psychology

SOURCE: Developed by the author from Griffith University: Undergraduate Studies Handbook 1996. Further problems from operating with duplicate Schools occurred when course

structures varied between Faculties awarding the same degree. For example,

marketing, a first year business course had different assessment criteria, which

depended on the campus the student studied at. It was explained that it was seen to

be very cost ineffective for Schools to deliver the same course, with different course

requirements for the award of the same degree. A senior manager explained her

experience:

We used to be two Schools, one at Nathan and one at the Gold Coast. We were teaching one discipline subject and we were teaching it differently at two campuses. It was seen to be very cost ineffective to be running two different courses.

This had further implications for the legitimacy of programs offered. For example,

some Heads of School believed industry partners were confused by the current

structure. These participants suggested the restructure was necessary to appear to be

united to industry partners. A senior manager explained:

If we take a university with two Faculties of Business rather than one Faculty of Business we run the risk of the two being uncoordinated, having different


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standards, and offering two faces to the world rather than one. This is good ground for saying lets have one Faculty.

Another staff member holding a similar view stated:

I think one of the rationales was that he (the Vice-Chancellor) wanted to bring together similar areas of the University for external image.

From another viewpoint, one Head of School bluntly suggested the restructure

occurred so the Vice-Chancellor could leave his mark. This view is illustrative of the

institutional view that not all organisational changes are made to improve efficiency

(DiMaggio & Powell, 1983). On a broader level, several managers suggested the

restructure at Griffith University was pre-empted by restructures occurring in other

universities in the State. For instance, one manager observed:

There was a kind of trend going around over the university system and in fact the idea of creating several Pro-Vice-Chancellors to look after groups was something that had happened at another Queensland university two years beforehand.

A general staff member corroborated this view:

A lot of the universities were restructuring at the time, and the Vice-Chancellor thought that he had to restructure too because the current structure hadn’t really delivered the result that was intended.

These comments correspond with the new institutional theory view that

organisational changes can be made to legitimise the organisation when its

environment changes (DiMaggio & Powell, 1983, 1991; Scott, 2001; Scott, 1991,

1995). Going further, some staff took the view that the University undertook a

review of its structure to show the public that the University was changing to

meet community demands. For example, one staff member observed, “When

they think big is good we will follow big organisations, when it doesn’t work


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then we will move back to small again.” She went on to explain that when

management cannot find a compromise to satisfy external pressures for change

and internal inefficiencies in the management structure, they tend to carry out a

review process to show that they are addressing these concerns. As suggested

above, such observations tally with the external legitimacy view of institutional

theory (Deegan, 2002; DiMaggio & Powell, 1983).

Some senior managers believed the restructure was necessary to reduce the chance

of the Gold Coast Campus disassociation from the University pending a review of

the Gold Coast Campus in 2000.100 By structuring Faculties across campuses, it was

explained, would make it more difficult to separate the campus, at the same time

making the centralisation of administrative services more favourable. One Head of

School maintained:

The Vice-Chancellor wanted to lock the Gold Coast in so tightly that separating it would have been a very, very difficult task. The new structure was imposed to do this.

The Vice-Chancellor, instigator of the review process, presented two reasons for

the review. In his submission for the review of the Gold Coast campus, he (Webb,

2000b) said the purpose of the restructure was to “Achieve(s) academic coherence

through University-wide faculties, which coordinate the work of Schools which are

the key academic budget and staffing units” (p. 7).

100 On the 8th November 1989, the University entered a Memorandum of Agreement for a review of the Gold Coast Campus to be carried out in 2000. The purpose of this review was to determine if any changes should be made to the campus, including a possible separation from Griffith University. The Council appointed a review committee in accordance with the terms of the Memorandum on the 5 June 2000. The Gold Coast Advisory Council received the Review Committee’s recommendations on the 29 November 2000. The outcome of the review process was that Gold Coast campus did not separate from the University.


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Whilst the 1997 annual report suggested the purpose of the review was to, “foster

and strengthen cooperation across the University and to generate greater coherence

in the presentation of the University’s strengths to the community” (p. 3).

Education Queensland interviewees had a basic knowledge of the restructure that

had occurred. They offered the following comment:

All universities have become more corporatised and professionalised. The organisational structure used to be designed around a sort of academic philosophy, but that has changed. The idea of universities has been totally abandoned and administration has progressively become much more professionalised. The structure is more formal and in many ways more distant. Universities are shifting, not away from being public sector bodies but the balance of public sector activities is shifting from 100% public to half and half or whatever. A different style of governance is necessary, more business expertise and more corporate and downtown expertise. You know a much more greater focus on all that stuff.

The views presented in this section are consistent with the new institutional

sociological perspective presented in Chapter 3, which suggests there may be many

motivations for change: some externally sourced such as changed stakeholder

expectations, others internally sourced such as those which arose from staff

dissatisfaction with the current structures.

7.3.2 Implications and Ramifications of the Restructure

This section outlines the restructure and implications for the academic and

administrative units.

7.3.2.1 Academic Units

In 1996, the four group Pro-Vice-Chancellors were advised by the Vice-Chancellor

to review existing academic structures and to make recommendations how to


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restructure the University to best suit its current operating environment. In addition

to this, the responsibility for implementing the new academic structure was

delegated to Pro-Vice-Chancellors. Pro-Vice-Chancellor participants indicated that

the new structure had been decided upon after reviewing the current structure and

consulting with staff in the University. They also suggested the structures used on

other multi-campus universities in Australia and the UK had been used to inform

their decision.

In support of these comments, some staff members holding Dean positions at the

time of the restructure suggested there was some discussion at senior meetings

about the restructure and their opinions of the change, but for the most part the

planning was left at the discretion of the Pro-Vice-Chancellors. Most academic staff

also recalled attending a meeting prior to the restructure. According to staff, the

purpose of the meeting was not to consult but rather to inform, to answer

questions, and to alleviate staff concerns about their positions at the University.

One Head of School recalled a meeting within the Faculty with the Pro-Vice-

Chancellor, at which time three options were presented to the academics as possible

restructure models. This staff member recalled that although staff voted on the

options presented, whilst one model was chosen, another option was implemented.

Many other participants recollected similar views. For instance, one was quoted as

saying:

There was a meeting. Like most things in the University, for most things you hear about them through the grapevine, then there was emails and proposals. At Nathan Campus there was a discussion and the Pro-Vice-Chancellor came along and three options were put before us. We voted for one option and we got another option.


235

Another staff member who corroborated this view suggested that even though

some consultation had occurred between the Vice-Chancellor, Pro-Vice-Chancellor

and other staff members in her Faculty, “many objections were canned or pushed

aside or not recognised as valid by senior management.” As a whole, staff suggested

the restructure of the University was planned with minimum consultation from the

academic staff.

The chosen university structure was centred on devolution of management

responsibilities. The University Council approved this structure in December 1996.

Marginson and Considine (2000) suggest the change to a more devolved

management structure is common to all higher education institutions in Australia.

Furthermore, the change is consistent with the underpinning themes of the

managerialism or NPM culture. The devolved management model resulted in major

changes to the management positions at the University. The following section

discusses these changes beginning with the position Pro-Vice-Chancellor.

7.3.2.2 Pro-Vice-Chancellor

In 1996 the Office of Vice-Chancellor was reorganised comprising the Vice-

Chancellor and four group Pro-Vice-Chancellors (i.e. one for each group). The 1996

Annual Report suggests the responsibilities of the Pro-Vice-Chancellors included

executive academic planning and coordination, staffing, and budget delegations (see,

p. 3). In addition, Pro-Vice-Chancellors were assigned responsibility for the general

management of particular campus operations at this time. This means that a Pro-

Vice-Chancellor was responsible for the Health Science Faculty and also the Gold

Coast Campus. Another Pro-Vice-Chancellor was responsible for the Arts and


236

Education Faculties and was also responsible for both Nathan and Mt Gravatt

Campus. Conversely, the responsibility for Logan campus, the newest campus, was

been delegated to the Deputy Vice-Chancellor.

According to Pro-Vice-Chancellors, the most significant change to their position lay

with the vast number of Schools that had to be overseen post-restructure. Instead

of overseeing the management of 15 Faculties, the Pro-Vice-Chancellors now had

the collective responsibility for overseeing 45 Schools. Individually, this meant that

some Pro-Vice-Chancellors who previously oversaw the management of only 3

Faculties now had up to 15 Schools under their domain.

7.3.2.3 Dean

Along with the new academic structural arrangements, the role of the Dean

underwent dramatic change. When asked about the change in position, a Dean

commented, “It has gone from a line management position to a strategic

management position.” Another elaborated:

I think the Deans role is more strategic. By this I mean that Deans are supposed to be your research leaders, your mentor, the person that helps you step back and look at the bigger picture, whereas the operational side of things, that is the Head of School role.

These claims were further substantiated with documentation suggesting the role has

changed from focusing on the management of the budget, to setting the strategic

direction for teaching and learning in Schools (Griffith University, 1999b).

Consistent with this, a review of the University Budget Operating Fund Allocations 2001-

2003 revealed that the Deans allocation includes only the salary and operating costs

of the Deans.


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7.3.2.4 Head of School

Under the new structure the responsibilities of the Heads of School were increased.

Previously responsible for programs and course development, Heads of School now

found themselves responsible for the operational planning of their School. This

included but was not limited to business planning, the preparation of the budget,

and the authorisation of expenditure. Similar to the Pro-Vice-Chancellors, the span

of control for Heads of School changed with the restructure of the academic units.

In particular, staffing responsibilities have changed. For some Schools staff

numbers have decreased by as many as 10 staff and for others they have increased

by 10 or more staff.

Once accountable to the Dean and the Pro-Vice-Chancellor, the devolution of

management responsibilities also saw a shift in reporting lines. Directly accountable

to the Pro-Vice-Chancellor, the Heads of School report to the Pro-Vice-Chancellor

for their operational performance. The reporting line to the Dean has, however,

been eroded. This has resulted in a noticeable shift in power in the organisation.

Deans, once responsible for the budget and allocation of resources, now rely on

influence and persuasion to infuse value in projects and ideas. Surprisingly, most

Deans claim there is little value in the power of their position in the organisational

hierarchy. To further explain, before the restructure Deans were able to make

Heads of School take note of their opinions by attaching or withholding money

from certain projects and activities. Now the Dean no longer has the funding to do

this: funds are allocated directly to Schools from the Vice Chancellor.

Coincidentally, the power of the Heads of School has become a deal greater because

the Heads of School now have the funding to back up the ideas of academics,


238

which has improved their commitment to activities undertaken in the Schools. The

change in power is perhaps best depicted in a comment from one Head of School:

I can personally signup to $50,000 worth of expenditure at the one time, but before it was zero. The Dean signed everything.

This comment illustrates the shift in power that has occurred under the devolved

model. This is consistent with political and power perspectives, that suggest that

change can result in unexpected shifts in the balance of power of organisational

actors (Baldridge, 1971; Stacey, 1993).

Interviewees at all levels claim that the devolution of budget offers greater

autonomy and timelier decision-making. This is consistent with traditional

organisational theories (Bourn, 1994; Tomkins & Mawditt, 1994). There was also a

mention that because the Head of School is on campus everyday and is familiar

with the issues or concerns facing staff or students, the Head of School has a

greater capacity to address their concerns. This view that devolved management will

encourage timelier responses to increasingly complex institutions is also consistent

with the managerialist culture (Marginson & Considine, 2000). In comparison, if a

Head of School wished to get funding for a particular initiative under the old model,

that Head of School would have to approach the Dean. In the cases where Deans

were located on a different campus, interviewees suggested that this could reduce

the Head’s ability to implement initiatives in a timely fashion. That is, the

geographic separation meant that Heads of School would have to wait until the

Dean came to their campus to discuss the initiative and plan its implementation.


239

In situations where Schools now traversed campus boundaries, the devolution of

management responsibility required Deputy Head of School positions to be created.

For instance, the School of Nursing operates with a Head of School and two deputy

Heads of School. Interviewees explained that the purpose of the Deputy Head of

School position is to provide assistance to the Head of School. For larger staffed

Schools, it was explained that the Deputy Head of School position usually involves

supervising and managing a certain number of staff. In Schools where Deputy

positions have been created, the Head of School works on the campus with the

majority of staff and students, and the Deputy works on one of the other campuses.

Although the Deputy Head of School have not been delegated any financial

responsibilities, those Schools operating with Deputy Heads of School confess to

consulting with Deputy Heads of School on budget issues. In the School of

Information Technology, for example, the Head of School consults the Deputy

Head of School when it comes time to plan the budget.

7.3.3 Commitment and Acceptance of the New Structure

To change the management and academic structure and provide a supporting

culture, Pro-Vice-Chancellors drew on a number of communication strategies.

These strategies were necessary to educate staff on the changes and the effect of the

changes. They also helped to combat some of the resistance to change (Boston,

2000).

Formal mechanisms such as meetings, memos, and proposals were used to

disseminate information about the intended restructure to staff. Most of the

academics interviewed recall being filled in about the changes through the grapevine


240

or through Head of School emails. The new archetype was sold to academic staff by

appealing to their need for improved decision-making at the lowest levels. In

particular, the ability to make budget decisions was strongly emphasised by

management to convince staff that the new structure was in the best interest of the

University. As one Head of School put it, “Schools became masters of their own

destiny!” This carried with it an understanding that under the new structure, Heads

of School would be better equipped to deal with staff concerns and have resources

to back up staff initiatives. One senior manager explained, “The new structure was

sold in terms of responsibility, devolution, and management at the lowest levels.”

Another remarked, “Those people affected by budget decisions also now make the

budget decisions.” This view is consistent with Marginson and Considine (2000)

who suggest the budget can provide the necessary motivation for changing the

culture of a higher education institution to accept new business practices.

Once the structure was in place, the Pro-Vice-Chancellors claim that staff had few

options but to comply with the new structure. Notwithstanding, Pro-Vice-

Chancellors claim to having spent large amounts of resources getting people to

accept the new model. One Pro-Vice-Chancellor commented:

To change the culture and get people onside we had to do a lot of talking, visiting, and massaging. Negotiating, brokering deals, and consulting, that was our job.

Another reflected:

We had to do a lot of selling to bring people onside. A lot of going over what is good for the University, and what is good for management. At the end of the day, there is always some resentment.


241

Such views are consistent with the ‘talking campaigns’ described by Marginson and

Considine (2000) in their book, The Enterprise University: Power, Governance and

Reinvention in Australia. The talking campaigns described by Marginson and

Considine involved conversing with employees to try and get them onside by

informing them of what is going to happen. These views are also consistent with

organisational theorists Kotter and Schlesinger (1979) who suggest that staff need

to be informed about the consequences of the change for resistance to be quashed.

More generally, the findings are also consistent with Hardy (1991) who suggests that

change will only be successful if there are attempts to respond to opposition groups

and manage the meanings attributed to the change.

7.3.4 The Centralisation of Administration: Perceived Economies of Scale

The multi-campus nature of the University introduced with the Dawkins

amalgamations had in the past encouraged campuses to operate using control

techniques specific to their situation. Thus, many of the administrative controls

existing prior to the amalgamation continued in the aftermath. Of particular

concern, then, was the overall control of the University. Interviewees suggested that

functions such as information handling were proving to be problematic because of

the increase in the number of campuses. They explained that when information had

to be consolidated, inefficiencies were realised because of the variety of methods

applied. Furthermore, it was suggested that by having administration staff in each

Faculty, such as financial managers, proved to be both time and cost ineffective. In

order for the planned changes to the academic structure to be effective,

administrative staff were told that the administration and technical support areas


242

needed to be realigned with the new structure. When asked about the rationale for

the restructure one staff member simply stated, “I believe the common terminology

used was better management!”

At the same time as the academic restructure, Griffith senior management sought to

address other management issues by reorganising the administrative staff into

centrally controlled departments. This involved most of the general staff currently

hosted by Faculties being removed from those positions and reassigned to a central

administrative department. It is important to realise that the view held by several

employees at Education Queensland was that universities as large as Griffith are

incapable of being run effectively with centralised administrative structures. This is

evidenced by the comments of one employee:

I don’t have any faith in centralised administration to run a large institution. I have a huge amount of faith in very strong corporate quality and corporate policy. You have to have good management skills to run administration. Mind you, it takes good management skills to run anything the larger it gets. It doesn’t seem to me that Griffith is a well-run institution compared to the way it was. If you ring up you can’t get anyone to tell you who the Dean of something is. It can be quite frustrating to deal with Griffith from the outside. Some of that is about technicality and some of that is about size.

The administrative departments now provide cross-campus support that is not

unique to any particular campus. This includes student administration staff,

technical support staff, and financial support staff. Put another way, there is not for

example a statistics section on each campus, or a managing committee on each

campus. It was suggested that by centralising all administrative services, the

University would become similar to commercial enterprise, in turn creating greater

efficiencies. Staff interviewed suggested the Pro-Vice-Chancellor (Administration)

had pushed for the reorganisation for improved control and a larger portion of


243

budget funds to aid in supporting academe. For instance, one senior manager said,

“I think the Pro-Vice-Chancellor Administration gained more budget under the

new structure, which is probably why he was a driving force behind it.” Selected

Education Queensland employees held a similar view. “The problem with current

university structures is that they are designed so that the corporate overheads and

the corporate centre of the University gets bigger and bigger, but this means the

amount of money available for the front end for teaching and learning gets smaller

and smaller,” one interviewee from Education Queensland said.

7.3.4.1 Commitment and Acceptance of the Centralisation of Administrative Services

Administrative staff responded to change in a number of ways: some resigned and

others applied for the few support positions that remained in the School. Two of

the remaining general staff members relayed their experiences:

Everyone got letters advising that they could apply to stay in the Schools or apply for something else. If you decided to go for something else, you had to present the case of where you would like to go and why you wanted to go there. (Interviewee 1) We were aware that a restructure was going to take place. The Pro-Vice-Chancellor Administration, who drove the administrative restructure came down and addressed the general staff. We were advised that a lot of positions would no longer exist and that some staff that were on contracts or sessionals101 many not continue. However, anybody that was tenured was guaranteed a full time position, irrespective of whether you would do your current job or not. You would still have a position within the University. I myself received a letter to state that the industry liaison position that I was currently in would cease to exist within our Faculty. The School Administrative position was a new position created in the process. I decided to apply for that position. It was inline with some of the things that I had been doing. (Interviewee 2)

101 Sessionals refers to the casual staff employed by the University.


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As suggested in the previous quotes, only a few positions remained in the Schools

after the administrative reorganisation, this meant that most staff had no choice but

to move to the centralised administrative offices. Because of this, the morale of

general administration staff took what academic staff described as a ‘beating’.

According to interviewee comments, the loose job descriptions, a lack of training in

the required tasks, and new supervisory structures did not help the situation. Staff

admitted the uncertainty surrounding both job description and job security

increased their resistance, favouring the Faculties over a centralised administration.

Interview comments mirrored the following:

Under the new structure we didn’t know what our roles were. Our manager seemed to define our role according to what they thought it should be. We really didn’t get any support or structure on how to change it. In the first twelve months we had a very steep learning curve, which was high pressured for everyone in administration.

And:

Employees were very disgruntled. We didn’t know what our job was, what it encompassed. Every time we looked around we got another responsibility. But, it didn’t seem to be recorded as a legitimate responsibility within our position description. It got big and nasty in some places.

Academic staff at the lower levels recognised the position administrative staff

had been put in with the new structure. “They felt that they were being pulled

away from their family,” an interviewee recalled. Others offered explanations

similar to this one by a Head of School.

Many of the staff thought the old Faculties were good because it was an administrative training ground. There were lots of duties and functions in the old Faculties that you could do. So they hated being put into central offices.

There was also a view that Gold Coast general staff feared being put into the same

departments as Nathan Campus. A Head of School claimed:


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Morale was very low for administrative staff at the time of the restructure. The Gold Coast staff had a fear of ‘Big Brother Nathan.’ And yet they were no threat to them at all. They had this belief that the people at Nathan were better off than them. They thought that because this is where Head Office was and because of that they were treated special.

Academic staff and administrative staff all suggested the administrative restructure

was not well planned, especially for those staff at the lower levels expected to move

into new and unfamiliar positions. An administrative staff relayed her experience:

From the restructure, I had to go from a comfort zone in the School I was in to a totally unfamiliar office and School. I was told that the restructure was going to happen to support academic changes and to amalgamate the Schools. The administrative changes that had to support the academic changes were not really considered until after the administrative changes were place. The impact of that was enormous. We didn’t know or even understand what our responsibilities were. It was very peculiar times.

Others collaborated this view offering similar stories.

7.3.4.2 Consequences and Implications of the Administrative Restructure

In several instances, the centralisation of the administrative functions into a single

office has had its intended effect, to create greater efficiencies. One staff member

involved in timetabling and mark entry provided an example of this:

They were trying to do things like a mark entry system. Different Faculties tried this and tried that but they could never agree. In 1997, when the function was centralised staff in this office devised spreadsheets for lecturers to enter the marks and email them and so on. So, suddenly the University was using one system to manage student marks.

This meant that all managers in the University used the same management systems,

including accounting packages, human resource packages, and the student marks

entry system. It would be reasonable to expect that greater efficiencies could be

sought from this change. However, there have also been many unplanned


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consequences from the centralisation of administration. From an operating

perspective, there was some suggestion that the restructure had implications for the

effectiveness of the Student Services department, Finance and Business Services

department, and the Office of Technical Services.

In theory, centralisation should result in greater efficiencies (Cummings & Worley,

1997), however in Griffith’s case, Heads of School felt that this was at the expense

of the level of quality of services provided. Most Heads of School suggested the

main area that still needs attention is student administration. They fear the quality of

student services had declined since the student administration function had been

moved from the Schools to a central department. Under the new model, for

example, student administration staff was required to answer queries from students

about any of the 150 courses on offer. Based on this, there was the view put forth

that student administration staff was giving out information about Faculties they

knew nothing about. Representatively, a Head of School commented:

I think there has probably been a decrease in the quality of services provided to students because I don’t think the people in a centralised office are the best people to give them advice about their programs. The best people to offer that advice are in the Schools. My feeling is that the Schools are increasingly out of touch with the students. We had very close relationships with our students, and again very informal, very relaxed, and part of our culture here has suffered because of that. I don’t think we have the same relationship with our students anymore. I feel it was better when we provided that direct service. We were more in touch with what student problems and concerns were and they were given more informed advice. I think they feel a sense of frustration that there is more of a bureaucratic maze that they have to fight their way through to get an outcome than previously.

As suggested in the previous quote, most Heads of School and subordinates

interviewed felt that the people in student administration were not capable of

providing quality services because of the vast number of courses provided by the


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University. In spite of the centralisation of student services, a lot of Heads of

School suggested that their Schools still spent a large amount of time servicing the

students. In the words of two Heads of School:

In reality there is still a fair bit of servicing of those students needs through the School. But in the restructure that was not supposed to happen. This is because they (the students) don’t get quality advice. This is no criticism of the people that work in administration at all. There is just too much to know, and students are therefore dissatisfied and therefore they come back to the School. So, in reality Schools are subsidising the administration, they are not resourced to do that. That increases the workload at the element level. The restructure has not effectively dealt with all of these issues. (Interviewee 1)

If students have a query about the course, they have to go to general staff. But they end up going back to the lecturers because general staff were giving out information about Faculties they knew nothing about. (Interviewee 2)

Many other managers also felt that the schools were subsidising student services by

providing course information and answering student queries.

Comments from the interviews suggested the centralisation of administrative

functions had repercussions for academic staff, especially those holding

management positions such as the Head of School. Several Heads of School

commented that the centralisation of administrative staff had reduced their ability to

make decisions in a timely manner because staff was not always available to deal

with queries. It was explained that the use of the web as a communication tool

exacerbated this problem further. One staff proposed an analogy with the banking

sector in Australia:

I have no problems with commercial, just like the national banks. We had a personal banker to look after us. But now they have shut down all the branches. You and I know the banks aren’t working properly. You now have to cue up for hours to get served and we go to the phone instead of going to them. Similar to the banks, we also rely on the web, and sometimes it is not even updated.


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Several Heads of School identified the removal of the Office of Technical Services

staff to have the biggest impact on their ability to manage their School effectively.

This was one of the main gripes of the whole centralisation arrangement. One

senior manager relayed her experience and opinions:

I think the implications of the centralisation of administrative functions are a real mockery of the decentralised vision that senior management had. There are so many things that are centralised and by centralised they seem to have become ‘one size fits all’. Let me give you an example of what has become very inefficient, both financially and in terms of job satisfaction. Before the restructure, the School had its own technical officers and we employed them and they were very in tuned with our needs. Then when it became restructured all of the Office of Technical Services people went into the Office of Facilities Management. Now they report to the Office of Facilities management and it is very difficult for use to say well we want to reshape your role in this way. I can’t do that as a manager because they are responsible to the Office of Facilities Management and not to the School. We are very unhappy about that and the staff is unhappy about that because the Office of Technical Management is managing them in a different way to how the School managed them, and yet they spend their full work time here in the School.

Several others commented that the centralised model encouraged the ‘one size fits

all’ management approach. These staff explained that some of the Schools rely on

the Office of Technical Services for support in the laboratories, others require basic

general computer services. It was explained that the Office of Technical Services

requirements for Arts, Business, Engineering, and Nursing groups tend to be very

diverse. Many interviewees argued that the lack of specific training in relevant

information technology slowed both the management process and also had

implications for the quality of teaching in the long term.

More troubling perhaps, one Head of School suggested that although technical

services is now part of central administration, and funded as an administrative

element, his School often had to pay for overtime of these staff when computing


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facilities in the School required urgent attention. This he claims was unheard of

under the old Faculty structure.

Several of the senior managers interviewed suggested that although the academic

managers had gripes with the new structure, the changes had the greatest

ramifications for general staff at the University. Not only did the centralisation

require a change in location for many staff, but it also involved the abandonment of

many of the traditional positions, and the creation of a host of new positions. In

most cases this meant that general staff were now under the control of

administrative managers, and not of the academic managers. According to the

interviewees, this had widespread implications for the quality of administrative

services. From one perspective, it meant that Faculties could no longer train general

staff according to their needs; instead, staff are trained with generic skills that can be

utilised by all of the Faculties. This means that if, for instance, Finance and Business

Services employs you, you might find yourself processing cheques 40 hours a week,

or if you are a Student Services Officer you may spend all of your time answering

student queries. In particular, Finance and Business Services employees who moved

from the Faculty structure to the centralised structure contend their positions have

changed from a manager position to a simple bookkeeping role. It was explained

that traditionally, the Faculty provided a vast array of activities for finance staff,

whereas now their position is limited to providing information to required parties.

Furthermore, unless you were promoted within that department there was little

chance of your duties or responsibilities changing.


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From the above interviewees’ comments, it appears that the limited responsibility

and functions of the administrative staff positions were perhaps the most

demoralising effect of centralising administrative functions. Administrative staff

interviewed reflected that working in the Faculties offered variation in their duties.

They claim that there was room to expand their skill base. This in turn increased the

number of positions they were qualified to apply for promotion. In this regard, the

old structure had provided motivation for employees to improve work

performance.

7.3.5 Confusion Sets In: Problems and Inadequacies in Planning and Unexpected Shifts in Power

The combined pressures of the reorganisation of the University into 45 Schools and

the centralisation of administrative departments caused angst for employees and for

the viability of some Schools. The following section looks at the implications and

issues arising from the introduction of the new model.

7.3.5.1 Faculties

The reorganisation of the University led to the creation of several Faculties

comprising a number of, in some cases, disparate disciplines. Earlier in this chapter

it was suggested that Deans were expected to set the strategic direction for the

Schools in their Faculties. Some Deans expressed concerns about the new structure

because of the differing focus of each of the Schools in their Faculty.

Representatively, one Dean shared a general opinion:

From my point of view of managing operations, the actual professions that are represented in the Faculty are quite disparate. In some cases you could argue that one of our Schools would be better located in a management


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Faculty than in this Faculty. This professional disposition creates a reasonably difficult position for implementing proper governance and management procedures.

7.3.5.2 Dual Footprint Schools

The Dean’s role has always traversed campus boundaries. This was especially

problematic under the traditional model where decision-making responsibilities

were held at the Dean level. Under the new model the Dean’s position continues to

traverse boundaries. Even though decision-making responsibilities have now been

devolved to the Head of School, Deans still expressed some concern because of the

geographical scope of their position. A representative comment of a Dean was:

The Faculty has a School on the Gold Coast, several Schools on Nathan campus, and more recently we have established a School on Logan campus. From that perspective, the geographical scope of the Faculty extends from Brisbane, Logan, and the Gold Coast. In terms of management, that is quite a significant amount of distance to be governed by one individual.

In related vein, having to manage operations at two campuses provides further

challenges for Heads of School. As previously mentioned, one of the reasons for

devolving was the lead-time for decision-making. Organisational theory suggests

that by devolving decision making it is expected that decision-making will be

speedier and more effective because Heads of School can react to problems and

issues as they arise using their local knowledge. Operating on more than one

campus, however, reduces the likelihood of these objectives being achieved to the

full extent. Heads of School cannot be on all campuses everyday. This means

decision-making time is increased. It also means that when a Head of School is on

one campus, he or she is not going to be fully aware of what is going on in all areas

of the School at that time. Based on this, it could be argued that in a number of

cases, the devolution of responsibilities did little to improve the timeliness with


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which decisions could be made: the new model still had many of the failings of the

old model.

The new structure also created problems for general academics employed by cross

campus Schools where Schools had a dual footprint on two or more campuses.

Staff complained that the new model meant that they had to spend a lot of time

travelling between campuses. This was not the case when Schools operated on a

single campus.

7.3.5.3 Size and Number of Schools

It was explained earlier in this chapter, that the 1997 restructure increased the

number of manageable units from 12 Faculties to 45 academic budget units.

Implied in this was a move from large management units to smaller management

units. Although at the time this was viewed as a viable alternative for improving

management efficiency and effectiveness, the evidence presented in this chapter

suggests that this has not altogether been the case. For the most part, the change in

the size of Schools has presented an unpropitious working environment.

At the senior management level, the restructure meant that Pro-Vice-Chancellor

responsibilities now extended over a larger number of units. Instead of monitoring

two or three units, they now have to monitor as many as 15 units. Comments from

two senior managers convey the general attitudes felt:

I think the Pro-Vice-Chancellor is finding it tough because the line management responsibility is quite vast. (Interviewee 1) It is hard to keep your eye on that many Schools! (Interviewee 2)


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It could be argued that Heads of School have felt the repercussions of managing the

small Schools the most. As one Head of School put it, “Even the Heads of the

bigger Schools don’t have the administrative strategic capacity to operate

effectively.” Another adopting a similar view recalled his School’s experience:

We were so small that we knew we were going to be under budget pressure all of the time. The restructure also meant that Schools that were doing well in research were now under more pressure because most of the funds were apportioned based on teaching.

Over time, senior management has also come to adopt a similar view. One manager

observed, “The Schools are really too small to be really viable.” Another who

echoed this view explained:

Economies of scale would suggest if you look after 30 staff and similar administrative support it is a lot cheaper to run than 15 or 20 staff. The photocopying is cheaper and the infrastructure is cheaper for one School than two smaller Schools.

Many Heads of School held this belief that economies from scale could be realised

from a School employing around 30 staff members.

Quite apart from this, staffing problems were another implication highlighted from

the School size.

One staff member goes away and this can create problems. More staff needs to be hired to fill teaching positions. This creates greater costs for the School. Conversely, with small Schools, if your subjects drop off you have excess teaching capacity in your School.

A final related issue identified in the interview process stemming from the size of

School was the fact the pool of talent from which a Head of School can be chosen

is restricted by the number of staff holding senior positions in the School. With a

Head of School turnover of two or three years, and a pool of 10 to 15 staff

members to choose a suitable Head of School from, even less if you just consider


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senior staff, it was explained that the ability to select an appropriate Head of School

with the required skills to effectively manage the School was further reduced.

7.3.5.4 Role Ambiguity for Management

As indicated earlier in this chapter, one of the central features of the new

organisational restructure was devolved management responsibility. At Griffith,

Deans and Heads of School explained that their positions had changed in the

University when the new structure came in. In the past, Deans had made most of

the management decisions including budgetary decisions. Now with the

devolvement of responsibility, these became the Head of School responsibility.

Deans and Heads of School expressed a lot of angst about their new job

descriptions. Many senior managers suggested Deans, in particular, displayed

resistance to the new model because they did not understand their new role in the

University. Most comments mirrored this one by a senior administrative staff

member:

I think it is safe to say that when the new model came in the Deans were very unsure of what their jobs were. Very, very unsure. There were a couple of them that said this is not worth it and went into different positions.

Others suggested they resisted the model because of the loss of confidence in the

position. A common feeling conveyed was, “we have a level too many.” It would

seem that many could not see value in having a Dean position when the majority of

day-to-day decisions resided with either the Head of School or the Pro-Vice-

Chancellor.


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Management norms and behaviours once institutionalised at the Dean level or

above, were deinstitutionalised through the loss of control and loss of authority to

shape others’ realities. For the most part, Deans blamed the devolution of budget

responsibility for this change. For Deans, the devolution meant that the traditional

norms and behaviours were no longer reinforced and new behaviours and norms

had to be created around their new strategic management position.

At the same time, Heads of School needed to create their own management culture

to be successful in creating a more efficient, effective, and accountable School.

Without guidelines or a template to steer their behaviours, most Heads of School

contend that when faced with an unfamiliar decision they rely on the actions of

other Schools, or they imitate their response on senior management responses to

similar decisions. As one Head of School commented, “I like to find out what are

the norms for the University. So I will ask Finance and Business Services, other

Heads of School, and department managers and use that as a guide.” Deans

expressed similar views to the Heads of School, drawing on the experience of

others in the same position.

7.3.5.5 Power

Once upon a time when the Dean said something the Head of School listened. Not these days. (Interviewee)

Similar comments to the one given above were made by all of the Deans

interviewed. Participants suggested that the 1997 restructure resulted in significant

changes in the powers and responsibilities of the existing Dean position (see for

example, Griffith University, 2002b). They suggested that historically, the Deans at


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the University held significant budget responsibilities in the Faculties, distributing

and allocating budgets to the Schools as they saw fit (see also commentary by the

Vice-Chancellor, Davis, 2002). For the most part, however, spending was contained

at the Dean level, and Heads of School were provided with small amounts of

funding for discretionary items. A former Dean also explained that prior to the

restructure and the devolution of budget responsibilities, the Dean managed three

Deputy Deans who held responsibilities for teaching, research, and staffing.

According to staff in the Dean position and those having held a Dean position,

budgeting and staff management consumed most of the Deans time under the

Faculty model.

The Dean’s budget responsibility is now limited to the salary and operating costs

inherit to the position. Interestingly, one Head of School likened the Dean position

to the chairman of a board in a corporate entity. He elaborated suggesting the role

does not involve the day to day running of the Faculty, nor is it concerned with

responsibility for the budget. “Ideally”, he went on to say, “the Dean sets the vision

and direction and lobbies on behalf of certain interest groups in the University.”

Others held mixed responses to what the actual role and benefit of the Dean

position was. One Head of School suggested that this position has now been

“emasculated” in the current structure. He went on to suggest that the loss of

power coupled with unclear job description led to this. Another senior staff

member maintained that the loss of budget power now requires Deans to draw on

“personality and moral persuasion” to carry out their roles effectively. In similar

vein, one academic commented:


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Deans can talk to Schools about the goals and directions they are setting, they can float ideas about how they think that things could work, but because they have no budget and because they have no line control over the Heads of School they have no capacity to be able to force people to do what they want in any kind of capacity.

Another commented:

The Dean’s role is somewhat unclear. I know they have a strategic role in teaching and learning quality, and in research, and obviously they chair staff committee, which is a critical function, but they have no direct line responsibility over my School or me. I don’t answer to the Dean. So from that point of view, their basis of power is somewhat unclear. They have power in some areas like staffing and research but lets face it, it really comes down to the budget. I answer to the Pro-Vice-Chancellor. He/she is my supervisor. Budget issues go through the Pro-Vice-Chancellor. To me the Deans are outside of that.

The new Vice-Chancellor (Davis, 2002) of the University also made similar

observations in the 2002 review of management structures:

There is also a widely expressed view the role of the Deans is not clearly specified, leaving talented individuals unable to contribute according to their potential. The authority of the Deans is constrained because they have no budget. (p. 5)

Some Heads of School even took the extreme view that Deans were no longer

required for the effective management of the University. The main reason given for

this comment was that the Dean essentially deals with issues at the same level as the

Pro-Vice-Chancellor and therefore their role was deemed superfluous. Others

suggested there was an overlap between the Dean’s responsibility for human

resource management and teaching and learning therefore the position was

unnecessary. General academic staff comments also mirrored those of the Heads of

School. For instance, one staff member commented:

I don’t know why we have Deans. We should just have Schools and have the School’s reporting to different Pro-Vice-Chancellors on academic matters, on research matters and that is all.


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More generally, these comments suggest that in addition to setting the direction for

the Faculties as required by the senior management, Deans have the arduous task of

convincing staff that they are integral to effective university management and that

they do in fact provide a legitimate role in the University. The findings of this

section are not unlike those described by Scott (2001) who suggests that

devolvement of budget responsibility can threaten the power structure of the

organisation.

7.3.5.6 General Perceptions About the Changes

A lot of staff were unhappy about the changes, especially the older staff that had

been at the University for a number of years. Not surprisingly, those staff favoured

the Faculty structure over the current School structure. Some staff suggested senior

management should have taken their reservations about the proposed changes more

seriously. There was a general view amongst staff that Faculties were run very

effectively and were very efficient. For the most part, interviewees held the belief

that the efficiency stemmed from the fact that administration staff were on hand at

all time and the fact that the Schools seemed to get a larger portion of the operating

budget under the Faculty model. A representative view went something like this one

offered by a Head of School:

The old Faculties ran very, very well. It was very efficient. Administration staff was multi-skilled, they could fill a number of positions. We also never had the same funding concerns that we have now. We have projected a deficit for our School for the end of 2002.

Several members of staff from one department interviewed suggested the current

structure had resulted in inefficiencies in almost all facets of the University. For


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instance, one said, “I think it has probably cost a lot more money than if we had

stayed the way we were before.”

In response to the change, many academics chose to overlook the fact that the

structure had changed, instead choosing to focus on their research and teaching

leaving senior management to deal with the repercussions of their decisions. Those

in management position took one of two views: they could try to make the best of

the situation, or alternatively they could resign.

Education Queensland participants also suggested the current structure at Griffith

isn’t working. Taking a broader view of the problem, they explained, “getting a

single corporate view from Griffith on anything is difficult. The idea of a strong

corporate entity to an institution is quite a modern one, but I think it is a legitimate

position for a university to have.”

Notwithstanding, the model has accomplished a few of the planned objectives; it

has created some research opportunities with the emergence of cross-campus

research groups; and it has increased the consistency of teaching delivery materials

across campuses.

7.3.6 A Reassessment of Operating Structures at an Element Level

During the interview process with Griffith employees it was revealed that

inadequacies with the restructure of 1997 have forced a number of Faculties and

individual Schools to reassess their structures. In particular, the structures

implemented in 1997 proved to be particularly problematic for similar Schools


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reorganised into different Faculties. In a number of cases, Schools have

amalgamated or moved to a single Faculty. What is more interesting about these

amalgamations is the fact that under the new arrangements the disciplines taught in

the Faculties tends to be disparate: integrating with a Faculty has been a matter of

financial viability rather than improving the research synergies of the Schools. Of

course, this is inconsistent with the original aims of the restructure.

7.4 Discussion

The planned change process described in Chapter 3 starts with a conception of the

need to change. In Griffith’s case there were multiple, often interrelated pressures

for change requiring change to the existing systems.

Traditionally changes to the organisational structure have been viewed from two

alternative perspectives: (1) those made to improve the efficiency of the

organisation; or (2) those made as a result of political struggle for control (Pfeffer,

1981). It appears that the Dawkins reforms aimed at improving the efficiency,

effectiveness, and accountability of HES was the real driving force behind the

change in structure at Griffith. The competitive environment created by these

reforms rendered the current structure as ineffective, especially in light of the

amalgamations that took place, which increased the span of management from a

small single campus university to a large multi-campus university. It also led to the

duplication of Schools where similar courses had been offered in the former

universities and CAE’s. Furthermore, it appears that the conflict between campuses

was attributed to the ineffective control systems lingering from the amalgamations.

In particular, the conflict was related to ineffective budgetary systems. Budgetary


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systems were documented to provide the pressures for change, they highlighted the

inequities of the current model and they served as a legitimising device for the new

structure (Jones, 1994a). The view that governments can impose change is

consistent with DiMaggio and Powell (1991) and Scott’s (1995) interpretation for

explaining why organisation’s change. It is also consistent with the notion that

changes can be exerted on other resource and support dependent institutions. As

discussed in Chapter 2, as an Australian public university, Griffith University

received a large portion of funds from government. Based on this one could argue

that they are particularly susceptible to the changes and demands of these parties.

According to the interview comments, the conception for change was further

amplified by the fact that most other universities in Australia were or had

undergone structural changes in recent years. This is not surprising given the

complexity and uncertainty provided by the new commercial environment.

DiMaggio and Powell (1983), for example, suggest that when organisations are

faced with high levels of uncertainty they tend to imitate their actions on other

organisations. This chapter provides evidence to suggest that although government

provided the pressures for change, the initiation of change was made at the senior

management level.

The change in context created the need for a change in management style and

changed many of the traditional values underpinning the University. It indicated

that a more corporate structure would improve management’s ability to operate

efficiently and effectively by improving strengthening systems of accountability.


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The second phase of change, the transition phase, involves a series of complex tasks

aimed at changing the current state of the organisation.

Before the organisation can change, the leaders need to create a vision or an

archetype of how they would like the organisation to look. In this study, the Pro-

Vice-Chancellors developed a vision, which involved the removal of duplicate

Schools and the devolvement of management responsibility. Essentially this meant

that the traditional model of governance built on collegiality where all members of

the University community were invited to partake in decision making would be

replaced by the new managerialist style of governance involving few actors in the

decision making processes to encourage an improved response time to community

and institutional issues. Dopson and McNay (1996) suggest that the change to

devolved structures is consistent with the managerialist reform. Similarly,

Marginson and Considine (2000) observed that this style of governance is not

uncommon in the Australian HES, it is the product of pressures to become

commercialised. This infers an acquiescence response, that the organisation may

have simply imitated the response of other institutions in the sector (DiMaggio &

Powell, 1983).

More importantly, several employees commented that the proposed model was also

consistent with the management literature at the time that suggested that a devolved

structure could improve the competitive position of an organisation. The perceived

rationality of the devolved management process would suggest the model was also

adopted for legitimacy purposes as well as for efficiency (DiMaggio & Powell, 1983;

Meyer & Rowan, 1977).


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The involvement of Pro-Vice-Chancellor’s in the planning process suggests the new

structure was primarily designed based on the negotiations between these staff

according to their values and preferences for how the organisation should ideally

function (Baldridge et al., 1977). This is consistent with the view that those holding

the most power in the organisation determine what the response should be

(Carruthers, 1995). In many ways, restricting the decision making to one level of

management with few individuals also served to reduce conflict associated with the

choice of a particular response (Hardy, 1994, 1996; Pfeffer, 1997).

By outlining the proposed structure, the Pro-Vice-Chancellors were able to point

out the inadequacies of the current structure creating a readiness to change. That is,

they were able to use their power to redefine the attitudes and perceptions of staff.

This is consistent with the view that organisational change only occurs where there

is political support for the change (Hardy, 1991). Individuals and groups in the

organisation can help to promote the change, or alternatively they can resist and

block the change. Employees will only support the change if they understand why

the change is necessary, what the benefits are and how the benefits can be

accomplished. Without an understanding of the motivations for change and how

the change will benefit the organisation, efforts for change are unlikely to produce

the intended outcome. This implies that for change to occur there must be some

communication between those involved in planning the change and the

organisational community: there must be some attempt to manage the meanings

employees give to the change (Hardy, 1991). As the key determinants of the

response, it was imperative that the Pro-Vice-Chancellors were involved in


264

explaining the archetype to their subordinates and managing the change if the

desired state was to be achieved.

In Griffith’s case it was not difficult to convince staff that the current structure was

not working. The external triggers for change created an awareness that the current

structure was not working effectively. It appears that management relied on the

external pressures for change to help gain acceptance and legitimise the new

structure (DiMaggio, 1991). At the same time, many staff suggested that they were

already aware that the structure was not working, especially because of the

infighting going on between campuses and between the management levels and

thus were ready for a change. The expectations of the new structure also created a

readiness for change in the organisation. The expectation was that the devolved

structure would improve the management of the organisation through more

equitable budgeting, and decision-making at the face level. Thus, the devolved

structure was seen to motivate individuals to make decisions and to innovate for the

benefit of the organisation (Scott, 2001).

The fact that other universities in Australia had adopted similar approaches, and

that the proposed model was aligned with the management literature at the time

imparted a belief that the model was legitimate. It also gave the impression that

more employees would be involved in making the day-to-day decisions in the

University, which was tempting to employees because they could now get involved

in decisions that affected them.


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On a broader level, it could be argued that senior management were able to bring

others onside by reason that they controlled the organisations resources. This is

consistent with the power theories described in Chapter 3, which suggest that

people comply with the demands of others when resources are deployed or

withheld (Hardy, 1994, 1996; Pfeffer, 1997). Evidence demonstrated in the chapter

also suggested that managers expended their authorised powers to restrict access to

decision-making at the senior level, which ensured that only information that would

improve commitment to the change was relayed back to employees (Hardy, 1991;

Pfeffer, 1992b, 1997). Clearly, this is one of the ways managers at Griffith chose to

manage the meanings given to the change.

Notwithstanding, deciding on a particular response or archetype automatically

favours some individuals or groups over others, it can affect the balance of power

and on this basis resistance occurs (Baldridge, 1971; DiMaggio, 1991). Resistance to

the reorganisation of the organisation occurred at two levels: the Dean and the

administrative. These appeared to be the levels most affected by the change.

At the Dean’s level, resistance took the form of resignations in the most extreme

cases, and in less extreme cases a lack of support and commitment towards the new

positions. It appears that resistance occurred because of the perceived loss of

power, which was related to the devolved budget responsibility. This is consistent

with Bass (1990) who also believes that employees resist change for fear of a loss of

power and Brown (1998) who suggests that employees resist change when their

status is at stake. Scott (2001) also claims that one of the most challenging aspects


266

of devolving the budget is managing those levels of management where budget

control has been removed.

At the administrative level, resistance took two forms: resignations or applying for

the administrative positions that remained within the Schools such as Head of

School Secretary or School Administrative Officer. In the case of the administrative

staff, one could argue that resistance was motivated by a number of sources

including selective perception, habit, and security. At the time of the restructure,

administrative employees had a clear understanding of their role and their job

requirements, however, the lack of adequate information about the how the new

structure was going to work, what their jobs were going to be, and how the change

would benefit them created uncertainty, and in turn, a lot of anxiety. In almost all

cases, the changes also required institutionalised habits and behaviours to be

discarded to cater for the centralised model. There was also evidence to suggest that

the psychological security of many employees had been threatened because of the

uncertainty of expectations.

At the same time as the structure was being put in place, senior managers impressed

value in the structure by following through with a new budget model that devolved

budget lines to each of the Schools for them to decide on appropriate ways to

spend the funds. By doing this, senior management was able to demonstrate that

the new model was valued. Finance and Business Services employees were

designated the responsibility of helping the Schools develop their budgets. By

providing such resources to help Heads of School with their new tasks,

management again reinforced their commitment to new model.


267

The final phase of change involves evaluating and institutionalising the archetype.

Institutionalisation can be measured by comparing the implemented structure with

the planned structure. It can also be measured by determining the extent to which

the model achieved the desired result. It appears that the desired structure had been

implemented in the organisation: many of the duplicated Schools were removed and

the responsibility was devolved. The final model could be likened to the private

sector bureaucratic model described in many management texts. The findings of

this chapter also suggest the structure had achieved many of its objectives. For

example, it had improved the community perceptions; it did offer a more coherent

model to industry, government, students, and the wider community. Participant

comments, however, suggested that it did not foster or strengthen co-operation in

all departments of the University. This was however related to the budget method

applied. This issue will be discussed in greater detail in Chapter 8.

The chapter highlights several interesting issues inherent with the current model:

the Dean’s position is viewed as problematic because of role ambiguity and also a

loss of power through budget devolution, and the number of Schools and the size

of the Schools was believed to have had budget repercussions.102 With regard to the

culture, it appears that the introduction of devolved management responsibilities

did increase the rate at which the culture changed in the University. To explain, the

devolved structure signalled to employees the acceptance of business practices in

the organisation. In addition to this, the increase in the number of managers at the

University symbolised a move to a culture similar to that of the private sector.

102 These issues will be revisited in Chapter 8, which focuses on the budgetary system.


268

Sandbach and Thomas (1996) too suggest that devolution can be used to change

culture. They argue that “devolution is as much about cultural change as with

financial management” (p. 63).

7.5 Conclusion

This chapter described the governance and accountability systems operating at

Griffith University. The chapter suggests that the changes in the University,

although unique in substance (i.e. devolved budget to the Head of School), tended

to mirror the broader changes taking place in the Australian HES at the time. It is

argued that by changing the structure, the organisation was seen to be improving

the systems of accountability and incorporating managerialist or private sector

models of management into the organisation. It has also been shown that there is a

strong link between the structure and the budgetary system of the organisation. In

this chapter the ACSs, in particular the budgetary systems, took on two roles: (1) a

source of change, and (2) a legitimising device. To explain, the perceived budget

inequity provided the impetus for change and then later in the transition phase the

budget system was used to legitimise the changes by offering a more equitable

model. Collectively, the evidence of this chapter suggests the change in governance

was viewed as a means of improving the effectiveness of the budgetary system

(Bruns & Waterhouse, 1983).

Having outlined the changes to the University’s strategic planning and governance

system the next two chapters focus on the accounting system. Specifically, Chapter

8 describes the budgetary system and Chapter 9 describes the performance

management system.

269

AAccccoouunnttiinngg CCoonnttrrooll SSyysstteemmss:: AA BBuuddggeett FFooccuuss

8.0 Introduction

This chapter examines one of the most important processes in the organisation –

the budget. It seeks to document the budgeting models used in a university

environment. In doing so, the chapter, looks at how the budget, as one element of

the accounting control systems (ACSs), is shaped and can shape other

organisational processes. In Chapter 5 and 6 changes to the interrelated control

structures were described. This thesis argues that in order to understand accounting

change, the change process must be studied in view of the wider organisational

context. As indicated earlier, the previous two chapters provide for a fuller

understanding of how and why the ACSs were fashioned. To recap, with regard to

strategic planning, Chapter 6 suggested the budget needed to be aligned with these

plans for them to be effective. On the other hand, one of the findings of Chapter 7

was that a link existed between the budget and structure at the University. This is

consistent with the literature that suggests the design of the budgetary control

system is mutually interdependent with the organisational structure (Otley, 1987).

This chapter will offer a partial explanation for how and why the ACSs at Griffith

have been shaped to support the changing environment, and accommodate the

organisational values and strategies.

8


270

The new institutional sociological perspective developed as the study’s theoretical

framework in Chapter 3, guides this chapter. This perspective identifies three phases

of change: the conception of the need to change, the transition process, and the

institutionalisation phase. Such a perspective is used to identify the specific reasons

for change, how the changes were brought about in the organisation by mobilising

different power sources in the organisation, and the degree of institutionalisation.

Increases in reporting requirements and student numbers along with the need to

supplement decreases in government funding, have forced universities to review

their financial status. Community expectations for the effective and efficient use of

resources have heightened as the public has been made to pay for larger portions of

the cost of delivery under the Higher Education Contribution Scheme (HECS). In

the face of these pressures, much emphasis has been placed on budgeting systems

as one of the primary means to control organisational activity (Thomas, 2000). This

is not surprising given the nexus between budgets for satisfying accountability

requirements (McKinney, 1995) and pursuits of efficiency (Covaleski et al., 1985).

In turn, budgetary systems have been placed under increased scrutiny. Griffith

University, similar to other universities in Australia and the world over, have

grappled with how best to structure budgetary systems to ensure that resources are

consumed in the most effective and efficient manner (Jacobs, 1995; Thomas, 2000).

To make sure funds are being allocated and spent effectively, and to ensure that the

University continues to secure funding from the Federal Government, management

has imported managerial techniques from the private sector and the Federal

Government, details of which follow.


271

The remainder of the chapter is comprised of nine sections. First, some background

information is provided. In particular, this section looks at who is involved in the

management of the University funds and the sources of those funds. Next, the

black box budgeting model is described followed by a discussion on the devolution

of budget responsibilities. Section four investigates the extent to which the budget is

used as a control device in the subject organisation. In the fifth section, the

implications of external pressures are explored further. The sixth section

investigates further changes to the budget model. The seventh section takes a more

general look at the behavioural consequences and implications of change. The final

two sections comprise a discussion and then a conclusion, respectively.

8.1 Resource Allocation: A Top-Down Approach

Griffith University adopts a top down approach to budgeting (Anthony &

Govindarajan, 2001). That is, senior management determines the budget for the

lower levels of the organisation, namely, the Schools. At Griffith University the

Council has delegated the power to control University finances to the Vice-

Chancellor. Part of the role of the Vice-Chancellor therefore is to manage the

University funds. Notwithstanding the delegation of powers, the Finance and

Property Committee and the Council must accept the operating budget prior to the

commencement of the financial year (see Section 59(1) of the Griffith University

Act 1998).

Although not considered a formal university committee, the Vice-Chancellor, uses a

budget committee to allocate funds to the various budget elements. Interviews with

senior management and documentary evidence revealed that this committee


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consists of the Vice-Chancellor, the Deputy Vice-Chancellor, and the Pro-Vice-

Chancellor of Administration. The Director of Finance and Business Services and

the Academic Registrar act in an advisory capacity providing this committee with

information. Where required, academic Pro-Vice-Chancellors also act in an advisory

capacity on behalf of their respective groups. For the most part, the Vice-

Chancellor exercises his powers choosing to formulate and make budget decisions

in a sole capacity using the authority vested in him by the Council. As suggested in

the previous chapter, it is his responsibility to recommend the annual budget to the

Finance and Property Committee and Council each year. The budgets run for the

January to December financial year.

Interviews with staff at the University suggest the churning out of government

policy initiatives and limited growth funding continue to be the biggest external

challenges for the budget committee. Figure 8.1 illustrates the change in

government funding. These pressures coupled with unfunded salary increases,

increased building costs, and corporate information systems have provided further

tensions for the budget committee. Coincidentally, senior management suggest the

effects of government fiscal policy, in particular the reduction in funding has not

been felt by staff at Griffith University as much as some other universities in

Australia. It was explained that the growth in the State, in particular in the Gold

Coast region buffered other government funding cuts. In fact, the total amount of

government funding received has not decreased; instead, it has increased in

accordance with newly funded additional places for the region. Two interviewees

explained:


273

The Gold Coast as a growth region and undergraduate growth policies balanced out the government cuts. We went through years where we would have communication with the government. They would say now you have to have a cut in your university budget because $ per equivalent full time student unit (EFTSU) in all universities are having a cut but here are some new growth places. (Interviewee 1) Griffith University has been fairly lucky that it has been fairly insulated from what is happening outside. I don’t think they have felt the same sort of pain that other universities have because of the continuous increase in student numbers. (Interviewee 2)

Interviewees working at Education Queensland offered similar suggestions. One

said:

I am not saying Griffith hasn’t been though difficult financial times, every institution has, but it has had very consistent growth and that has been a huge cushion against those financial pressures.

Figure 8.1: Percentage Change in Source of Revenue

In 1999 the Federal Government issued the policy statement, Backing Australia’s

Ability,103 which saw student placements increase by an additional 245 places at

103 See Chapter 2 for a discussion of this policy statement.

0%10%20%30%40%50%60%70%80%90%

100%

1994

1996

1998

2000

Other Income

GovernmentGrants Income

SOURCE: Davis, G. (2002). Vice-Chancellor Key Issues - Griffith University.


274

Griffith for 2002 academic year. These places have however been restricted to

particular disciplines and campuses (Griffith University, 2002b). In all fairness the

government funded student numbers have now reached a plateau, placing greater

pressures on budget planning and control for more efficient and effective use of

resources. As will be seen in this chapter, unlike the private sector, the budgeting

environment of the University offers a range of new problems and challenges for its

managers.

8.1.1 University Revenue

Total revenue at Griffith University has continued to rise over the past decade,

despite reductions in government funding across the sector (see Table 8.1). In 2001

the total revenue of the University was $317.9 million. The revenue base for the

2001 budget was set at $217.625 million (Budget Review Committee, 2002). The

difference was allocated as ‘special purpose income’ to capital, the Office of

Community Services, research grants, consultancy revenue, other government

grants, the Centre for Applied Languages and Linguistics, and parking revenue

(Webb, 2000a).

Table 8.1: Growth in Total Revenue

SOURCE: From Vice-Chancellor Key Issues - Griffith University. *Average Government contribution to universities is 45% (Nelson, 2002b, p. 9).

1994 1995 1996 1997 1998 1999 2000Government Grant Income ($ Mil) 124 116 128 134 127 128 131Percentage of Total 63 59 59 55 50 47 46

Other Income ($Mil) 73 79 89 108 128 141 154Percentage of Total 37 41 41 45 50 53 54

TOTAL 197 195 217 242 255 269 285

Government Grant Income: State and Commonwealth Government GrantsOther Income: Fees (Incl. HECS), Research Grants, Consultancy/Contract Research


275

Griffith University has a number of sources of revenue, the Commonwealth

Operating Grant for teaching and research forming the largest proportion of this

(2000, 46% of total revenue; 1999, 47% of total revenue; 1998, 50% of total

revenue) (Griffith University, 2000). According to one senior manager, the

educational profile is the major form of reporting to the Department of Education,

Science and Training (DEST) required to secure the Federal Government

Operating Grant. The educational profile was introduced as one of the initiatives of

the Dawkins reforms to strengthen the accountability relations of the University

and the Federal Government (Vidovich & Currie, 1998). It was explained that the

educational profile was designed to act as an agreement between the government

and universities. At Griffith, senior managers suggested the profile is prepared in

accordance with requirements set by the Federal Government including the Higher

Education Funding Act 1988. One of the senior members advised the most recent

profile submitted included an outline of the University’s strategic plan, a range of

student and staffing statistics (such as student and staff numbers or shifts in the

demand of programs), new programmes, research and research training

management plans along with a range of research performance measures, capital

spending plans, equity considerations, indigenous portfolios, quality assurance

systems, and flexible learning updates. This is consistent with documentation from

DEST (Nelson, 2002b, 2002c).

Further probing with senior managers at the University about the role of the profile

revealed that this document is used by DEST as their major vehicle for influencing

the University operations. A senior manager explained further, “This year they gave

us a lot of feedback on the profile and we had to modify it according to what they


276

said.” He went on to explain that DEST visits the University annually to raise issues

or discuss areas of concern in the profile. He explained that there was an

expectation that Griffith would comply in order to receive funding. Apart from this,

he suggested that DEST has very little to do with planning and control at the

University. Surprisingly, a review of recent DEST publications (Nelson, 2002b,

2002c) suggests that apart from the student load data, the other information

contained in the profile does not affect the funding provided to the University.

Interviews with financial managers in the organisation and a review of internal

documentation suggest the operating grant is allocated to the University as block

operating grant. This grant is determined according to the number of EFTSU.

Griffith University also receives small Commonwealth payments for equity (Higher

Education Funding Act 1988), workplace reform (conditional to improvements in

management, administrative and industrial arrangements, see DEST, 2001),

superannuation, and capital funding.

Budget documents also revealed that a small portion of the University revenue is

received via the Institutional Grant Scheme (IGS). This is a competitive scheme

used by the Federal Government to encourage research in universities. The funding

is allocated to universities using a set of criteria developed by DEST such as

research grants and income, research completions, research higher degree load,

publications, and conference attendance. According to the budget documents, this

funding is allocated with a two-year lag. Academic staff also reported that this was

the case.


277

The University also bids for block funding to pay for research and training through

DEST and the Australian Research Council (ARC). Rising cost pressures at the

University have been alleviated by several other revenue sources including fee

paying student income, State and Local Government Research Funding, HECS

receipts, investments income, and industry (consultancy) income (Griffith

University, 2000; Webb, 2000a). Fee revenue continues to be the most significant

source of revenue for Griffith University outside of the government payments.

More recently, however, Schools have begun to display innovative methods for

dealing with funding reductions in addition to standard teaching and research

initiatives. A summary of Griffith sources of revenue is provided in Figure 8.2.

Figure 8.2: Sources of Revenue

CommonwealthGovernment GrantsStudent Contributions

Commonwealth Payments

Queensland GovernmentGrantsOther Research Grants

Fees and Charges

Investment Income

Royalties, Trademarks andLicencesConsultancy and contractresearchOther Revenue

SOURCE: Developed by the author from Griffith University Annual Report 2000.

Since the advent of the Dawkins reforms, Griffith University budget systems have

undergone numerous reviews. Some induced in part by the Dawkins


278

amalgamations, others took on a more political role. These systems are now

described beginning with the ‘black box’ model.

8.2 Black Box Budgeting

Known as the black box budget model, few employees were able to shed light on

how this budget process was carried out, apart from the fact that the Vice-

Chancellor allocated resources to Faculties for further distribution to Schools and

for other initiatives. The budget system was labelled the black box model by staff at

the University because of the lack of transparency and perceived inequities in

budget allocations. The following explanations were given:

The budgeting process involved the Vice-Chancellor saying the budget for this element is X, and the budget for this entity is Y. What is the rationale for allocating funds on this basis you may ask? The answer is simply, because I decided it. (Interviewee 1) It was sort of at the Faculty level. It was certainly based on ideas of budget rates and you did have targets and student numbers, but there was a fair bit of slippage. It wasn’t a transparent process. You went in and made your best pitch for what you needed. (Interviewee 2) We did it on a gut feeling and on trend and knowledge. (Interviewee 3)

There was a general understanding amongst interviewees that resources were

allocated by linking funding to performance in key areas. Deans at this time were

considered to hold significant power. With the assistance of faculty managers and

finance administrative staff, the Deans controlled the budget, allocating small

amounts to Heads of School for discretionary items such as photocopying, travel,

and staff development. Heads of School put in bids to the Dean for projects and

equipment. Because few staff were engaged in budget process at that time, Deans

were able to restrict access to budget information. This meant that Heads of School


279

were kept in the dark about what other Schools were receiving and the allocation of

resources was kept confidential between those in powerful positions.

It appears that until recently most universities in Australia used similar opaque

principles. For instance, Watts (1996a) suggested that many universities in Australia

had used opaque principles to allocate funding prior to the introduction of the

Relative Funding Model (RFM). He (Watts, 1996a) reasoned that before this

approach was introduced the Commonwealth Tertiary Education Commission

(CTEC)104 had not revealed the formulae by which funds were allocated and

because of this universities were not able to mimic their approach.

Senior management reported that the Vice-Chancellor instigated changes to the

budget process in 1994. Documentation such as the annual report confirmed this.

The Vice-Chancellor suggested the budget methodology needed to be amended to

improve the equity of resource distribution, by funding comparable teaching

activities across the University on a similar basis (Griffith University, 1994). In

order to achieve these objectives he introduced a formula based funding model.

Several interviewees suggested that they had anticipated this response given the fact

that the University did not have accurate cost data. In addition to this, they

acknowledged that considerable time and effort would need to be expended to

determine the costs of individual courses.

104 The Commonwealth Tertiary Education Commission was the distributor of the Federal Government Operating Grant before the RFM was introduced.


280

Education Queensland took a different view, suggesting many universities had

changed their budget methodology to formulae based approaches because the

Commonwealth had decided to use this approach, not because the approach

offered increased transparency.

Under this new model, revenue was aggregated into a single funding pool. This pool

included revenue from fee-paying students, student contributions, and

Commonwealth payments. This pool was then divided up and Pro-Vice-

Chancellors were given a one line-budget for the Faculties on their campus. The

budget line was then further divided up and given to Deans. Deans then allocated a

small portion to Heads of School for discretionary items, keeping the remainder for

Faculty initiatives. At this time, funds were to be allocated to Faculties depending

on the academic activities of the Faculty (Webb, 2000b). Thus, Schools operating

similar activities were to receive the same $ EFTSU per student. The 1994 Annual

Report explained this new approach in a series of steps. These are shown in Table

8.2. The Vice-Chancellor also changed the University’s funding methodology for

Research Higher Degree (RHD) students at this time: funding was allocated at twice

the rate of undergraduate and postgraduate coursework load.

Administrative staff, others involved in the budget process, and documentary

evidence suggest this method was unique and was not being used by other universities

in Australia at the time. Irrespective of this, the model was seen to cater for the

interdisciplinary culture of Griffith (Griffith University, 1994, p. 45).


281

Table 8.2: Griffith University Budget Model 1994

1. Identification of distinctive academic groups appropriate to Griffith’s mission;

2. Identification of an appropriate funding rate for each group based on Griffith’s long experience in establishing funding levels in an interdisciplinary context;

3. Allocation of course loads to Groups to derive funding levels for each course; and

4. Allocation of course funds to existing faculties on Faculty budgets.

SOURCE: From Griffith University Annual Report 1994, p. 45.

One year later, changes were made to the Research Quantum allocation model. In

the 1995-1997 budget cycles research funds were allocated to budget elements using

the same basis as DEST’s composite index. Further investigation revealed that this

index comprises a range of input and output measures. Participants clarified that the

input measures primarily included National Competitive Grants, however, other

government and industry funding was also considered. Outputs, on the other hand,

were described to include publications and the number of research higher degree

completions.105

Despite formal evidence suggesting the 1994 model was a more rational and

equitable method of resource allocation, interviewees suggest this was not the case.

The budget was not, as the methodology would suggest, a neutral planning process

at this time. Instead, the budget took on a highly political role (Nutley, 1999), used

in part to define organisational reality and in part to reinforce relations of power

(Fernandez-Revuelta Perez & Robson, 1999; Miller, 1994; Otley, 1987). Senior

105 For a more detailed discussion on the Composite Index refer to Harman (2000).


282

managers including the Vice-Chancellor, Pro-Vice-Chancellors, and Deans were

seen to be allocating funds in the manner they saw fit rather than adhering to

budget methodology. This is consistent with the view that those holding significant

power control organisational behaviour (Carruthers, 1995). It also appears that

because the budget was kept at the top levels of the organisation, those holding

Head of School positions were less concerned with the inadequacies of the

budgetary system.

A senior manager of one division explained:

The Vice-Chancellor was in a position of basically trying to bribe parts of the University to do what he wanted. He constantly got frustrated that the old Faculty was given substantial amounts of money and he couldn’t have any impact on the initiatives that they did. And so he would hold money back in the old budget system and then try and bribe on a bilateral basis. You know sometimes he did that across the board with the Deans and said these are our new initiatives. Sometimes he would make separate deals with the Deans and sometimes the Deans would then talk and ask for the same sort of money back. But right through, I would say until the mid 1990’s some of the Faculties had completely different deals and arrangements with the Vice-Chancellor. There was always some abhorrent deal that had been struck politically, administratively, or bureaucratically.

Similar comments were made of the budget allocation process at the lower levels.

One employee observed:

The previous budget model encouraged cross subsidization between Schools, as Schools were not allocated a set number of dollars per student, despite the University being funded on that basis.

This section described the budgetary system at the University that existed up until

1997. The next section describes how and why this system changed in an attempt to

get a better understanding of how accounting change occurs and how ACSs are

designed and operate.


283

8.3 The Restructure of the University: Devolution of Responsibility to Academic Budget Elements

This section first gives a broad overview of the new budget methodology used by

the Vice-Chancellor at the University to allocate funding to the academic budget

units. It then presents the motivations behind the change in budget methodology.

Next, the chapter concentrates on the budgetary systems at the School and

Administrative levels.

8.3.1 A Change in Budget Methodology

The 1997 restructure of Griffith University discussed in Chapter 7 also saw a new

budget model adopted by the University. At this time, the Vice-Chancellor in

consultation with his budget advisory committee developed another formula based

budget model based on line item budgeting.106 Similar to the previous model, this

budget model involved the entire general operating purpose funds being aggregated

into a single pool. After funding was allocated to the Vice-Chancellor’s strategy

funding, and the Deputy Vice-Chancellor’s research funding pool, funding was

allocated to the academic units, directly to the Heads of School. Various

administrative support divisions and overhead pools also received a budget line.

The main change in this model, however, was the devolvement of budget

responsibility to the Heads of School level. As suggested in the previous chapter,

delegating responsibilities such as the budgets to lower line managers is viewed to

provide the most effective and efficient use of resources, because managers most

directly involved with service delivery can then direct resources to support the

106 In Griffith’s case, line items were identified as the Schools and Administrative Departments.


284

planning of courses and subjects to meet client demands (Rees, 1990; Scott, 2001).

To be clear, budget lines were allocated directly from the Vice-Chancellor operating

budget to individual Schools surpassing both the Pro-Vice-Chancellor and the

Dean. Notwithstanding, it was reported that Pro-Vice-Chancellors still play integral

parts in the budget process authorising each of the Schools budgets. The budget

process is shown in Figure 8.3.

Figure 8.3: The Budget Process


Senior management suggested several reasons for a devolution of budget

responsibility and a change in budget methodology. One manager shared his view:

There was a need for restructuring in view of the new accounting model used at the University, the new accounting requirements, and the reduced funding. The University couldn’t afford the structure that existed at that time in lieu of the staffing, so they were looking at streamlining the process and centralising various functions.

Vice-Chancellor Advisory Group

FBS

HOS FBS PVC

ApprovalBudget Planning

Budget Allocation

HOS- Head of School FBS– Financial Business Services PVC– Pro-Vice-Chancellor


285

More specifically, it appears that pressures for change arose from political infighting

between campuses over the accounting systems and processes. Senior managers on

all campuses echoed comments such as:

The need was political. People on the Gold Coast Campus, at any given School, needed to see that they got the same rate of funding as people in Nathan in a similar School.

Or

The current structure was really put into place for cross campus political reasons.

Following on from these comments, interviewees maintained the new model had

been designed to increase transparency. As one participant put it, “Similar

activities were seen to be getting the same funding regardless of which campus

they were on.”

In addition to this, with the intended restructure of the University, senior managers

engaged in a level of fighting because there was a perception that if the existing

model continued to be used, and the University restructured, all of the Deans could

be situated on a single campus. This meant that actors on a single campus could

dominate the budget process and therefore Schools operating on that campus might

receive a greater proportion of funds. “The devolution of budgets to Schools was to

try to prevent the sense that budget power was going to be moved off to some

other campus,” one interviewee said. Another stated, “The budget was an important

tool used to change Faculties which had a lot of power, to a new structure by

putting the budget in a different area of the University. It was an important driver

of change.” This inferred that without the devolvement of budget responsibilities

management feared the new structure would be resisted. In Griffith’s case then,


286

formula based funding was used to reduce the temptation to use the budget as a

bargaining device for political gain. Rather, the inflexibility of a formula based

model was perceived to improve the equity of resource allocation decisions (see for

example, Thomas, 2000).

The Vice-Chancellor also acknowledged the tensions between campuses. In his

2000 submission Review of Gold Coast Campus, the Vice-Chancellor wrote of the

tensions that existed between Deans and Pro-Vice-Chancellors. He suggested these

tensions arose from the Pro-Vice-Chancellor distribution of funds to the Faculties.

According to the Vice-Chancellor, staff believed that activities were not being

funded the same $ per EFTSU. There was the view therefore that it was a

disadvantage to work at certain campuses; that Faculties were receiving more or less

funding for the same level of activity depending on location.

To a large extent, the political infighting described in this section could be

attributed to the tightening of budget allocations from Federal Government. Pfeffer

(1981) for example, suggests that in periods of fiscal restraint, conflict and power

arise as actors struggle to maintain if not increase their share of resources. To

further explain, when resources are plentiful there are few reasons to expend efforts

and fight for resources. On the other hand, when there is a shortage of resources,

employees draw on power sources in an attempt to keep their fair share of

resources. So, one could argue that the new budget model originated from the need

to demonstrate fair and equitable budget allocations during periods when resources

were scarce.


287

The internal pressures were further exacerbated by external pressures for greater

accountability, diminished Federal Government funding, and increased HECS,

which brought with them community expectations for greater transparency.

Interviewees suggested the new budget methodology helped to satisfy these

demands. For instance, the manager of one division explained, “There is now more

focus on if we (the government) give you this money, what are you going to

produce with it?” Another interviewee pointed out, “Budget literature at the time

suggested that effective management involved local management and a greater

autonomy for decision-making.” Many staff in the organisation accepted this view.

Organisational literature suggests that giving a person more responsibility and

autonomy encourages that person to innovate knowing that he or she will be

identified with any successful results for their business unit (see for instance,

Carnall, 1995).

Devolution of the budget to Heads of School required a major reallocation of the

1997 budget. This was necessary because the reporting lines had changed: some

Schools were being moved to new Faculties. Further, senior management believed

the splitting of surpluses and deficits would further aggravate staff that were

unhappy about the restructure. Hence, a new budget model was required to allocate

resources to the new budget units (i.e. Schools and departments). From a systems

perspective, one staff member suggested, the reallocation of the budget at this time

required staff to revisit every transaction that had occurred over the past six months

to ensure that budget allocations were reasonable. Coincidentally, the devolution of

budget responsibilities had huge implications for the existing ACSs. Substantial

modifications to the chart of accounts of the University were required to allow


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funds to be distributed to the increased number of budget units (1998 Annual

Report, p. 50). Indeed, as might be expected, the devolution to Heads of School

also required Finance and Business Services to develop a range of management

reports suitable for catering to the Heads of School information requirements.107

Schools received their first budget line on 1 July 1997, the date of the organisational

restructure.

8.3.2 Allocation to the Schools

Since the 1997 restructure, Griffith University has prepared a triennial operating

budget to enable managers and Heads of School to plan for the feasibility of

academic programs, to allow for growth in student places, and to plan for new

infrastructure (Webb, 2000a, 2001). Interviews revealed that more recently, senior

management has placed increasing emphasis on the triennial budget to allow those

Schools facing deficits to establish strategies to ratify or remedy those deficits. A

key budget manager informed, “We budget on a triennial basis to control

movement.” Investigations revealed that the Commonwealth Government also

prepares their budget on a rolling triennium basis for planning purposes (DEST,

2001). Organisational theories thus could suggest that the organisation copied the

Commonwealth Government, because of its resource dependence nature

(DiMaggio & Powell, 1983; Pfeffer & Salancik, 1978).

107 New Age Business Systems (NABS) were introduced in the years following the devolution specifically to cater for the changes in management requirements. NABS includes management statistics, access to accounts, HR and staffing policies, the organisational structure, performance guidelines, the University strategic plan, the Operational plans, the Code of Conduct, the staff support and development plan, academic policies and information, and staff policies and information.


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Interviews with staff involved in the budgeting process shed light on how funds

were allocated to Schools. Staff explained that the Vice-Chancellor allocates funds

to the Schools using four categories: undergraduate/coursework postgraduate target

load, research higher degree target load, institutional grant scheme, and research

performance allocation. The University Budget Operating Fund Allocations 2001-2003

and the Review of University Budget Process collaborated the interview evidence.

To allocate funding to Schools for undergraduate/coursework postgraduate target

load and the research higher degree target loads, the funding rate applicable to the

School is multiplied by the student load.108 Coursework postgraduate, research

higher degree, fee paying international students, and fee paying domestic student

loads allocated to the Schools are calculated based on actual enrolments.

Undergraduate loads, however, remain set at the targeted rate, despite over or under

enrolments in the Schools. The academic registrar of Griffith University is

responsible for determining student load. Although the private sector and now

much of the public sector delivers products and services on the basis of market

demand, this is not the case in the University. One staff member shed some light on

this. He explained:

Suppose 3000 students wanted to study law, the University would not have the resources to cater with such demands. Furthermore, this would have significant ramifications for other Schools who would have to lose student places to law. Equally important, you can’t let no students go into law.

Instead interviewees revealed that student loads at Griffith are determined using

various modelling methodologies, factoring in such things as customer choice,

108 Recall that, by definition student load is equal to the number of students.


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political sensitivity, and space capacity. Employees suggested external factors, in

particular, those imposed by government also had significant implications for what

the rates were calculated to be. As an example, one manager commented:

We take into account external factors such as what is happening with government policy. We are hoping that the Postgraduate Education Loan Scheme (PELS) will make an impact in the postgraduate area and encourage more students to undertake postgraduate studies.

Factoring in such issues, management calculates total student numbers, number of

students for each programme, and areas of student growth or decline.109 There was

also some suggestion amongst staff that the rates were plugged into the budget

model to see how Schools were impacted and then if the budget committee was

satisfied they were handed down to the Schools. Interviewees emphasised that since

the majority of funds allocated to Schools were allocated on the basis of load,

getting a fairly accurate mix is vital for the financial health of all of the Schools. It

was explained that target load projections were reviewed on an annual basis to

account for changes in student preferences, unallocated load, and School

performance. Specifically, the most recent budget statement (2001-2003) suggests

that School spending patterns, Enterprise Bargaining Agreements (EBA), and

School business plans were the main areas considered for setting the current targets.

A review of recent Griffith University statistics revealed that for the 2000 budget

year, the University had an excess of 300 EFTSU places (Webb, 2000a). This meant

that in those Schools where students were overenrolled, the School did not receive

any additional funding for the education of those students. For example, if a School

109 It is worth noting that Griffith University staff involved with the budget planning process claim that there was no correlation between the EFSTU allocation rate received from the Federal Government and the rate used by the University.


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has a budgeted target load of 50 students, and they have 60 students, they had to

fund those additional places using other revenue sources. The advantage for

Schools who have a budget target load of 50, and enrolments of 40, is that they are

funded for additional 10 places for which they do not have to provide a service.

This does however have one drawback, the under enrolment will be noted in setting

the following years budget target load. The Review of the University Budget Process

validated employee explanations of the under/over enrolment process and

implications. Some Heads of School claim the way the University deals with under

or over enrolments can add significant pressures to the School’s budget. Staff in one

School claims to be over enrolled by as many as 100 students. The Head of School

suggested the cost of funding those additional places was exorbitant.

The IGS funds are allocated in the same manner that the University receives the

funds from the Commonwealth Government (i.e. those who conduct research are

rewarded). The research performance allocation, on the other hand, requires the

pooling of 5% of Higher Education Funding Act (HEFA)

undergraduate/coursework postgraduate funds to be allocated to Schools using the

national institutional grant scheme formula and a range of Griffith multipliers

(Webb, 2000a).

As suggested above, another important source of revenue for Griffith University is

fee-paying students. At present, the University is not limited by the number of fee

paying students they can enrol by government mandate. Obviously space,

equipment, and staffing limit those numbers, however, with space still available on


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the Gold Coast and Logan campus and with plans to acquire further land, fee

paying students continue to be an important source of revenue for Schools.

To summarise, the new budget model incorporates conceptions of rationality

whereby similar activities are allocated the same resources, regardless of campus

(Watts, 1996a). Thus, the problems of political budgetary practices (Wildavsky,

1975), which saw Deans, Pro-Vice-Chancellors, and the Vice-Chancellor under the

old model allocate resources to their host Schools or favoured Schools was

eliminated under the new model. The devolution of the budget changed the role of

the Head of School, from one that was traditionally focussed on teaching and

research, to one that now concentrates on the financial implications of teaching and

research decisions (see previous commentary on this issue by Thomas, 1999). This

suggests that the Head of School role involves much more administration work and

less teaching and research than in the past.

The forthcoming sections will describe how Schools have moved away from their

traditional academic culture concerned with teaching and research, to a

management based culture concerned with the budget line, items of expenditure,

and surpluses and deficits. Specifically, the next section discusses the budget

planning process carried out by Heads of School and investigates the extent to

which the budget is used as a control device.

8.3.3 School Budget Preparation

This section describes how budgets are created by Heads of School. First, the

general planning process used by the Schools is described. From here, the planning


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process used by the Education Schools is described. This was necessary because the

process used by these Schools deviates from the general planning process adopted

by the other Schools.

8.3.3.1 The Process of Budget Construction in the Schools

As discussed in previous sections, planning begins with a single budget line being

handed down from the Vice-Chancellor to a School. One Head of School estimated

that around 60% of this budget was from Government revenue, the remaining 40%

from initiatives taken up within the School. These initiatives commonly referred to

as ‘soft money’ by staff in the University included money from grants, consultation,

and professional development courses.

Griffith University does not operate using a budget manual. To some extent, this

could explain why there were variations in budgeting processes used by the Heads

of School. It is also worth noting that despite the budget being operational from

January to December, there were no budget creation deadlines for Heads of School.

Some Heads of School claim to only finalising their budget in February or March of

the year the budget was expected to cover. Under the new budget arrangements,

group resource managers110 approached the Head of School in the second half of

the year (actual timing varied from year to year) with a tentatively prepared budget.

This budget, prepared by Finance and Business Services, outlines the School’s funds

that are already committed (e.g. salaries). To forecast expenditure items and levels,

Finance and Business Services staff explained they used the previous year’s budget

110 Group resource managers are employed by Finance and Business Services.


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and previous year’s spending patterns. Then at a single meeting, Finance and

Business Services staff and the Head of School plan the triennial budget for the

School. It was explained that the main focus of this meeting is planning the

expenditure for the Schools, but more recently Heads of School admit to discussing

other possible revenue sources to supplement the revenue received from the Vice-

Chancellor.

Heads of School and Finance and Business Services staff suggest the major

expenditure items do not vary much from year to year. In light of the fact there was

no budget manual, and the fact that Heads of School positions were tenable over a

three-year period, Heads of School tended to rely on the previous year’s budget

spending for allocating the budget line handed down from senior management. This

is consistent with previous comments by Jönsson (1982, p. 289) who claims that

managers use the previous year’s budget to simplify the budget process when faced

with complexity and uncertainty. From these findings, it could also be argued that

the previous year’s budget held significant meaning for those academic managers

not familiar with the budget process or holding budget expertise.

Most Heads of School had knowledge of new programs, staff going on sabbatical or

taking long service leave, and increases in student numbers.111 Heads of School did

not however have information such as whether there is enough space to cater for an

influx of students, or what the University plans are for expansion of infrastructure.

According to the Finance and Business staff interviewed, this information is

111 It is important to realise that detailed knowledge of the School is limited by the length of time the Head of School has held the position.


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considered vital for setting realistic budget projections. Furthermore, the interviews

revealed that apart from having sufficient funds to pay staff salaries, Heads of

School were left to their own devices to determine what is and is not appropriate

spending. When new or unusual situations arise, Heads of School explained they

rely on financial consultants to advise them of appropriate action. For instance, one

staff participant recalled her experience:

I wanted to make a decision about conference allocation. We give each staff member a certain amount of money every year to go into his or her conference attendance. The idea is that it encourages staff development and helps people to remain current. We had to take a decision this year to put a ceiling rate on it, to cap it at a certain amount of dollars. So we had to make a decision, as to whether it was in the School’s best interest to make sure that everybody goes to a conference every year or every second year, even if it is a very expensive conference or to keep building it up so that every five years they can go to a super conference. It helped to know what other Heads of School were doing, but I have no way of knowing that except to ask my group resource manager to talk to other group resource managers and find out what people usually do.

Factoring in all of this information, the Head of School and a financial consultant

allocate the budget line to cover salary expenses, other commitments, and other

discretionary budget items. It appears that there was an expectation that should the

School go into deficit, it was Finance and Business Services staff responsibility to

balance the School budget. There was also a general understanding that the

activities funded should correlate to the activities set out in the business plan (see

Appendix 6.1 for an example). This is consistent with Anthony and Govindarajan

(2001) who explained that strategic planning provides the framework from which

the budget should be developed if the organisation’s objectives are to be achieved.

Investigations revealed that this was rarely the case at Griffith.


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As indicated earlier, apart from Finance and Business Services financial consultants

and the Head of School, School budgets are created with little participation from

academic staff. At the most, some Heads of School consult staff to determine the

best way to spend discretionary funds. Despite this, most Heads of School revealed

that they shed some light on the School financial situation at School committee

meetings. Normally, the Head of School did not disclose specific details except

where input was required by the committee. Although some Heads of School

inferred that including staff would be the preferable situation, most understood the

time and information restraints of including staff in the budget process. In a

number of cases, it was explained that with budgets being created in the latter part

of the year, a fully consultative process would not ensure budgets were ready for the

forthcoming year. In most cases, Heads of School also commented that they

grappled with trying to understand budgeting and therefore suggested that it was

inconceivable to provide each member of staff with an adequate understanding of

the budget for their participation to be valuable. In addition, the Heads of School

interviewed commented that getting a school committee to make decisions on

sensitive budget issues often proved to be futile in any case.

After the budget meeting, the budget is formalised by Finance and Business

Services and returned to Heads of School for further comment. Once it has been

finalised with the Head of School, it is sent to the Pro-Vice-Chancellor for

approval. Whilst responsibility for budget planning has been devolved to the Head

of School, it is important to realise the Pro-Vice-Chancellor has overriding authority

on the budget matters. It should be noted that although the Pro-Vice-Chancellor

has this authority, there was rarely any interference reported during budget


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preparation phases. The Heads of School interviewed reasoned that the Pro-Vice-

Chancellor was not involved in the day-to-day management of the Schools and

therefore they did not have sufficient information to make informed decisions

about how money could best be spent in the School. According to Schiff and Lewin

(1983), this is not uncommon in organisations where budgets are prepared at lower

levels.

8.3.3.2 Budgeting in Education: A Different Approach

Unlike other Schools at the University, the Education Schools situated on both

Logan and Mt Gravatt campuses did not adopt the single school budget

approach.112 Instead, interviewees from each of the Education Schools revealed the

budget is handed down as a one line item to the three Schools, suggesting the three

schools are treated as a single budget unit. The three Heads of School then get

together to collaborate the budget with the assistance of two Finance and Business

Services financial consultants.

Interviewees suggested the motivation for the Education School’s defiance of the

new model stemmed from existing budget problems. In particular, the Education

Heads of School believed the proposed budget model would exacerbate budget

problems and in turn the Schools’ capacity to retain quality teaching and research.

One Head of School commented:

I felt very strongly it would be a very big mistake for us to conform to the restructure model. It would be destructive to what we were doing. So we all

112 It should be noted that one other Education School exists at the University. This School chose not to be included in the one line budget of Mt Gravatt and Logan campuses. Those involved with the management of the Education Schools at the time suggested that the Gold Coast School had not been included because of political indifferences.


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felt that something had to be done so that we could continue to work together.

Another Head of School took a different view, suggesting the motivation for

implementing a different budget arrangement from other Schools and Faculties was

the difficulty of determining the degree that belonged to each of the Schools. This

Head of School reasoned, “The budget was based on EFTSU. This could mean that

Schools could fight with other Schools to have their EFTSU and that would be

detrimental to our wellbeing.”

At the time of the restructure, the Dean played an instrumental role in opposing the

use of the proposed budget model for the Education Schools. Key staff members in

the Education Faculty claim that senior management was not happy about the

Education Schools defying the proposed budget model, because of expected

efficiency gains from devolving management to the lowest level. For instance, when

probed about the education schools, one interviewee recalled, “The University

didn’t like it. It was against the model but it was allowed.”

The Education Heads of School interviewed informed that the budget is primarily

created over a series of meetings. At these meetings Heads of School put forth

initiatives for their respective Schools for the following year. One Head of School

elaborated, “We say we need a line for this, we need a line for this, and we need a

line for this, and then we look at what we have spent in the past in the profile.”

Interviewees further disclosed that budget initiatives had to fit within the general

framework of the initiatives set out in the business plan. Thus, the business plan

provided parameters for budgeting for the education budget elements.


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Once the budget has been drafted, the initiatives drafted in the budget were

circulated to staff in a report at respective school meetings. One Head of School

mentioned the actual budget documents were not circulated to staff for two

reasons: they were not presented in a form suitable for distribution to staff, and

they reduced the budget document being misinterpreted by staff. Based on the

feedback of the staff on the proposed initiatives, it was explained that the budget

was then refined and sent to the Pro-Vice-Chancellor for approval.

Interviewees suggested their budget model was designed so that one Head of

School has the power to sign off on major items of expenditure for the three

Schools. There was an expectation that this person would act on the

recommendations of the collective Heads of School. Interviewees revealed that the

Head of School from the smaller school was designated with this responsibility

because this person had more time to commit to the budget than the others.

The Heads of School in Education rely on email to deal with budget concerns for

their respective Schools. Interestingly, the Education Schools of Mt Gravatt and

Logan have set up a resource committee to deal with resource decisions in the

Schools. The purpose of this committee is to make resource decisions for the

Schools and to free up some of the time of Heads of School so they can deal with

other pressing matters. Specifically, the committee develops and recommends

various schemes for managing the day to day running of the Schools such as

replacement of staff or developing a schedule for the replacement of computers.

Staff members from each of the Schools comprise this committee.


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According to the Education Heads of School, this model of budgeting has put them

in a sound financial position. In fact one Head of School suggested they were able

to turn around the elements financial position in just over a year using the aggregate

model. A manager from Finance and Business Services proposed that this had

worked well in these Schools because each School has a different strength; one

School was strong in research, one School was strong in teaching, and the

remaining School was strong in specialist areas. Thus, even though some Schools

subsidised other Schools, there was a common goal amongst the schools: education

graduates.

To be sure, the model still has limitations. In particular, Heads of School stressed

the need for trust amongst themselves, as well as an individual capacity to work in a

group for the continued effectiveness of the model. In the words of a Head of

School:

We recognise that the structure we have is potentially fragile in the sense that it could always fall apart if a Head is appointed who doesn’t trust or rely on us. There is the potential danger that it could become ineffective because it relies so much on individual personality and the willingness to cooperate.

The aggregate budget model therefore also had significant consequences for the

appointment of Head of School in these Schools. Managers commented that trust

and a capacity to work with other Heads in budget development were two key

criteria for a Head of School appointment in any of the education schools.

The Pro-Vice-Chancellor recognises how fragile the model is and recognises the value of the model for managing the schools. So, he does seek to confer in making a Headship appointment with the other existing two Heads of School to hold it together.


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Without consideration of these criteria, Heads of School emphasised that micro-

political activity would escalate and the effectiveness of the model would diminish.

The Pro-Vice-Chancellor supported the budget planning procedures used by the

Education Schools. He also recognised the complications of allocating a separate

budget to each of the Education Schools, given that in the past their financial

performance had been declining. During the interviews, other Pro-Vice-Chancellors

and Deans also recognised the effectiveness of the Education model for managing

the Schools.

8.4 Budget Control

In theory, one of the reasons why organisations devolve budget responsibilities is to

improve to the responsiveness of decision-making and control so that local needs

are addressed in a timely fashion (Nutley, 1999). Not all of the Heads of School at

Griffith University adopted this view. Instead some viewed the budget as a

legitimising device, others viewed it as a power tool, used to reinforce positions of

power. With this in mind, the following section describes the budget control

systems used in the Schools.

The Heads of School at Griffith University could be put into two categories: those

that worked hard to maintain a surplus; and those that prepared budgets but did not

really use the budget for decision making or control in the School. The latter

confessed to being in deficit. Of those Heads of School that worked hard to

maintain surpluses there was a perception that they would be rewarded for effective

budget management. Several Heads of School presumed the incentive for sticking


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within the budget guidelines set by Finance and Business Services was the implied

threat of either closing the School down or amalgamating the School with a more

profitable School. One Head of School observed that this was happening in other

Australian universities.

Although Heads of School are able to monitor the School budget using their

personal computers many confessed that they rely on the monthly reports provided

by Finance and Business Services financial consultants to highlight any anomalies or

budget areas of concern for their School. The following quote illustrates this view:

The support from Finance and Business Services is so good and so efficient that in fact I do not bother to go into NABS apart from signing requisitions and expenditures.

Heads of School also reasoned that the new accounting system, introduced in the

wake of the restructure, was very difficult to understand and this was why they did

not use their computers to monitor expenditure. Notwithstanding it was explained,

“In the transitionary stage there is an expectation of teething problems with the new

system.”

On a monthly basis, Heads of School are provided with financial reports from

Finance and Business Services to aid in controlling expenditure. Those staff that use

the reports as a control tool explained that they monitor their spending based on

prorata.113 There was a common understanding between Heads of School who

worked hard to control the School’s expenditure that “overspending on one

113 It was explained that the prorate percentage was based on percentage of funds spent according to pay periods. The logic behind this was that the major component of the budget was salaries.


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account doesn’t count so long as there are savings in other accounts.” A

representative response of a Head of School who adopted this view is:

The only one that anybody ever looks at is the percentages at the bottom. At the moment we have 44% of our estimated expenditure in the first six months of the year, therefore we can tick the box ‘yes’, we are doing okay.

Several Heads of School explained that when they were concerned about the

financial position of the School, they looked at individual accounts to see where

expenditure had increased. They also stressed the importance of understanding the

cyclical spending patterns, in particular those periods where a greater proportion of

funds were expected to be spent. For instance, one Head of School suggested that

the start of semester and also the end of semester require greater funding. For the

most part, he explained this was for increased salary payments to sessional and

casual staff. In addition to this, these Heads of School expressed the view that the

reports would be more meaningful if comparisons of financial expenditure could be

made with other Schools. Most however, suggested the receipt of budget reports

was more a matter of routine than a measure of control.

Other interviewees did not see any incentive for effective budget control. For

example, one Head of School commented:

You don’t get rewarded for good budget management. You usually end up with less the next year. There is actually a disincentive for being careful with the budget. Schools in the past that have overrun their budgets have been given more money.

Another argued that budget control was more Finance and Business Services

responsibility, not his:


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I monitor the budget fairly loosely. I trust staff, I know if anything goes wrong Finance and Business Services will bounce it back, but I don’t follow people too closely.

In truth, despite the fact that responsibilities were devolved to Heads of School and

the fact that most Heads of School were concerned with their School’s future, many

suggested that there was little they could do to improve the financial situation and

thus monitoring performance beyond senior management requirements was a waste

of time. Heads of School who did not use the budget as a control device defended

their position using one or more of the following reasons. First, Heads of School

suggested that it was not possible to hold them accountable for the budget when

they had no prior experience managing a budget. These managers added that even if

they wanted to exert greater control over the budget, their lack of understanding of

financial statements and financial data prevented them from doing so. For instance,

a Head of School offered the following comment:

If they really want Heads of School to run the budgetary centres then they need to understand the budget functions, they need to be an accountant. All I really understand is income and that it has to be spent.

One Head of School who confessed to ignoring his budgetary responsibilities

suggested this was because senior management did not place a huge emphasis on

budget control. For instance, he reflected:

Nobody has said well your expenditure is 10% over, you haven’t done your job. Nobody really holds you accountable for that.

Other Heads of School voiced similar views. They suggested that few efforts were

made to ensure that Heads of School were kept accountable for the budgets of their

Schools. One Head of School’s comments exemplify this view:


305

There is only a minor degree of accountability for budget responsibility. I have seen Schools engage in what could only be called derelict activities and run Schools from million dollar surpluses into the red. People joke and laugh about it.

To some extent, Heads of School suggested the availability of up-to-date

information had also reduced their ability to maintain control. As one Head of

School explained, “It is very hard to get up to date information to even understand

where you are at any given point in time within a couple of $100,000.” Another

explained, “We couldn’t tell you today how much money we had three months

ago.” In part this would explain why some of the Schools were in such a poor

financial position. Otley (1987) for example, suggests that organisations tend to go

to pieces when there is not a regular flow of information. Moreover, many Heads

also adopted the view that when provided, the information was rarely accurate. For

example, one Head of School maintained that he had found discrepancies between

the accounts he kept and those provided by Finance and Business Services. In order

to make reliable decisions, he claims that he was forced to keep photocopies of all

receipts of revenue or expenditure. This belief that information must be timely and

accurate is consistent with the literature, which suggests these two features are

prerequisites of a successful devolved budgeting system (see for example Benjamin,

1996).

Yet another reason put forth for poor budget management were oversimplified

budget categories. One of the Heads of School who suggested this provided the

following example to illustrate her point:

I am interested in my research line, for example. In particular, I want to know what portion of research grants is still sitting in the account from last year, what has been introduced this year. More specifically, I would like to know


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how much money has been spent on a new research proposal or a strategic initiative and what that proposal or initiative is. The way the system is set up at the moment everything just gets lumped in one account.

Benjamin (1996) presents a similar view to this, suggesting that when new

accounting systems are introduced attention needs to be paid to the coding

structure to ensure that information caters for the users needs.

At Griffith University there were numerous Schools that had been operating in

deficit for a number of years. Several Heads of School had the opinion therefore

monitoring budget spending is a waste of time or as one Head of School stated, “As

far as I am concerned this is not my problem, it was inherited.” He went on, “It

would have happened regardless of me being here.”

Several administrative personnel sympathised with the situation, suggesting that the

circumstances of the budget did not lend to an environment where controls could

be put in place. The common feeling conveyed was thus:

Heads of School in reality really have so little control. They can’t control their income because it is set from the centre, be it through EFTSU or government money. They can control their expenditure, but it is really not like a commercial enterprise where they can go out and generate a lot of money.

Senior management took the view that autonomy of decision-making provided the

necessary incentive for Heads of School to operate within the budgetary limits and

to pay attention to the School accounts. From a Head of School point of view,

however, incentive to maintain budget targets were minimal: Schools do not get all

of the revenue they generated, Heads of School were not rewarded for their efforts,


307

and revenue raising activities although recommended were not supported through

other institutional arrangements.

To sum up, the view presented by the Heads of School who preferred not to use

the budget as a control device was that as long as they continued to provide high

quality research and teaching, and as long as the University did not threaten closure

little would be done to improve budget control. More generally, it would seem that

the level at which academic managers were held responsible for devolved resources

at Griffith is less than that of other public sector organisations (for similar findings,

see Watts, 1996a).

Up to this point, the chapter has described the budgetary system used at the

research site, Griffith University. The next section investigates how external

pressures have impacted on this phenomenon.

8.5 Pressures From the Institutional Field: The Search for Budget Savings and Income Supplementation

Heads of School suggested financial pressures such as those from the recent round

of EBA and the decrease in Federal Government funding per EFTSU continue to

outstrip the rate of School budget increases. Senior managers blamed these external

pressures for the current budget situations. For example one was quoted as saying:

Every time we have a pay increase, the government does not supplement them. We have to find them out of our own budget. We had a 12% pay increase over three years. That is a government policy decision, and we have to fund those pay increases from our existing funds or we have to grow funds to enable us to pay. The implication of government policy is that we have to keep generating other income but we are not like a private sector organisation, which can go out and increase its fees and things of that nature.


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Senior management added to these budget pressures requiring School budgets to be

balanced by the end of 2004. To alleviate budget pressures and to balance the

budget, Heads of School have been forced to look for budget savings and ways to

supplement the budget line. The following two parts deal with these two issues.

8.5.1 Savings

As suggested in the previous section, Heads of School have been forced to reassess

budget expenditure in the hope of finding some savings, redeeming themselves and

ensuring their Schools survival. By complying (Oliver, 1991) with senior

management pressures and finding alternative funding sources, the Heads of School

were assured that their School would not have to face the possibility of

amalgamations with similar profitable Schools or more seriously closure.

Within the Schools, Heads of School revealed that as much as 75-95% of the

budget was consumed by salary expenses. The actual amount of the budget

consumed was dependent on the positions held by staff in the Schools. One School,

for instance claims most of the revenue (up to 90% of the budget) received is used

to pay the salaries of four Professors in the School. By contrast another School,

which employed more staff, had a smaller amount of revenue consumed by salary

expenses (approximately 75%), because they tended to have very junior staff

members (i.e. primarily associate lecturers and lecturers). Some Heads of School

complained that the large portion of the budget allocated to salary expenses

restricted their ability to make savings that would not have severe consequences for

their staff.


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Many Heads of School although reluctant to use staffing for budget savings,

admitted to having done so in recent years. There were two methods that Heads of

School viewed as viable alternatives for realising budget savings from a staffing

perspective. The first they explained was through the replacement of staff. It was

not uncommon for a Head of School to suggest that staff positions were not filled

when they became vacant, because this could result in significant budget savings for

the School. This is illustrated by the comments of one Head of School, “I do have

some control over savings because people quit. If you don’t replace that staff

member straight away then you can get salary savings.” This is one way he

suggested Heads of School exercised control over the School financial position.

Similar observations were made by Tomkins and Mawditt (1994) in their study of

profit centre management within the University of Bath.

The second method involved the employment of sessional staff instead of full time

staff. Sessional and casual staff costs are significantly lower than full time staff. In

effect, although budget savings can be achieved, interviewees commented that it is

often at the expense of the quality of teaching for students and also the research

output of the School. As could be expected, sessional staff are hired for teaching

and are not expected, or often qualified to contribute to the research profile of the

School. Several Heads of School counter argued that by employing sessional staff,

full time staff was then free to engage in research activity and therefore arguments

against using sessional staff were negligible.

In all fairness, there were Heads of School that looked for budget savings in areas

that did not have direct consequences for staff. Areas such as the School’s


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promotion and advertising were viewed to be inconsequential because the

University provided such initiatives in any case through the Office of External

Relations. Consequently, this was viewed as a viable alternative where savings could

be made whilst maintaining staffing levels.

Another area Heads of School claim to be using to realise budget savings was

teaching. Heads of School suggested that by streamlining teaching and/or reducing

the number of subjects offered by the School, savings could be achieved. For

instance, one School hoped to reduce the number of subjects offered to students by

40 subjects. By doing so, the Head of School explained the School should be able to

reduce their projected deficit significantly. Another Head of School maintained a

similar view:

One of the main problems with the School is that we have too many different subjects. That within itself would clearly indicate that it is not cost effective.

Notwithstanding, there is an ongoing debate in the University whether Schools

should offer or remove a subject on economic grounds or on educational merit

(Coaldrake & Stedman, 1998; Jones, 1994a; Marginson, 2000; Marginson &

Considine, 2000).

8.5.2 Income Supplementation

Heads of School admitted that they found it difficult to carry out their operations

within the budget line allocated from the Vice-Chancellor. They explained that the

alternative to looking for budget savings was to look for additional sources of

revenue. All of the Heads of School interviewed looked to fee-paying revenue to

buffer the reduced revenue for EFTSU students. This is consistent with the


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University view that additional funding sources should be sought to supplement

revenue. For some Schools, such initiatives could raise as much as $800,000 to $1

million per annum. The Griffith University Budget Operating Fund Allocations 2001-2003

suggests this is consistent with Federal Government policy:

Federal Government of both political persuasions emphasise the importance of universities obtaining funds from sources other than the Federal Government and have put in place policies which encourage expansion of fee-paying enrolments, certainly for international students and Australian Postgraduates. (p. 3)

Most Heads of School’s ability to get other revenue was limited by the large portion

of the budget line consumed by salaries. “You need money to generate money,” one

Head of School explained. He went on, “Clearly, there are costs involved with

developing products into a sellable format. But as budget allocations presently

stand, Schools are not provided with money to fund such initiatives.” Other

interviewees also held the opinion that with greater discretionary revenue they could

generate a larger revenue base for their Schools. In addition to the Schools

benefiting from a larger revenue base from revenue generation, the University also

stands to benefit from this arrangement because they skim a portion of revenue off

the top before allocating those revenues back to the Schools.

Although Heads of School don’t commonly involve staff in budget preparation,

Heads of School had noticed that staff had becoming more aware of the

diminishing financial resources and when possible contributed to revenue

generation. One senior manager explained, “Staff have come become more aware

of the budgetary matters since the restructure in 1997.” Heads of School suggested

that often staff members were approached at conferences or by industry relations to


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provide income-generating services such as professional development courses.

These services, they explained are often managed by those individuals. Typically, the

amount of income generated through such arrangements is limited by the time and

availability of individuals to manage the initiatives. The Heads of School expressed

some concern that staff was so keenly aware of the need to supplement School

income. Reflecting on his School’s experience on Head of School remarked:

You have to find the time and people to generate income. It has put extra pressures on staff who are already feeling stretched in my view. I wouldn’t put staff in this School in the position where they are forced to do that. The University doesn’t offer a lot of incentive for looking for other sources anyways.

Heads of School explained that Masters courses were also used to supplement the

revenue received from the Vice-Chancellor. One Head of School reflected on his

experience:

Some of the Masters courses, the way they are structured are almost resource neutral, so you can bring extra students in and get $5000 effectively for nothing. It is almost like a discount airline. If you have a seat vacant, give it to them at a discount rate and fill it up. You are better off to have some funds rather than none. So, some of the masters courses are being organised and effectively utilise some of the undergraduate units on an elective basis, but sort of with slight top ups from what they would have done in the undergraduate courses. Here is the core, but you have to do the core plus. So, it is almost neutral when they do that and that is happening in our Schools.

This view is consistent with the University budget document that suggests that

postgraduate courses can be used to supplement government allocations (Webb,

2000a).

Research was another activity undertaken to supplement the School income. Most

Heads of School, however, suggested that this is not anywhere near as profitable as


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fee-paying students, particularly since research funds are diverted back to the

researcher and not to the general School budget.

This section described the effects of external pressures on the School budget. The

next section explores the more recent changes made to the model.

8.6 Crises Mode - Clawback and Funding Changes: A Double Whammy for Schools

The 2000 and 2001 budgets saw significant changes to the budget methodology.

First, the level of funding allocated to Schools for fee-paying students was reduced

to the same level as domestic students. Second, Schools operating with significant

surpluses lost half of that surplus through a clawback114 of funds. Instigated as a

response to a budget crisis, details of which follow, these two changes presented a

host of new problems for Heads of School.

The next section discusses these changes in detail. A discussion of related problems

and issues of the current model follow this. This is necessary to understand the

degree to which budget values and beliefs have been institutionalised in the

organisation.

8.6.1 Fee Paying Students

Under the formulaic based budget methodology, fee-paying students were funded at

a higher rate than HECS students. In the University Budget Operating Fund Allocations

114 A clawback is defined as “a refusal to dispense funds already approved in the budget” (Wildavsky, 1975, p. 205).


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2001-2003, Professor Roy Webb, the Vice-Chancellor wrote, “There is no

justification for this… the funding rates set out in the Budget deliver the same rate

of funding to a School for a student irrespective of whether that student is HECS-

liable or fee paying” (p. 8). The funding rates for the various schools are shown in

Table 8.3.

Table 8.3: Funding Rates from the 2001-2003 Budget

Funding Description Funding Rate $ School Elements Covered

Marketing 3400 Marketing, Marketing and Management.

Business, Humanities & Asian Studies 3700 Accounting, Banking and Finance, Accounting and Finance, Economics, Management, Industrial Relations, Art, Humanities, Criminology and Criminal Justice, International Business, Asian and International Studies, Politics and Public Policy, Centre for Languages and Linguistics.

Media, Education & Leisure Studies 3920 Film, Media and Cultural Studies, Aggregated School of Education, Education and Professional Studies, Leisure Studies.

Psychology & Human Services 4100 Applied Psychology (Business), Applied Psychology (Health), Human Services.

Information Technology 4220 Computing and Information Technology, Information Technology.

Legal 4400 Law.

Languages 4635 Languages and Applied Linguistics.

Nursing & Public Health 4800 Nursing, Public Health.

Science, Engineering & Environment 5000 Health Sciences, Biomolecular and Biomedical Science, Microelectronic Engineering, Environmental Engineering, Engineering, Australian School of Environmental Studies, Environmental Planning, Environmental and Applied Science, Science, Physiotherapy and Exercise Science.

Queensland College of Art 6755 Queensland College of Art.

Queensland Conservatorium 8940 Queensland Conservatorium.

RHD – Arts, Business, Social Sciences 6800

RHD – Information Technology, Psychology, QCA

8000

RHD – Science, Engineering, Health 10,500

RHD – Queensland Conservatorium 9500

SOURCE: From the University Budget Operating und Allocations 2001-2003, September 2000, pp. 11-12.


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Senior managers interviewed had the opinion that fee-paying students required the

same amount of funding to teach as HECS students and therefore funds should be

allocated using the same basis as domestic students. A second view put forth by

several managers was that international funding is no longer seen as extra money or

discretionary income, instead it is viewed to be part of the recurrent funding the

University receives, similar to government funding, and thus it should be aggregated

with government funds and be allocated in the same manner as the Government

Operating Grant. Accordingly, University budget allocations were adjusted and the

School budget lines were amended to reflect this change in beliefs (see, for example

Webb, 2000a; Webb, 2001).115

Academic staff did not adopt these views. Many conveyed views similar to the

following, expressed by a Professor at the University:

Fee-paying students are more expensive to educate for many reasons. Often you find you have to spend more time with fee-paying (international) students because English is their second language and therefore they have trouble grasping the material. Furthermore, often you find yourself teaching them not only the content that you want to teach but you are teaching them how to put together a presentation or an assignment.

Several Heads of School had the opinion that the change in fee-paying student

budget rates was made to reduce the surpluses of Schools who had significant

numbers of fee-paying students. Senior management did not support such claims.

115 It should be noted that the funding rates used to allocate resources to Schools was amended in the same budget statement. The Vice-Chancellor suggested these rates had been reviewed with consideration of the expenditure patterns of the Schools in the three years since the restructure and level of cash surpluses held by the Schools over the same period.


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8.6.1.1 The Behavioural Implications of Fee Paying Allocation Rate Changes

The change in funding rates for fee-paying students was not well received by those

academic staff members involved in budget planning. “It gives us less incentive to

want to get international students when most of the money is being held centrally,”

one Head of School explained. Another suggested he had changed his opinion on

using international students to buffer his income when the amounts the Schools

received were reduced. He said:

For one thing it takes a lot of time and a lot of effort. It is a penalty now to have international students because you know that the more international Non-English students that you take, you are going to work harder and you are not going to get as much money as you need.

These views are consistent with those expressed by Sandbach and Thomas (1996,

see p. 64) who suggest that when incentives are withdrawn this can generate

disillusionment amongst staff which can then be counterproductive to the

organisation.

Notwithstanding, many Heads of School suggested that without this revenue their

School would not survive. Reflecting on this change, Heads of School expressed

views similar to the following:

I don’t think we have any option. Despite this year’s short-sighted policy for fee paying income, I think the Schools have got to pursue that because it is the only way that we are going to survive.

8.6.2 The Clawback

Until 2000, Schools that had under or overspent did not see any repercussions to

their behaviour. In fact, several Heads of School boasted that their School operated

with surpluses in excess of $1.5 million. Not surprisingly, the University surplus hit


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an all time high of $16 million because of this. Interviewees recalled that this was

the third year in a row that the University had recorded significant surpluses.

Surpluses however were not limited to the Schools. During the same period

administrative divisions recorded surpluses ranging from $4.8 to $5.3 million

(Webb, 2000a). Some senior managers took the view that although the University

was not using its funding effectively, Griffith University, unlike other Australian

universities, had yet to record a deficit and therefore it was doing something right.

One senior manager explained:

We may not be using our money well enough, but that is better than being in debt and there are a number of Australian universities now in quite serious financial trouble. Griffith University is not one of them. So our budget works extremely well from that perspective.

At the same time, however, issues of efficiency and effectiveness began to emerge

in all corners of the public sector (Coaldrake & Stedman, 1998; Marginson &

Considine, 2000). Senior managers were then faced with the reality that public

perceptions were changing. Unions, students, and staff were asking why such large

surpluses existed, whether this had any implications for the quality of teaching in

various Schools, and why there tended to be an uneven distribution of surpluses

within disciplines despite them being funded on the same basis. Staff members

suggested that the University relationship with DEST was also at stake. For

example, one senior manager said:

It was virtually impossible for the Vice-Chancellor to explain to DEST that we were carrying a surplus of $16 million. Normally the University would be carrying say a $2 million surplus over the year and that is fair enough.

In the context of increasing government pressures that universities demonstrate

effective management of public funds, the University had no choice but to respond


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to these concerns. In particular, senior managers suggested the University Finance

and Property Committee and Council requested that something should be done,

and soon. These suggestions were substantiated with the Vice-Chancellor

comments in the Griffith University Budget Operating Fund Allocations 2001-2003 that

stated:

The existence of these surplus cash balances (in the Schools) has been a matter of concern to the Finance and Property Committee over the last two years…while recognising the advantages of the strong financial position indicated by the surplus case balances, the concerns noted by the Finance and Property Committee related principally to two issues. The first is that Schools in particular may not be fully utilising their resources to the benefit of students (e.g., in staff : student ratios), and secondly that there is an unequal distribution of surplus balances across the four academic groups (Arts, Business, Health, Science). (pp. 2-3)

The Vice-Chancellor (Webb, 2000a) presented a second view of why the clawback

occurred. He wrote:

In order to provide for greater flexibility in targeting strategic initiatives and particular School needs, 50% of the surplus cash balances as at the end of 2000 will revert to the relevant Group Pro-Vice-Chancellor for allocations within the group. (p. 9)

Internally, staff members of the University, particularly those in deficit asked how

the University could report such large surpluses when their Schools were struggling

to work within their budget line. One employee argued:

Surpluses of this size raise a couple of questions: (1) Are some Schools being funded too much? (2) Did the surpluses occur because they weren’t providing services that were at a high enough level?

Different levels of management presented three views to explain why surpluses of

this magnitude occurred. Senior management and most Finance and Business

Services staff took the view that surpluses were the result of conservative spending

in Schools. “The budget puts the fear of God into Schools!” one senior manager


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remarked. Another senior manager explained that the problem with the Heads of

School understanding of the budget was that they didn’t see the budget as funding

for the year. Instead, they saw the funding as a long-term stream, and therefore

didn’t see underspending as a bad thing. He went on to explain that by doing this,

they were cheating staff and students of resources that could improve their

operating environment. Another senior manager argued that the inexperience of

Heads of School led them to adopt such a conservative approach. He said:

They were all extremely concerned about going into the red. Almost all of them were totally inexperienced in financial management. The University’s overall surplus blew out because instead of having 8 or 10 budget elements with $100,000 you have 40 odd with $100,000 surplus. So, the structure is directly to blame for that.

Another senior manager presented a different view of why Heads of School were so

conservative:

Schools are constantly told that there is no bail out, so they tend to underspend it if they can because they are worried that if they get into a problem that is going to mean jobs.

Heads of School comments substantiated these senior management claims. Many

Heads of School admitted that they were overly cautious when spending School

funds. For instance, one Head of School suggested that in the past he had been

conservative with his spending to increase full time staffing levels and to introduce

new programs. The view taken by most staff, however, was that senior management

ignored the real reasons for surpluses (perceived to be inaccurate funding rates and

poor budget methodology), which could be linked to them; instead, they chose to

view the Schools budgeting approach as conservative.


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As indicated above, inaccurate funding rates and a poor budget methodology were

also blamed for the surpluses or deficits in Schools. To some extent, the devolution

of budget responsibilities at such a low level was also blamed for the exacerbated

financial situation. It was proposed that some budget responsibility needed to be

redirected to a higher level, such as the Dean or Pro-Vice-Chancellor. This was

evidenced in comments such as:

People are trying to plan at such small levels, trying to generate a suitable amount of money to finance initiatives. We need to branch out, but we are not prepared to use different Schools because that would harm our budget.

On the above scenario, it is important to realise that most Heads of School did not

see the surpluses as excessive. For example consider the comments of one Head of

School:

The fact is the surplus is not really anything you would consider excessive fiscal management.

Another remarked:

The surplus is really only just what you would expect as a minimum for sound financial management.

Although there was a widespread belief by managers in the University that senior

management should address the surplus by looking at each School on a case-by-case

basis, no effort was made to do so. Instead, to address the changing public

perceptions about the University, the Vice-Chancellor ordered a clawback of 50%

from those Schools operating with a surplus. Senior managers claim the purpose of

the clawback was to simply say, “You are not using the funding effectively. We need

to make more strategic use of it.” A budget manager offered a further explanation:

The purpose of the clawback was to try and get the Schools to become more accountable, because some Schools treat the budget like a bank, and they


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keep accumulating funds. They say who knows what is going to happen next year, lets just try and make as much money this year and keep on packing it away just in case we might need it.

Late in 2000, the money was taken from the Schools and given to the Pro-Vice-

Chancellors of the Faculties. Some Heads of School recalled losing as much as

$700,000 or more in the clawback. Further investigation revealed that part of the

problem of the clawback strategy was that the Vice-Chancellor decided to instigate

the clawback at a time when the University was changing their management

information service to the NABS. In several cases it was reported that because of

the change over in systems, several Heads of School did not actually know what

their financial position was for a couple of months. This was also believed to

contribute to Heads of School adopting such a conservative approach to spending.

In the weeks following the clawback Schools were invited to apply to the Pro-Vice-

Chancellor for funds to be returned. Specifically, the Head of School was required

to outline his/her intentions for spending, what initiatives it was to be spent on,

how much was required, and how it furthered the strategic initiatives of the School.

In many cases Heads of School claim that they were successful in being reallocated

a portion of the clawback funding. In reality, the process of redistribution led to a

similar mentality to that adopted under the black box model; those that were willing

to play the political game received funding. A budget staff member explained, “If it

fits the bill, or if it is politically correct on the day, well then they might get the

funding back.”


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Superficially, by changing the budget methodology and clawing back funding from

those Schools operating in surplus, the University then was seen to be doing

something about the budget situation. They were for instance able to show Council

and DEST that something was being done about their financial concerns. Internally,

however, the clawback of 50% surpluses had dire consequences for the financial

positions of many of the Schools. Additionally, changes of this magnitude were

bound to have behavioural consequences. The following two sections focus on the

implications of the clawback.

8.6.2.1 The Clawback: A Catalyst of Changed Budget Related Attitudes

Heads of School interviewed admitted they were aware that public perceptions of

the University could be distorted by the $16 million surpluses. They confided that

they were aware that a clawback was believed to be the most likely solution to this

problem, despite personal beliefs that the surpluses should be viewed on a case-by-

case basis. Furthermore, many revealed that they had been warned on several

occasions that if they did not address their surplus the money would be removed.

An academic manager confessed, “We were told you have got a surplus, if you don’t

spend it, we will take it back.” Because the Vice-Chancellor did not consult staff at

this level about how they intended to rectify the surplus problem, many admitted

that they expected a 10 or 20% clawback at the most. All were astounded when the

Vice-Chancellor ordered a 50% clawback of all surpluses. This was much higher

than they had ever anticipated.

This meant that some Schools lost hundreds of thousands of dollars, money that

had been committed to various projects and activities. A staff member described


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the general feeling of why such extreme action took place, “In the corporate area all

they can see is the bottom line gradually mounting up and up,” he said. “They are

not concerned with specifics of how that money is supposed to be spent,” he

explained.

It could be argued that the clawback caused the most angst for Heads of School,

especially those who accepted responsibility for the budget. They expressed strong

dissatisfaction with how the surpluses were dealt with.

The clawback of funds affected our School pretty dramatically. We had a pretty hefty surplus in place for a good reason. We were going to bankroll new infrastructure with our savings.

They were not alone. Many senior managers also were unhappy with the clawback.

They did not believe this was the best way to fix the budget problem; there was the

view that it only addressed the problem in the short-term. Paradoxically, any efforts

to address the problem in the long-term were thwarted when money was returned

to the Schools as a post hoc correction. For example, one interviewee observed:

Frankly, all the clawback did was make the budget situation worse. All of the money had to go straight back into the Schools. It allowed me to fix a budget problem temporarily, but overall it didn’t do much.

Finance and Business Staff also corroborated this view. Many expressed views like

the following:

This year a lot of the Schools lost a lot of their surplus. We don’t know exactly how they are going to get out of this mess. A lot of them look like they could go down the tube if they don’t get some sort of bailout from the Vice-Chancellor. How can Schools operate when they are now going to be $1.5 million in debt next year?


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At the time, Heads of School who had operated with surpluses felt they were being

punished for what they perceived to be good management. Two Heads of School

were quoted as saying:

He (Vice-Chancellor) is unreasonably punishing each of the Schools. They take away your surplus and give it to the poor. We have been managing responsibly and we are actually doing what we are required to do and being punished for doing it well. (Interviewee 1) The reason this clawback occurred was in fact to bail out some Schools. The Schools that were actually well managed that were actually in surplus were actually punished for that. So, the natural conclusion is spend and be damned.

(Interviewee 2)

As suggested in the previous comments, many Heads of School felt they were

losing their surplus to bolster other Schools in deficit rather than for promoting the

interests of their School. One Head of School explained that he held this view

because of a recent encounter with another Head of School. He recollected:

I was walking up to the car park with another Head of School and he said, ‘Oh I just got my financial statements and I see my deficit has been wiped out. It is probably from your clawback. Thanks!’

It seems that the Griffith clawback did little to appease mounting concerns over the

funding methodology. Tomkins and Mawditt (1994) reported similar findings in

their study of devolved budgetary systems at the University of Bath. Similar to

Griffith, in the years following the introduction of the devolved model the

University clawed back funds from those schools operating with surpluses to

improve the financial position of the schools operating in deficit.

In the aftermath of the clawback, Heads of School explained that their budget

perspectives had changed. One manager observed:


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It impacted on Schools attitudes towards surpluses. Prior to this time, Heads of School were pretty frugal and diligent in managing their budget and now they are just letting things go a bit because they think the University could just take it back again.

When asked about the importance of the budget as a control tool, Heads of School

comments mirrored something along the lines of “What the heck, we might as well

all go into the red! I am getting to the stage where I don’t care if I go into deficit

anymore.” Perhaps more tellingly one interviewee stated, “The purpose of the

clawback was to induce Heads of School to spend money to further the teaching

and research of the School. The message understood by Heads of School was ‘Why

would we want to save money? It could be clawed back!’” In similar vein another

Head of School described his predicament:

I have really been caught in a quandary here…the prudent part of me says to try and fix some budget savings, try and cut back and manage it the best you can. But the other part of me, and even some direction I am getting from up the line and certainly within the School says spend it. What are they going to do? Close you down? We are one of the biggest programs in the University. So I must admit I have an internal dilemma with that.

Previously, Heads of School had suggested they spent a considerable amount of

time monitoring the budget and planning the expenditure. The clawback however

had significant implications for the effectiveness of budget planning and control.

For example, one Head of School confessed to overspending by $20,000 to $30,000

a year now to signal to management that they were not being overfunded and to

ensure that funds would not be clawed back. This is not an uncommon response to

a clawback (see commentary by, Coombs & Jenkins, 1994; Scott, 2001). Others now

believed that the budgeting process, similar to the business plan, was a futile

exercise. They complained that they saw the clawback as a loss of control over their


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budget; control, which they believed, had been bestowed on them to improve

decision-making.

8.6.2.2 Related Issue: the Clawback and Repercussions for Business Planning

As mentioned in Chapter 6, one of the factors contributing to the effectiveness of

the strategic plan is the allocation of sufficient resources to support the plan

(Govindarajan & Gupta, 1985; Mintzberg et al., 1995). One would expect then that

a clawback would have significant consequences for the effectiveness of those

plans.

Griffith staff had observed that this was the case in the 2000 and 2001 budget year.

By reducing School surpluses by 50%, Heads of School suggested that they were

limited in their ability to attain the goals and objectives set out in these documents;

they no longer had the funding to make many of them viable. A group resource

manager from the Finance and Business Service Division described the situation:

There is no way that the Schools can really adhere to some of the things they have said in their business plan, because they simply don’t have the money to do it since the funds have been clawed back. This year it was an exercise they thought was just stupid. They thought that the Head of School was responsible for their budget. They thought the Head of School got a certain amount each year. If they went into deficit it was their responsibility, if they went into surplus, it was a tick for them. So, the Heads of School did not look upon this year’s business plan very favourably.

This view is consistent with strategic management literature, which suggests that

organisational units need sufficient funds to carry out their strategic plans

(Thompson & Johanson, 1999; Thompson & Strickland III, 1998). Prior to the

clawback, most of the Head of School claim to have controlled their spending and

developed surpluses to fund initiatives and projects. For example, one Head of


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School had been saving to increase staff numbers the following year. Another

claimed to be saving to fund infrastructure. This led to further changes in the

shared understanding of budget values. Nowadays, instead of spending money just

on the initiatives set out in the business plan, many Heads of School felt they

should spend all of their funding, planned or unplanned at the end of the year to

ensure that they would receive the same level of funding the following year. A

disgruntled Head of School illustrated this point. He explained:

Last year our School had a surplus of a million dollars. We had half a million dollars taken off us in the clawback. This encourages the old public policy mentality if you have money spend it, otherwise you may have it taken off you. It does not encourage strategic planning or looking after your long-term financial position.

Other Heads of School expressed similar views to this claiming that in order to

maintain similar budget lines, Heads of School were forced to spend money on

frivolous items, whereas in the past they suggested they had been able to put aside

funding to the further strategic initiatives of the Schools. One Head of School gave

a perfect example of this:

In October, we had a big balance and people were complaining. So we bought a very expensive piece of equipment that wasn’t even really needed. We have to show that we are spending the money, otherwise next year we might get less.

This view again is consistent with strategic management literature, which suggests

that too much funding can lead to a waste of organisational resources (Thompson

& Johanson, 1999; Thompson & Strickland III, 1998).

It is worth noting that the Vice-Chancellor (Webb, 2000a) held a different view to

Heads of School:


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Given the level of carry forward surpluses and the availability of unallocated funds in 2002 and 2003, the allocations in this Budget will enable the great majority of the 40 budget Schools to continue to operate successfully according to their business plans. (p. 9)

To alleviate further surplus problems and to dissuade Heads of School from taking

such a conservative approach, at the end of the data collection period the budget

committee looked at setting a level of surplus, which Schools could legitimately

carry forward. No suggestions were given as to what would happen with funds in

excess of the set level. Whether the funds were going to be allocated to a central

fund or returned to Pro-Vice-Chancellors was yet to be determined. Participants

had suggested a rate of 10%. The recent release of the University Operating Fund

Allocations 2002-2004 confirmed these suspicions. It states, “Surplus amounts in

excess of 10% will require justification from the Head of the Element to the Vice-

Chancellor though the relevant Pro or Deputy Vice-Chancellor”(p. 19).

The next describes the behavioural consequences and issues of the budgetary model

further.

8.7 Behavioural Consequences and Implications of the Changes to the Budget

Staff at the University was informed of senior management’s intention to devolve

responsibilities and to make the School the main budget unit during the restructure

meetings described in Chapter 7. It seems that the motivation for the change in

methodology was inextricably linked with the structure; that is, staff did not refer to

the structural change without talking about the devolved budget responsibility and

vice versa.


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Although the structural change has achieved many of its objectives, senior managers

and Heads of School openly acknowledge that the devolved budget model is not

working in the current environment. “The underlying problem is an EFTSU-driven

load model that encourages Schools to horde students by duplicating courses and

restricting elective choices,” Glyn Davis (2002), the new Vice-Chancellor wrote in

his recent paper Management Structures at Griffith University. Most Heads of School

were perplexed why the University had continued to use this model when the

limitations were blatantly obvious. Recent meetings held in several of the Schools to

discuss mergers with other Schools to create bigger and more manageable budget

entities also suggested the model was past due for review. Comments such as, “I

think it (the budget) is utterly mismanaged” or “The current budget model is a

joke!” dominated conversations with academic managers. Other managers in the

University corroborated these views with comments such as “I think the budget

process here is terrible, because there is a small group up here that haven’t got a

clue what the troops are doing out there in the front line.” In addition to this, as

indicated in the chapter, the School budget model created a whole host of

unintended problems for management. Notwithstanding, management claims the

model has served its intended purpose, to create a sense of budget equity.116

The following section takes a more general look at some of the problems and

conditions of the budget planning process to understand the technical and

behavioural consequences of the changes to this component of the control system.

116 Mayston also suggests that the combination of devolved budgeting and formula funding can create a sense of equity. Specifically he (Mayston, 1998) compared the use of devolved budgeting and formula funding with incremental budgeting, political decision-making, and the tiebout model for promoting equity.


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Despite the fact that some of the problems overlap, for the purpose of analysis

these problems have been classified as stemming directly from budget responsibility

or the use of formula based resource allocation methods.

8.7.1 Devolution of Budget Responsibility and the Distribution of Power at Griffith

The level that budget responsibility should be devolved has always been a

contentious issue for most organisations. Griffith University is no exception. Two

opposing models have been used: the first with responsibility at the Pro-Vice-

Chancellor and Dean level, the second with responsibility devolved to the Head of

School. As indicated in this chapter, senior management are in agreement that

devolved formulae based model needs to be revisited in light of the budget

surpluses of 2000. This chapter has illuminated a number of problems with the

model.

One concern with the current model is that Heads of School have little to no

financial experience, and yet they are responsible for millions of dollars. Staff

members at all levels of the University expressed similar views to the following:

The Head of School could be a scientist or an artist, so they haven’t really got administrative skills. They are not all good at finances. They can have a look at the finances of their School on the web, but most of them go what the heck is that? How do I read this report? Do I turn it this way or that? They are not well trained as financial managers. (Interviewee 1)

There are a lot of Schools out there where pure academics have been thrown into the position and they haven’t even really wanted it. It is very hard to then say well this is what you have to manage. They are not that way inclined at all. They want to do research. (Interviewee 2)


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This is not the first time such concerns have been recorded in the HES (for similar

findings, see, for example Coaldrake & Stedman, 1999; Eley, 1994; Watts, 1996b).

Scott (2001) too found that a similar problem existed in further education colleges

in the UK. Nutley (1999) suggests that organisations need to match the financial

competence of their employees with the position responsibility. Despite the fact

that almost all of the Heads of School admitted to having no previous experience,

most held an understanding that the budget was used for planning and control.

Senior managers took broader view, suggesting the budget was the most important

strategic management tool used at the University.

Related to the problem of financial competence, interviews and documentary

evidence suggest that Heads of School are selected primarily on the basis of

research performance and productivity. Not surprisingly, many Heads of School felt

that they did not possess the necessary skills to carry out budgeting effectively. To

drive the point home one Head of School reflected:

You basically have got Schools that are given multi-million dollar income. You have a Head that has no accounting training. I have no accounting training. The Heads of School have a secretary that has no accounting training, and an administration officer who is flat strap doing timetabling and collating the marks entry and you are expecting those people to somehow administer a couple of million bucks a year!

In addition, with the increased financial pressures placed on Schools, and Heads of

School at the helm, it is the Head of School who has to justify expenditure and

make cuts to existing programs and activities. For Schools operating in deficit then

the Head of School position with its increased responsibility and autonomy is less

appealing. Because of this it can then be difficult to find qualified staff willing to

take on the position. To some extent, this supports Scott’s (2001) conclusions that


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the introduction of devolved budgets in periods of fiscal restraint can be

demotivating and less empowering.

The evidence from the study is that the short two or three year appointment of

Heads of School was also believed to reduce their ability to build up expertise in

managing the School. One senior manager expressed his reservations:

I think trying to get 45 really good leaders with skills you need is a big ask and when you are only doing it for a short period it is an even bigger ask!

Eley (1994) also made a similar observation in his study of management training for

the University Head of Department. Specifically he suggested that the three to four

year short-term basis limited the chance of the individual building up sufficient

expertise.

Because of a lack of budget experience, budget managers tended to rely on verbal

communication with Finance and Business Services advisors and consultants, even

though budget reports were provided at regular intervals and budget information

was available via the web at any time. Many admitted to not understanding the

budget figures. Instead, they relied on the commentary written by Finance and

Business Services staff to highlight any irregularities or areas of concern. Thus,

budget control was viewed as a routine process, prompted by reports from Finance

and Business Services.

Some of the Finance and Business Services staff were also perplexed as to why

Heads of School had been given budget responsibility. They highlighted the fact

that traditionally this practice would not occur in the private sector, and to a large


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extent continues not to be the practice of public sector organisations. Using the

health sector as an example, one interviewee commented:

Traditionally doctors ran hospitals. Recently, however, they have said this does not work because those doctors are not administrators. So, they hired and spent lots of money getting insiders to come in and run the show.

In comparison, some of the administrative staff that lived through the changes in

structure suggested the Faculty structure allowed for greater financial control than

the current model, because Deans worked very closely with Faculty managers to

monitor the budget. As one administrative staff explained, “Heads of School sign

off on all sorts of things, but half the time they don’t know what they are signing

off on.”

Two alternative viewpoints were presented to counter Heads of School claims for a

lack of financial experience. Firstly, although the Vice-Chancellor had devolved

control to Heads of School, most of the budget devolved to Heads of School was

already committed to paying salaries. Thus, discretionary income was really the only

area that Heads of School had any control. Some Finance and Business Services

staff also acknowledged this. A second view put forth was that having knowledge of

budgeting doesn’t necessarily make you a good manager/administrator. “Just being

able to understand information doesn’t mean to say you will have the appropriate

behavioural patterns,” one interviewee commented. These parties therefore

considered the fact that Heads of School did not have any financial experience to be

unimportant for effective management.


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Quite apart from the last point, there was a select number of staff that believed the

Vice-Chancellor and his budget committee had inadequate knowledge of what was

happening at the School level to allocate funds effectively. More specifically, it was

suggested that the budget committee had no clue about the difficulties the Schools

were facing or what they were trying to achieve. Education Queensland participants

also highlighted this as an issue of concern. One participant observed:

The managers need to have more corporate ideas and abilities. I don’t think most of them have the skills and the wear with all to run a multi-million dollar corporation, which is increasingly what universities are being. They are becoming like multi-million dollar beasts because of the diminished public funding and the reliance on private funding.

One of the problems resulting from the devolved management responsibility is

clearly competition. Similar Schools openly admit to competing for the same

EFTSU’s. Based on his experience, one senior manager observed:

The typical Head of School is fighting to preserve his or her budget. So they build fortresses around the School. If we take, for example, joint teaching, initiatives in teaching are generic across a whole lot of Schools, but it is very difficult to get away from that because some Schools say ‘gee I might lose some load from that so therefore I don’t support it.’ It is not an academic argument anymore it is just a financial argument.

Jones (1994a) observed similar behaviour in universities that had devolved budget

responsibilities in the UK. In this study he noted significant changes in power of

departments resulting from two sources: (1) their ability to reduce the amount of

teaching provided by other departments, and (2) their ability to introduce new

courses to attract students from other disciplines.

A second area in which the current budget model has provided unhealthy

competition is in research. Academics contend they are reluctant to carry out


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research in cross-discipline research teams for fear of losing research dollars to

other Schools. In this sense, one interviewee suggested the budget model has

fostered “an absence of a means of doing things across Schools.”

At the same time, the devolution of most of the Griffith University operating

budget directly to the Heads of School has reduced the Deans and Pro-Vice-

Chancellors ability to define the strategic direction for the Faculty. One senior

manager described his situation as follows:

When the budget is devolved to the School level, it is much harder to get money out of the Schools for a collaborative activity. If the money sits at a higher level of management then more strategic initiatives can be pursued. The devolution to Heads of School has brought with it a self-interest culture.

Heads of School comments also suggest this is the case. For instance, during the

course of an interview one Head of School said:

Schools will only want to fund things that benefit them. For example, I don’t put money into undergraduate income because we share that with other Schools. There is no point for me as a Head of School to put a dollar into the promotion of the undergraduate degree when someone might go to another School in the Faculty. Whereas when I put a dollar into postgraduate education promotion and I get a postgraduate student then I know they will be in my class and I will collect the money from them.

Another senior manager reiterated this point:

Schools have become little organisations unto themselves trying to keep their budgets and not allowing other people or Schools to use their resources.

Quite apart from the last point, but relevant to the discussion at hand is staff

participation in the budget process. Although individual staff participation has been

limited, senior managers suggest that staff are now more aware of the financial

position of their respective School. Schools have profited from this, because staff


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members are now seeking opportunities to expand their profiles, looking at

consultancy work and taking up contracts with overseas universities. The downfall

to this heightened interest in the financial position of the School is that staff is

acutely aware that synergies with other Schools could result in a loss of revenue for

their School. An example was given during an interview with a senior staff member.

If PhD students have co-supervision and that co-supervision is across School and Faculties there is a need to determine the percentage of activity out of the different Schools or Faculty. As soon as that is understood, you will notice that one School will not share the money. Thus, the sharing of activity brings with it conflict between the Schools or Faculties.

Another staff member gave a teaching example. She suggested that Schools take the

view that, “We need to branch out but we are not prepared to use different Schools

because that would harm our budget.” This provides a clear example of how the

current budget model encourages staff members to operate for the benefit of their

School, sometimes at the expense of the student, other times to the detriment of

university efficiency.

8.7.2 The Budget Methodology: Formula Based Funding for Student Load

At Griffith University, the devolvement of budget responsibilities brought with it a

distinct shift in focus from who received the funding to how funding was allocated. It

was suggested earlier in this chapter that most of the operating budget was allocated

to Schools on the basis of teaching load. Most academics were puzzled as to why

the University allocated most of the operating budget based on teaching load. In

reality, it was explained that academics are expected to spend 30-40% of their time

on teaching; administration is expected to take up around 10-20% of academic time;

the remaining 50% is supposed to be spent on research. This proved to be a huge


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concern for Heads of School who managed strong research Schools because

student numbers tended to be small in those Schools, and consequently, budget

allocations were small.

It is hardly surprising that Heads of School in these Schools linked the

implementation of formula based funding in the University to the demise of the

financial performance of their respective Schools. To emphasise this point, research

Schools operating with sufficient surplus under the black box model, now operating

with a similar staff profiles claim to be in the red by over $100,000 under the new

formula based budget model. Consequently, staff members in these Schools admit

to preferring the Faculty-based model to the School. Clearly here, accounting

numbers played a role in reducing the institutionalisation or acceptance of the new

budget model.

Several Schools criticised the current budget model suggesting it did not adequately

consider the high costs of course delivery. For example, DEST offers up to a $6000

difference between business students compared with science students. The

University, on the other hand, offers a $2000-$3000 difference between the various

disciplines. In all fairness, it should be pointed out that neither the Griffith

University rate nor the DEST rate is based on the cost of delivery.

Yet another criticism of the budget model is the number of Schools receiving

budget allocations. Many staff suggested the number of Schools that were allocated

resources further complicated the formula based model. For example, several senior

managers remarked that it would be much easier to calculate load for a smaller


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number of Faculties than for the 45 Schools as currently occurs. For example, one

senior manager said:

To satisfy the budget we have to get the right number of students in 45 budget units. That is quite a difficult task. If you had say 8 Faculties you have much more scope. It is much easier to hit 8 targets than 45.

Many senior managers therefore took the view that the University’s ability to

accurately determine load was jeopardised by the large number of Schools. Several

Finance and Business Service interviewees also suggested there were too many

budget units for effective management. This is not surprising given their role is to

assist Heads of School with the management tasks such as business planning and

budgeting.

The budget model has also been criticised because of the recent changes to the rate

of fee paying students that are allocated to Schools. Specifically, the reduced

funding per fee paying student has been viewed as a disincentive for Schools to

spend time and money attracting them. For Schools that rely on international

students to buffer their income, the change in budget methodology has put serious

financial pressures on those Schools. For example, one School claims to have lost in

excess of $250,000 to other budget lines.

Education Queensland employees took a similar view of formulae based funding to

that of the academic and general staff at the University. They suggested many

universities operated with an “excessively rational approach.” One interview

explained:

A too rational and competitive approach to budgeting tends to level down to want to treat everybody as if they were on a level playing field. The smart


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thing to do is that someone at the corporate level makes distinct distinctions about some subjects being better than others. People in universities hate that.

This interviewee went on to suggest that formulae based models were being

adopted by higher education institutions because they were easier to defend and

appeared rational to those concerned over the allocations they received.

The budget methodology also posed several problems specific to Heads of School.

For example, Heads of School felt the current university model limited their ability

to budget effectively because actual budget estimates were not received until late in

the year. In addition to this, of the School’s discretionary income, it was common to

allocate funds to academics for use on specific activities. A key example of this is

conference and research travel. The allocation of funds on this basis by Heads of

School has however fostered a culture, which has been detrimental to the University

financial position as a whole. As one Head of School explained, “You allocate

money to the individual staff members and they save it and then the Heads of

School are saving out of the total amount, so the School savings are bigger than

actually planned.” In reality, academic colleagues behaviours often mirrored the

conservative approach to spending adopted by Heads of School. When you have 45

Schools with both academic staff and Heads of School adopting this view the

surplus problem becomes insurmountable, as it did in 1999.

A final criticism noted by Heads of School of the current budget model was the lack

of parameters provided for budget planning. A staff member observed, “You know

there are no rules or regulations put on the Schools about how to spend their

money. They are expected to spend it wisely and they have to be able to pay


340

people.” Coincidentally, others mentioned that Heads of School could reduce or

increase the number of programs offered by the School to improve their ability to

meet salary costs. Increasing the number of programs has particular consequences

for the School such as increases or decreases in sessional staff wages and other

discretionary costs, yet Heads of School commented that often they were not

provided with a sufficient information to make informed decisions on matters such

as these.

8.8 Discussion

To understand how and why accounting change occurs, it is necessary to examine

the processes of change as well as the outcome of change. As suggested in Chapter

3, a conception of the need to change is the first major phase of planned

organisational change. As discussed above, there were several internal and external

factors pressuring the organisation to change its budgetary systems. These included

competition, political pressures, budget inequities, and reduced funding. This is

consistent with the view that change may be triggered by several interrelated factors

(Dawson, 1994; Deegan, 2002). It also supports the new institutional sociological

perspective that suggests that pressures for change arise from contextual pressures

as well as institutional pressures (Ansari & Euske, 1987; Hoque & Hopper, 1994).

Notwithstanding, the origin of each of these factors pressuring a change in budget

methodology can be traced back to the Dawkins amalgamations, which introduced

competition into the sector by reducing government funding and introducing

HECS. Government induced competition meant that the University required

effective management systems capable of monitoring and matching their operating

functions with the external environment. The funding restraints imposed on the


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University that followed the Dawkins amalgamation made it necessary that the most

effective resource allocation procedures were in place to ensure that resources were

being used efficiently (for similar observations, see Wildavsky, 1975).

The reduced funding also provides an explanation for why the various campuses

and the Pro-Vice-Chancellors and Deans engaged in warfare. To put it another way,

when there was a realisation that the resources were diminishing conflict emerged

between parties holding similar power basis in an attempt to increase or at least

maintain their fair share of the dollars distributed. This view is consistent with that

described by Stanford and Duhs (1994) who suggest that universities are less

concerned with funding formula and resource allocation methods when funding

constraints are not as severe.

In Griffith’s case, interviewee comments suggested that the strong motivation

behind engaging in conflict was the power related to resources (Bruns &

Waterhouse, 1983; Walker, 2000). The chapter described how many held the view

that if you had resources, you had power, if you had power you could make

decisions and exercise greater control (Hardy, 1994, 1996; Pfeffer & Salancik, 1978).

Furthermore, the evidence indicates that power is not always dependent on

hierarchy. In Griffith’s case it was shown that the Deans, although higher on the

hierarchy actually held less power than the Heads of Schools once the resources

were devolved (see Salancik & Pfeffer, 1974 for similar findings).

The evidence presented in the case suggests that the reduction in Government

funding sensitised employees to the deficiencies in the current model; it highlighted


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the fact that there was a lack of transparency and inequities in the system and thus it

was not perceived to be a rational model for allocating funds given the constraints

of the new environment. This is consistent with the view that budgetary systems

change when powerful individuals are dissatisfied with the system (Greenwood &

Hinings, 1996). These deficiencies served to delegitimise the existing model (Miller,

1995) and create a readiness for change in the organisation. More importantly

perhaps, the findings suggest that before the Dawkins reforms and the Vanstone

cuts, the budgetary systems were not a central focus of the organisation; employees

were less interested in how funding was being allocated.

Quite apart from this, the conception of a new budget model was linked with the

need to legitimise the structural changes at the University. Otley (1987) supports

this view suggesting that changes in the accounting system are usually made in aid

of other objectives. More specifically, Bruns and Waterhouse (1983) linked the

design and operation of the budgetary system to the degree of centralisation,

autonomy, and the structure of activities. This issue was discussed at length in

Chapter 6.

The transition phase follows the conception of the need to change and precedes the

institutionalisation phase. As suggested in the previous chapters, it involves a

number of tasks focused around planning a change and then managing its

implementation in the organisation. As described previously, the new archetype was

designed based on two principles: devolved budget responsibility and formulae

based allocation. This demonstrates support for Mayston (1998) who suggests that

devolved budgeting and funding formulae are central to the changes occurring in


343

the public sector. The findings also seem to mirror those reported by Angluin and

Scapens (2000) and Thomas (2000) who found that many universities had adopted

devolved formula based budgetary systems in recent years.

In this chapter, two levels of management were identified to be involved in

designing the new model, the Vice-Chancellor and the Pro-Vice-Chancellor. The

Pro-Vice-Chancellors were involved to the extent that they designed the governance

structure as a devolved structure. The decision to devolve responsibility and to

adopt formulae based budgetary systems was made after consideration of the

political dynamics in the organisation (i.e. the ongoing fighting between campuses)

and the wider social and economic environment. This is consistent with Thomas

(2000) who suggests that the devolved formula based systems of resource allocation

offer rational bases for reducing the politics of the process. Thomas (2000), for

instance, notes, “An argument in favour of a system based on a formulaic model is

that it avoids exaggerated annual budgetary submissions and lobbying of decision

makers by powerful budget holders” (p. 132). Watts (1996a) also made similar

observations. He suggests that some of the factors that influence the use of formula

drive allocation processes include the perception of an equitable distribution of

resources amongst Faculties, simplicity, visibility, and its ability to reduce lobbying

in the organisation (see p. 64). This chapter described that employees held similar

views to this and on this basis, managers were able to defend and legitimise the use

of a devolved formula based resource model in the organisation.

What appears to be unique about the Griffith case compared to other Australian

universities is that the budget line was devolved to the lowest management level, the


344

Head of School. It has been reported that other universities in Australia also use a

devolved model, however, they only devolve budget responsibility to the Dean and

Pro-Vice-Chancellor levels and not the Head of School (Marginson, 1997b). In this

case then, School and not Faculties are considered to be the cost centres.

The evidence suggests the Vice-Chancellor’s preferences and priorities remain

crucial for the budget allocation process. The case demonstrated that the Vice-

Chancellor made the decision to adopt formula based funding to allocate resources

to the Schools.

As suggested in Chapter 6, getting employee commitment to a devolved governance

model was generally not a difficult task at Griffith. The only real resistance occurred

within the Education Schools who defied the devolved model, choosing to remain

as a single budget unit at a Faculty level and not a School level. This chapter

suggests that Heads of School in the Education Faculty did not agree that the

devolved budget model was rational for their circumstances.

Managers were able to stimulate commitment from the other staff in the University

by pointing out the deficiencies of the current model suggesting the new approach

offered a more rational and equitable basis for allocating funds (Covaleski et al.,

1985; Jönsson, 1982). Within the University there was an expectation that the new

model would offer the possibility of the most efficient and effective use of

resources because decisions would be made at a the lowest level, where

management was more aware of the needs and problems facing employees. Thus,

the model was believed to foster improved control in the organisation (Covaleski et


345

al., 1985). In another sense, the existing model was discredited on the perception

that other similar Schools received more funding. These strategies provided the

necessary momentum for ensuring that little resistance would be met when the new

model was introduced. In addition to the above, the idea that other universities in

Australia had also adopted devolved and formulae based approaches served to

improve the perception that the suggested model was in fact legitimate and would

improve the University’s ability to compete in the market. In this regard, the

response can be categorised as a balance tactic, used to demonstrate a commitment

to compliance with managerialist pressures and at the same time the model was

fashioned on the needs of the individual organisation (Oliver, 1991).

As a Professor of Economics, many of the senior managers were not surprised at

the Vice-Chancellor’s response to adopt a formulae based budget model. In the first

instance, by adopting a formulae based approach infers a more equitable and thus

rational basis for allocating funds. Using formulae to allocate funds to the Schools

gave the impression that the budget was now a neutral tool, all Schools were treated

the same regardless of campus. It gave the impression that the process would not

be able to be manipulated by the political agenda of powerful individuals and

groups (Piper, 1995; Watts, 1996b). It also encouraged greater transparency of the

process. Finally, it gave the appearance of orderliness to management activities

(Jönsson, 1982; Watts, 1996a). There was some suggestion that the lack of adequate

cost data, combined with the time and resources required to obtain information for

a different budget model improved the attractiveness of using formula based

resource allocation methods. Similar views were thought to be held by other

administrators in other universities (see Watts, 1996a for some discussion). This


346

model was further legitimised by the fact that DEST, the primary fund provider,

had used a similar model for many years. There was the view then that insofar as

the University used a model similar to their resource provider, that resource

provider would consider the method legitimate and continue to supply resources.

This response is consistent with the new institutional theory (Baldridge et al., 1977;

DiMaggio & Powell, 1983; Fligstein, 1985). Consequently, literature and the

comments of interviewees suggest that many other institutions in the field have also

adopted formulae based allocation. Coincidentally, this is consistent with the view

that to reduce uncertainty, organisations mimic their response to pressures for

change on other institutions in the field (Marginson & Considine, 2000).

The results seem to suggest that there was still a degree of negotiation and political

lobbying at the senior management level, even after the introduction of formulae

based budgeting, because of the subject judgements required to develop formulae

and rates. This would suggest that the budget is not entirely neutral (Covaleski &

Dirsmith, 1983, 1986; Markus & Pfeffer, 1983). For many organisations such as

Griffith University, the budgeting methods used reflect the priorities and

preferences of those in positions of power (Hardy, 1991; Perrow, 1979; Thomas,

2000). Mostly it appears that the academic registrar’s and the Vice-Chancellor’s

preferences shaped the allocation rate decisions. Piper (1995) speculated similar

expectations of formulae based resource allocation processes. Having said that, the

Vice-Chancellor’s ability to restrict others access to the decision making process

appears to be in line with the new managerialist approach, which suggests that by

restricting access to decision making managers can reduce conflict and make

decisions in a more timely fashion (Alford, 1997; Pollitt, 1987).


347

Since its implementation, however, the problems of the formulae approach have

become apparent to management, especially in light of the surplus situation in 2000,

to which management responded with a clawback of funds and a change to fee-

paying student allocations. Comments from the Heads of School suggested that

management had intervened with the function that they had devolved. They

claimed to have lost the autonomy upon which the model had been designed on. In

return, the chapter presents evidence to suggest that Heads of School displayed a

number of forms of resistance to this response: many are not interested in using the

budget as a control device and many now refuse to look for alternative sources of

funding. In theory, Wildavsky (1975) suggests that the more rapid that change is

brought about, the worse conflict and resistance will get. Vasu et al. (1998), on the

other hand, suggests that when there is the perception of a tightening of control, as

appears in this Chapter, there is sure to be resistance to that change.

As suggested in Chapter 3, the final phase of change processes involves the

institutionalisation of the planned response. To recap, institutionalisation occurs

when there has been effective transition and the planned response becomes a part

of the organisational control system, supported by an appropriate culture.

The University has now been using the devolved formulae based model for four

years. The characteristics of the model are essentially the same as they were planned:

the Vice-Chancellor uses formulae to allocate funds to Schools as a one-line budget

based on EFTSU. Nevertheless, this chapter has described changes to the model

since its introduction such as the clawback and the change to fee-paying income.

These changes suggest the model did not provide all of the expected changes. The


348

empirical findings would suggest the model has definitely become more transparent

and in a number of cases it did allow the Heads of School to make more informed

decisions about issues that affected staff and students in the School. Despite this, as

previously discussed, the formulae based approach and the devolved model had

significant unintended behavioural consequences, which in turn, arguably have

efficiency and effectiveness implications. The combination of devolved budget

responsibility and formulae based allocations, for instance, appears to have

increased the politics among Schools. Although resources were no longer allocated

according to favour, formula based funding introduced a new form of politics. The

chapter instead reported that tensions arose among similar Schools as they

squabbled and fought to maintain and where possible increase student numbers in

their respective Schools. Schools who were therefore able to raise their profile and

attract students from other Schools or reduce the amount of teaching by other

departments exerted some control over the resource allocation process: those

Schools that attracted students attracted dollars. It was reported that similar

behavioural patterns to Griffith were observed by Jones (1994a).

It also seems that the effectiveness of the model was limited because of the view

that dominant research Schools were being disadvantaged. A third view emerged in

the findings discussed above, that Schools in surplus were not using their funding

effectively and that Heads of School may not be providing a suitable quality level of

services.

On the other hand, the findings also suggest that the model applied was not exactly

the same as the proposed textbook model. The devolution of budget responsibilities


349

in theory is thought to strengthen accountability systems in the organisation

(Benjamin, 1996; Hopwood, 1974; Sandbach & Thomas, 1996). However, in

Griffith’s case it appears that few managers were held accountable for their budget

responsibility; thus, few used the budget for control. This is a clear indication that

employees resisted the way budgeting was currently being done in the organisation.

Specifically, the clawback provided evidence to suggest this was the case, senior

management chose to deal with the budget surplus by clawing back 50% of the total

surplus regardless of individual reasons for having a surplus.

Based on the academic managers general disregard for budget figures one could

argue that the budget process has taken on a ritualistic role at the organisation,

symbolising the use of planning and control in the organisation and legitimising

organisational activities (Covaleski & Dirsmith, 1988b; Miller, 1994). To further

explain, the model demonstrated to Government the organisation’s commitment to

efficiency and rationality and the response served to secure continued funding for

the institution (Covaleski & Dirsmith, 1983, 1986; Fernandez-Revuelta Perez &

Robson, 1999; Markus & Pfeffer, 1983). This is consistent with Covaleski et al.

(1985) who claim that organisations often change their budget systems to illustrate a

commitment to efficiency. Boland and Pondy (1983) among others, suggest

legitimisation is important for continued support of external groups and social

communities. Walker (2000, p. 12-13), too has observed that “many universities

may have used budgets primarily as a means of authorising expenditure, rather than

as expressions of plans for the use of resources.”


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It appears that the University is no longer committed to using the existing model. A

review of the budget by the University in 2002 corroborates this view suggesting

that the model has not been fully institutionalised in the organisation. The problems

outlined in this chapter have discredited its credibility for achieving its objective,

which was to maximise the resources available for teaching and research (Annual

Report, 2000). Although Heads of School like the idea of the devolved budget, they

recognise their limitations as managers especially since most have no financial

training. It would therefore be reasonable to assume that the Heads of School

resistance to the model exemplified in the 2000 surplus has conceptualised the need

for a new system.

The findings described in this chapter highlight a number of important issues. First,

the chapter highlights the effects of an overly excessive economically rationalist

approach. The chapter described a situation where Schools not considered

financially viable had a threat of closure. As previously discussed, the comments of

the Heads of School also suggested that subjects that were not contributing to the

financial wellbeing of the School were being discarded to operate within the fiscal

restraints. Thus, subjects that were once considered legitimate based on the notion

that they contribute to knowledge have been deinstitutionalised under the new

corporate culture; the accepted rules of practice have changed.

Second, it has been shown in the chapter that the devolution of the entire operating

budget to the Heads of School raises serious problems for the management and

control of the University. Money was not easily transferable in the sense that once it

had been assigned as a budget line it was very difficult to move to other initiatives.


351

More seriously, perhaps, the devolution of budget responsibilities and the formulaic

approach to resource allocation based on EFTSU did not support the cross

discipline culture of Griffith University; something they had prided themselves on

and were widely recognised for.

A combination of conservative spending by Heads of School, a lack of training for

Heads of School, too many budget centres (Bruns & Waterhouse, 1983), a lack of

funding at the Pro-Vice-Chancellor or Dean level, and perhaps, inaccurate costing

for EFTSU and undergraduate fee paying students further discouraged a favourable

view of the budget model and as such institutionalisation of the process and values.

These findings are consistent with Sandbach and Thomas (1996) who argue that

budgets should only be devolved when managers have the capacity to influence and

control their revenue and expenses, “otherwise management become artificial and

accountability more difficult to promote” (p. 61).

Related to the devolution of responsibility, the chapter demonstrated how a lack of

management qualifications and training affected the Head of School perception of

their role and their ability to carry out the required financial duties. This linking

between the effectiveness of a devolved budgetary system and the financial

competencies of low level managers has been pursued by Eley (1994) and Sarros,

Gmelch, and Tanewski (1997) who suggest that if universities are going to vest

financial responsibility in the Heads of Departments, those Heads should undergo

training in financial and personnel competencies. Thomas (2000) too has observed

that for academics that are promoted to management positions on the basis of their

academic credentials there must be a commitment to learning financial management


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for the department to be managed effectively. Alternatively, Coaldrake and Stedman

(1999) suggest that universities would benefit if they left the financial planning and

other management tasks to professionals trained with the requisite skills and not

academics.

Finally, the chapter has shown how when the resources are not effectively linked to

organisational strategy resources can be wasted or used improperly. It becomes as

Anderson et al. (1999) state “no more than an intellectual exercise” (p. 5). In this

chapter, the ineffective linking between the budget and strategy was described to

have detrimental motivational implications for the effectiveness of the budgetary

system and the business planning process.

8.9 Conclusion

This chapter set out to provide an explanation of accounting change and in

particular, focused on the implications of competition on the design and function of

the budgetary system. A processual approach to change was used to understand

how and why the systems came to be designed and operated in the manner they did.

In particular, the chapter focused on a change in budget methodology to a devolved

formula based model. The chapter introduced the view that these features were

introduced in the University to illustrate the organisation’s commitment to

efficiency, effectiveness, and accountability by offering rationality and transparency.

The chapter also related the effectiveness of the budgetary system to strategic

planning processes and the organisational structure. It was shown that ineffective

strategic planning processes were interrelated to ineffective budgetary practices. In a


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number of cases, the structure and assignment of governance responsibilities was

also related to the effectiveness of the budgetary system.

Chapter 9 deals with a second component of the accounting system, the

performance management system. This system comprises the financial and non-

financial information used to assess the achievement of organisational objectives.

Interviewees suggested this system has developed significantly over the past seven

years, in particular in terms of performance appraisal.

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9.0 Introduction

In Chapter 8, the changes made to the budgetary system were discussed along with

the behavioural implications of this change. The chapter described a number of

changes to the budgetary system including devolution of responsibilities, changes in

funding models, and a clawback. Despite having significant systems in place, many

managers commented that the budget process did little to strengthen accountability

or improve the efficiency or effectiveness of resource usage. In this chapter a

second element of the accounting control systems (ACSs) is examined, the

performance management system. This system has been related to the

strengthening of accountability systems.

Performance management systems are necessary to ensure that strategies are

implemented and goals are achieved (Hughes & Sohler, 1992). This suggests the

design of the performance management system should be related to the

organisation’s strategy (Adams & Embley, 1988; Anthony & Govindarajan, 2001).

The usefulness of the system therefore is dependent on its ability to define and

measure the organisation’s objectives.

9

Chapter 9 – Accounting Control Systems: Performance Management and Strategic Efforts for Accountability

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In an effort to become more efficient, universities, similar to other public sector

organisations pursuing new public management ideals (Evans & Bellamy, 1995;

Hood, 1995; Kouzmin et al., 1999) have introduced performance measures to

evaluate the productivity of the organisation, to assess individual academic and

administrative staff performance, and to assess individual departmental

performance (Johnes, 1996; Lawrence & Sharma, 2002; Lonsdale, 1998). In the

higher education sector (HES) these systems are used not only to keep employees

accountable for their performance, but also to discharge accountability to external

stakeholders.

Performance is multi-dimensional (Armstrong, 1994; Holloway, 1999; Kaplan &

Norton, 1996). Performance can be measured in a number of ways: output,

outcomes, profit, internal processes and procedures, and employee attitudes.117 It is

important to realise that performance can be measured and consequently managed

at both an organisational level and an individual level. For these reasons,

performance management systems must also be multi-dimensional for them to be

effective.

In the past, government policy has suggested that performance indicators be used in

the HES to measure outcomes. In fact, as part of the change of Commonwealth

Funding during the Dawkins Review, the government suggested that universities be

funded based on performance measures (Dawkins, 1988). Notwithstanding, it is

widely recognised by policy makers, academics, and university managers alike that

117 See Williams (1998) for a full discussion on this point.


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difficulties exist with the use of performance management systems in the public

sector and more specifically in the HES because of the nature of the institutions.

For instance, the Higher Education Management Review suggests conflicting higher

education objectives as well as the imprecise nature of objectives prevent

institutions from developing performance management systems. Be that as it may,

performance management systems can fulfil multiple roles in universities: they can

be used to discharge accountability requirements to external stakeholders; they can

be used to improve the effectiveness and efficiency of organisational productivity;

and as with any organisation, in order for performance management systems to

operate effectively, they need to be developed with the organisational culture and

political environment in mind (Holloway, 1999). Seen in such contexts, the

performance management system in place within the subject organisation will be

described and analysed using the multiple theoretical perspectives developed in

Chapter 3.

The remainder of the chapter has been split into six sections: first, performance

measurement at the organisational level is discussed; second, the performance

appraisal systems used at the School/Managerial levels are described; third, external

reporting practices are presented; fourth, the rationales and implications of the

performance management system are explored; fifth, the evidence is analysed using

the theoretical framework; and sixth, the chapter is concluded.


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9.1 Performance Measurement at the Organisational Level: Using Performance Indicators

Chapter 6 documented the introduction of strategic planning processes in the

University. It was reported that as part of the strategic planning process operational

plans were prepared to facilitate the achievement of the strategies. An integral part

of the operational planning process is the development of performance indicators

used to evaluate the achievement of the organisation’s objectives. Holloway (1999)

suggests that an effective performance management system should comprise

properly designed performance indicators. The strategic planning process described

in Chapter 6, suggested that performance indicators had been devised in the

following areas: teaching and learning, research and research training, community

service, and staff. Recall, also that the responsibility for these indicators is assigned

only to senior managers of the organisation (e.g. Pro-Vice-Chancellors, Deans).

Table 9.1 shows the performance indicators used.

Table 9.1: Performance Indicators used at Griffith University to Measure Operational Performance

Operational Plan Performance Indicators

Teaching and Learning 1. Development of guidelines for Griffith University Flexible Learning based on international best practice.

2. Number of courses offered via flexible delivery.

3. Adoption of GU flexible learning courses/programs by international institutions.

4. Annual allocation of funds to encourage improvement in teaching and learning practices.

5. Development of performance indicators for scholarly publications related to teaching and learning.

6. Development and implementation of appropriate staff training modules for offering student-centered learning.

7. Development and implementation of methods for collecting annual feedback from students and graduates.

8. Development and approval of revised program approval guidelines which include a criterion concerning graduate outcomes.


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9. Review and rationalization of program numbers.

10. Regular reporting by Deans on the processes of professional/business/industry consultation used.

11. Regular use of Client Satisfaction Surveys to evaluate and inform service provision and program development.

12. Electronic Infrastructure Capital plan is funded and implemented.

13. Improvement in the learning environment for general and specific client groups.

14. Inclusion of attributes of Griffith Graduates in program submissions and course outlines.

15. Number of students registering for self-initiating program related unpaid work-experience.

16. The number of students studying languages and courses related to different cultures.

17. Development by Teaching and Learning Excellence Committee of guidelines for the process of internationalizing the curriculum and methods of teaching and learning.

Research and Research Training

1. Establishment of faculty-based Strategic Research Plans for all faculties of the University, coupled to an annual revision of performance targets.

2. Establishment of measures to identify and develop research groups, teams and centres coupled to the articulation of management structures and performance targets.

3. Increase in research income, publications and Research Higher Degree completions, benchmarked both internally and externally.

4. Improvement in the University’s research performance.

5. Investment in new and refurbished space designated for research and research training. External income generated in relation to the targeted investment of operating grant monies.

6. Percentage of academic staff with research-based higher degrees by element, benchmarked against leading departments elsewhere in Australia.

7. Implementation of strategies to foster the development of high quality research funding submissions.

8. Implementation of methodologies to support centers of research excellence, based on robust estimates of investment and return.

9. Uptake of Higher Education funding Act - funded RHD load by Faculty and element.

10. Number of honours and RHD enrolments by element and in total, set against national figures.

11. Number of RHD programs and number of enrolments.

12. Number and value of scholarships offered, compared with past performance and that of other institutions.

13. Implementation of procedures to ensure that all RHD students have effective work space within which to work.

14. Proportion of graduate students who are fully satisfied with the quality of supervision they have received.

15. Quality and timeliness in the publication of research materials. Perception of these publications by survey of end users.

16. Implementation of new processes for the establishment of contracts and consultancies, and the acceptability of the service to the external client, University staff and University


359

Management.

17. Number and monetary value and ARC Linkage Grants and industry-related contracts.

18. Establishment and implementation of policies to reward research performance by individuals, groups and elements.

19. Number of new adjunct and honorary appointments. Measurement of their impact on research activity.

Community Service 1. Collaborative projects with community groups and professional associations.

2. Level of productive activity generated by corporate affiliations and partnerships with key cultural and community organisations particularly in the Brisbane, Gold Coast and Logan cities.

3. Staff provision of expert advice to the media.

4. Number of staff occupying official positions in public and professional associations.

5. Number of professional and continuing education programs.

6. Number of staff nominating community service as a criterion for promotion.

Staff 1. Integrated workforce planning occurs with business planning.

2. Availability of data on the workforce.

3. Availability of information on staff opinion of GU employment.

4. Customer satisfaction with services provided by GU.

5. Increased retention of quality staff.

6. Staff satisfaction with GU employment.

7. Usage of staff development activities, which target the development of management competencies.

8. Number of staff who have developed skills in flexible learning and have obtained tertiary teaching qualifications.

9. As indicated in the University’s Workplace Health and Safety Plans.

SOURCE: Developed by the author from the Griffith University Operational Plan 2001-2002.

Investigations revealed that the performance indicators described in the operational

plan were actually being used in the organisation. During the period of study it was

observed that a number of surveys were carried out to measure performance. The

Dean of Postgraduate Studies, for example, carried out a survey on RHD students

to gauge their satisfaction with research training. Likewise, interviews with

administrative staff revealed that one administrative element runs an annual


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customer survey118 to measure performance. A further example was reported in the

2000 Annual Report. It claims that in 1999 900 surveys were completed to evaluate

staff attitudes about their work environment. It appears that most of the

performance indicators were reviewed as part of the operational planning processes.

Senior managers took the view that performance indicators were an integral part of

the University’s attempt to improve management processes. For instance, one of

the senior managers from administration who was partly responsible for the

postgraduate education performance evaluation remarked:

I think performance management in the postgraduate area is critical. I take it very seriously because I think it is so easy for students to get lost. Sixty percent of students will be fine with their studies, 40% are usually disenchanted. It might be, okay well the first supervisor has gone, and the second supervisor isn’t really in that area and is only a prop anyways. So based on their annual reports I can get them to come in and find out what the problem is, so that we can fix it. If we are going to get students completed on time, we need to make sure they have the necessary resources.

A second senior staff manager commented on the importance of performance

indicators for attracting students. He said:

Student attraction is very important. Griffith mostly comes third in the market, but in terms of research we are second. We are in the top 12 in the country, but we need to monitor our performance to maintain that position and to ensure that we attract high quality graduates.

Education Queensland participants took the view that most universities were

focused on using the McKinnon guide (2000) and other institutions to benchmark

and improve their performance. Despite this, senior management revealed that

apart from comparisons of graduate information (i.e. number of graduates, number

118 In this element, customers were defined to include both academics and students.


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of graduates getting jobs etc) few management areas use benchmarking at Griffith.

A review of the University performance indicators corroborated this.

Unlike other institutions in Australia, the senior managers at Griffith University

took the view that benchmarking would be a costly, and not altogether useful

exercise for improving the management of the University. Moreover, a lack of

consensus about appropriate indicators has reduced the attractiveness of using

benchmarking in the University. A Professor commented:

One thing that is different between the use of performance indicators in the private sector is that in the private sector when you are given performance indicators there are no arguments about the information. Any information in the public sector is a cause of argument. You often can’t get beyond the information. You can’t get to the next stage of evaluating it, what are we going to do with it? How are we going to use resources to link it back in?

A further disincentive for adopting the benchmarking systems is the fact that it

encourages a ‘one size fits all approach.’ Employees both within and external to the

University viewed this as one of the main deterrents for using benchmarking within

the institution. For example, an Education Queensland employee remarked,

“Benchmarking can encourage a one size fits all sort of approach.” She went on,

“The problems is if you get the generic manager who thinks you are the sixth

institution in size, so you should sit at number six in everything. Then you are in

trouble.” Senior management, in particular, the Pro-Vice-Chancellors, took the view

that for information to be comparable institutions need to be of similar size, and

need to consistently comprise either multiple campuses or a single campus. This

was seen as a further problem with using benchmarks, especially when the operating

environment of individual institutions in Australia are so diverse. It is worth noting,

however, that senior managers suggested that the performance targets that are used


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are not determined and used in isolation from the environment. In fact, they

suggested that many of the University targets have been set based on other

Australian universities targets. Further investigation of the Griffith University

Operation Plan 2001-2002 confirmed this was the case.

Up to this point, the chapter has concentrated on university wide performance

management. Next, performance appraisals at the school and managerial level are

discussed.

9.2 Performance Appraisal at the School/Managerial Level

In order to maintain control over delegated responsibilities, managers need to know

what their employees are doing to ensure that people are behaving in a manner that

is conducive to meeting the organisation’s goals (Holloway, 1999). Otley (1994, p.

296) argues that performance appraisal and accountability systems are the

cornerstones of effective management. It is also important to realise that

performance appraisals are required when promotion and retention decisions are

made, and for rewarding or punishing employees (Vasu et al., 1998). The literature

suggests that appraisal systems should be designed with the technical and

behavioural considerations in mind if they are to be used to improve employee

motivation, morale, and commitment.

Various forms of reporting have been used to manage employee performance in the

University since its inception. However, the introduction of Enterprise Bargaining

Agreements (EBA), forced the University to reappraise and redesign their

performance systems (GIHE, 2002). In planning the performance appraisal process,


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many interviewees took the view that the general framework developed had

incorporated government requirements for staff accountability. The existing

performance appraisal system was designed from negotiations between unions (e.g.

NTEU) and the Office of Human Resource Management. For the most part, the

performance appraisal systems were developed in three areas: the appraisal of

individual performance of academic staff, general staff, and management staff. Prior

to this, although performance management systems were available, few staff claim

to have used them. Today, there is a widely held view that Griffith University uses

performance reviews to ensure staff activities are conducive to meeting university

goals and objectives (Academic Staff Review Procedures, 2001).

The performance reviews are carried out in accordance with the hierarchical

structure of the organisation at Griffith. This means that the immediate superior

carries out performance reviews of his or her staff. Thus, performance appraisal

follow the chain of commands set by the power distributed in the hierarchy (Hardy,

1994, 1996; Vasu et al., 1998).

The accountability structures are outlined in Figure 9.1. General guidelines for the

performance appraisal of academic managers, general staff, and academic staff have

been outlined in the Staff Handbook developed by the Griffith University Office of

Human Resource Management. These procedures are used university-wide to

ensure for equitable and fair evaluations. Notwithstanding, it should be noted that

when each employee and their supervisor sets performance objectives, the

supervisor has the final say on what should and should not be measured.


364

Figure 9.1: Systems of Accountability for Performance

SOURCE: Developed by the author. The following section examines the performance appraisal systems focusing on the

academic management level (e.g. Pro-Vice-Chancellors, Deans, and Heads of

School) and the academic and administrative staff levels.

The performance appraisal process at Griffith University is centred on the

submission of an activity log by academic staff and managers. A copy of the activity

log can be seen in Appendix 9.1. This log is to be filled out by staff and submitted

Dean

Head of School

AcademicAcademic

Head of School

Vice-Chancellor

Council

Pro-Vice-ChancellorHealth

Pro-Vice-ChancellorBusiness

Pro-Vice-ChancellorScience

Pro-Vice-Chancellor Arts

Dean

Head of School

Dean

Head of School

Academic Academic

AcademicAcademic

Deputy Head of School


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annually. The Office of Human Resource Management at Griffith University set an

April deadline for the submission of the activity log. This is to allow for enough

time for the review to be completed by the end of June. The activity log is broken

down into four areas: teaching, research, service, and other activities. Documentary

evidence is required to be submitted to support the information contained in the

activity log. For example, a statement of teaching allocation or teaching evaluations

may be used to support the teaching area. Commercial activities such as

consultancies are also considered in the activity log. This document is submitted to

the relevant group human resource advisor.

The activity log also serves a second purpose at the University. Investigations

revealed a link between the internal performance appraisal process and external

reporting. Specifically, the Griffith University Office for Research uses the

information contained in individual activity log submissions to get a collective view

of the University in various areas such as research activity. To be clear, the staff

report the number and type of publications in the activity log, this information is

then collated to give an organisational measure of performance. The information is

required to be submitted to the Department of Education, Science and Training

(DEST) as part of the educational profile in order for the institution to receive

funding. The educational profile will be discussed further in subsequent sections.119

In addition to the preparation of this log, performance appraisal involves a meeting

with management. The following section outlines the performance appraisal

systems used at the various management levels in greater depth.

119 See also Chapter 2 and Chapter 8 for a more indepth discussion on the educational profile.


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Figure 9.2: Operational Plans and Performance Reviews of Senior Managers

SOURCE: From Griffith University Staff Handbook.

9.2.1 Dean

Accountable to the Pro-Vice-Chancellors, the Deans similar to the Heads of School

and other academic staff go through an annual performance review. This

performance review involves the Deans filling out the standard university activity

log, as well as a meeting with the relevant Pro-Vice-Chancellor. Because of the ill-

defined roles of the Deans, it seems the performance reviews tend to concentrate

on different aspects, depending on how the Pro-Vice-Chancellor views the role. For

example, some Deans explained that their performance review concentrated solely

Griffith University Mission Statement

Griffith University Strategic Plan & Supporting Plans

Unit Business Plans

Heads of School

Performance and Development Objectives

Deans

Performance and Development Objectives

Faculty Research, Teaching and Learning, Equity Plans

Review of Performance


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on strategic initiatives, whilst others claim the Pro-Vice-Chancellor took a broader

approach looking at both the strategic initiatives and academic performance. The

scope of the Dean responsibilities and hence basis for performance is set out in

Figure 9.2.

9.2.2 Head of School

As can be seen in Figure 9.1, Heads of School at Griffith University are accountable

to the Group Pro-Vice-Chancellors. To discharge this accountability and comply

with the Office of Human Resource Management Performance Management

System, Heads of School are required to submit an activity log, a summary of

achievements, and a performance plan to their respective group Pro-Vice-

Chancellor by April annually.

The Head of School activity log focuses on three elements: the position

requirements, the ability to deliver key results based on individual performance

objectives, and the achievement of development objectives (Staff Handbook, 2001).

The relationship between the Head of School performance and the University

performance is set out in Figure 9.2. Performance objectives are negotiated between

the manager and the group Pro-Vice-Chancellor during meetings. Heads of Schools

explained that this process of negotiation is required to ensure that appropriate

objectives are chosen that are measurable. In addition to the academic performance

categories of research and teaching, Heads of School suggest their performance

review also includes a review of leadership and strategic planning. Other common

areas of performance measures used to review academic management performance

include the number of PhD completions and number of programs.


368

To allow for a clear understanding of performance requirements, Personal

Performance Plans are prepared in conjunction with the activity log. It is expected

that these will be aligned with the Corporate, Faculty, and School goals and

outcomes. Heads of School discharge this requirement by filling out the Performance

Management Framework Academic Managers’ Personal Performance Plan designed by the

Office of Human Resource Management. In filling out this form Heads of School

are asked to identify development objectives. These objectives similar to

performance objectives, involve a discussion between the manager and the relevant

Group Pro-Vice-Chancellor. Development objectives pertain to setting objectives

based on the skills needed to improve performance and to further the career of the

academic manager. The Staff Handbook suggests these discussions should focus on

budget, workloads, and the skills necessary to carry out the day-to-day activities

effectively. It is important to realise that whilst there has been a push for

strengthened systems of accountability from discussions it appears that the meetings

primarily involve a discussion of workloads and skills with little attention paid to

budget performance or the ability to budget effectively.

Once these requisite performance logs are submitted, the Head of School is subject

to a performance review with his or her group Pro-Vice-Chancellor. A

representative explanation given by a Head of School is provided:

I have a review with my line manager, the Pro-Vice-Chancellor. What she does is basically look at my own performance in terms of things like publication output, my teaching, and my research supervision – so, in other words, not the School’s performance, my performance. We also discuss the position that the School is in but we don’t do that on the basis of any performance indicators for the School. I have a review yearly in relation to those. I set targets in those meetings where I say by next year I want to increase the number of honours students or I want to have mounted another Masters course or whatever. Then at the end of the year when we have the


369

review I say ‘Oh yes we have four more honours students’ or ‘I have another Masters course up and running.’ That is how the performance review process is currently working.

As indicated in the above quote, the purpose of the Head of School and Pro-Vice-

Chancellor meeting is to review the individual’s performance in light of the various

plans and objectives set the previous year. At completion, the Pro-Vice-Chancellor

marks the academic managers performance as either satisfactory or unsatisfactory.

Heads of School admitted that some kind of performance appraisal process was

necessary for Heads of School to discharge their accountability. Notwithstanding,

most had few positive comments about the current system. The following

comments were indicative of general Heads of School responses:

It is a very subjective process. (Interviewee 1) If you can make yourself sound good whether you are good or not, and if you have done what you needed to do or not, you will pass the performance review process. (Interviewee 2)

9.2.3 Academic Staff

Individual academic performance reviews are carried out by the Head of School on

an annual basis. Where Schools are managed with both the Head of School and

Deputy Head of School, the performance of the Deputy Head of School is

measured by the Head of School and the performance of academic staff is evaluated

by the Deputy Head of School. Similar to the Deans and Heads of School, the

performance appraisal process involves the submission of an activity log in the first

half of the year. In addition to this, the process at this level considers several other

formal feedback mechanisms in particular, lecturer and tutor evaluations and

subject critiques.


370

Students normally complete the lecturer and tutor evaluations in the final teaching

weeks of semester. The type of categories that lecturers and tutors are evaluated on

are: getting students to participate in the class discussions, making effective use of

lecture or tutorial time, inspiring excitement or interest in the context of the subject,

maintaining an atmosphere which encourages learning, and demonstrating creative

teaching methods. Appendix 9.2 presents an example of a lecturer evaluation and a

tutor evaluation.

Once the activity log has been returned to the Head of School, staff are invited to

make an appointment with their respective Head of School to discuss their

performance. Apart from a review of the past year’s performance using the

performance objectives set by the individual, during the course of the meeting the

Head of School and the staff member undergoing appraisal design a development

plan which details performance objectives and career goals, how those objectives

can be achieved, and the required support, resources, and assistance needed to

achieve the objectives. Many Heads of School also suggested promotional issues are

also discussed at this time.120 Based on this meeting, the supervisor fills out an

assessment form. If the performance is satisfactory the documentation is then

returned to the Office of Human Resource Management for filing. If unsatisfactory,

the staff member must undergo further evaluation by the staff committee.

The Heads of School and the Deans interviewed explained that the Deans play a

small role in the performance measurement of academic staff, particularly when a

120 The academic structure includes 5 levels: associate lecturer (level A), lecturer (level B), senior lecturer (level C), Associate Professor (level D), Professor (level E).


371

staff members’ performance is deemed to be unsatisfactory. Specifically, they

suggested the Deans are core participants on the Faculty staffing committees: they

assess staff performance and suggest courses of actions.

9.2.4 Administrative Staff

The introduction of the Griffith University General Staff Enterprise Agreement in

1995 encouraged the development of the General Staff Performance Management Scheme.

The purpose of this scheme is to “enhance an individual’s contribution to the

University’s goals and enhance opportunities for personal recognition and job

satisfaction” (Griffith University, 1997).

The General Staff Performance Management Scheme is designed to be carried out

in three phases: (1) planning and documentation; (2) ongoing feedback and review;

and (3) formal review. In the first phase, general staff are required to prepare

performance objectives and standards. It was found that two important criteria for

determining appropriate performance measures included the ability to observe

performance and the ability to measure performance. The measures and standards

are used at the end of the year to evaluate individual staff performance. The second

phase involves the collection of performance information on the performance

objectives devised in phase one. The third phase, conducted at year-end requires a

further collection of data about individual performance and a review of staff

performance against that data.

Although university policy suggests performance reviews are carried out annually on

all staff within the University, interviewee comments would suggest otherwise,


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especially by longstanding senior managers at the University. One manager

confessed:

I have only done a performance appraisal of my staff once. For some unknown reason it just doesn’t seem to come up. It is a Human Resource problem I guess. I will only do it if I am prompted.

Another also revealed that he had not carried out administrative staff reviews:

I must admit I didn’t review my administrative staff performance last year. And I haven’t even received documentation to do one this year. I don’t know whether we are required to?

When performance measurement did occur, administrative employees follow a

similar chain of command to academic units (i.e. performance is reviewed by their

immediate supervisor or manager). In addition to submitting formal performance

documentation, meetings are held with the immediate supervisor to assess the staff

performance and to set performance objectives for the following year. In some

cases where formal evaluation methods were used, employees believed the review

was carried out as a matter of routine, and not really for control purposes. A staff

member reflecting on the process explained:

The performance review process involves setting various performance objectives that we must achieve. I feel performance objectives are however more a matter of routine rather than being effective at all, particularly during periods of change. It seems to mean an additional burden.

Despite the lack of formal reporting and performance review on individual

performance, evidence abounds on informal systems. Managers that did not carry

out the formal performance review suggested it was an unnecessary waste of time.

When problems arose the manager preferred to discuss this with the individual at

the time, and not wait until the end of the year.


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For the most part, it appears that those administrative staff still working within the

Schools and Faculties tend not to be subject to the annual performance review

process. In the past five years, for example, one Dean claimed to have only carried

out performance reviews on his administrative staff once.

From a promotional point of view, administration does offer incentives for staff to

improve their performance and increase the range of duties they undertake. The

administrative staff wage system is set so that if you have taken on additional duties,

and build up a required level of service, it is possible for your wage to increase

according to increments.121 Prior to the introduction of the formalised activity log, it

was explained that staff increased their service level based on years of service. Since

the introduction of the EBA staff increments do not automatically increase in line

with the years of service. Instead, staff have to be seen as taking an active role,

increasing their duties, and increasing their efficiency.

As suggested in the preceding sections, most interviewees took the view that the

performance management system at the University was introduced as a response to

government requirements for improved accountability in the form of the EBA.

Furthermore, many suggested the process was necessary to improve the

management of the institution. It appears that the performance appraisal process

was introduced around the same time as the new structure and budget.

Administrative staff interviewed explained that the Office of Human Resource

121 Administrative staff are covered by the Higher Education and Salaried Staff Award 1989. General staff appointment classifications range from Level 1 to Level 10.


374

Management played a large role in getting acceptance of the performance appraisal

process and making sure that academic performance in particular was assessed.

Several interviewees suggested the performance appraisal process received some

resistance from staff. As one Head of School recalled:

When it (the activity log) came in most staff were unhappy because it was viewed as a means for sacking staff.

Other respondents did not share this view. Many suggested that staff knew the

performance appraisal process was the outcome of negotiations for salary increases

and thus they expected that some form of appraisal would be introduced to

maintain formal or routine accountability. A review of documentation suggested

there were also policies in place to ensure that there was widespread acceptance of

the plan. For instance, the Academic Staff Review Procedures suggest that failure to

complete the activity log will result in one or more of the following forms of

disciplinary action: formal censure or counseling, withholding a salary increment,

demotion, suspension, or termination of employment.

Comments from the managers indicated that although the process had now been in

place for several years the University was still refining it. A review of documentation

revealed the current academic staff review procedures were approved by Council in

June 2000.

This section reported on the performance management process used in the

University. It concentrated on performance processes used at two levels: the

organisational and the individual. In this section, and also in Chapter 8 it was


375

mentioned that management submits a number of reports to the external body, the

DEST, which report their performance. It was emphasised that these were used to

receive funding and to satisfy accountability requirements. In the following section

of this chapter, each of these is briefly described.

9.3 External Performance Reporting

All Australian universities submit a variety of statistical and performance data to

DEST and State governments to satisfy accountability requirements. Recent

publications by the Minister for Education (Nelson, 2002c, p. ix) suggest these are

published for ‘public accountability’ purposes. Senior management identified those

regulatory requirements to include the preparation of a financial statement, an

educational profile, and statistical information.

The financial statements are submitted in the form of an annual report. This is

submitted by June the following year. Senior academic and administrative managers

explained that DEST provides guidelines for the preparation of the statements. In

the recent round of financial statement guidelines it was suggested that one of the

purposes of the reports is to align higher education reporting with commercial

reporting. A review of the annual reports suggested that the Federal Government

guidelines are consistent with the Australian Accounting Standards (AAS). This

once again demonstrates how the Federal Government places increasing

importance on private sector practices for improving the HES. It shows that

Universities have been forced to import commercial reporting practices in their

institutions (DiMaggio & Powell, 1983). In addition to this, a review of several of

the financial reports revealed that the financial reports must be prepared in


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accordance with the prescribed requirements set out in the Griffith University Act

1998, the Financial Administration and Audit Act 1977, and the Financial Management

Standard 1977.

In addition to complying with the Federal and State government requirements, a

review of the contents of Griffith University annual reports for the past ten years

suggest the University uses the report to discharge their accountability functions to

the wider community as well as to the requirement bodies. For example, the 2001

report stated:

It (the annual report) is aimed at government, business and industry, the tertiary education sector, media, supporters and benefactors, along with the broader community. (p. 3)

Such comments suggest that the senior managers involved in the preparation of the

reports recognise that such reports can be used to instil operational confidence in

the wider community as well as the regulatory bodies. This illustrates the

institutional view that organisations make visible those routines that demonstrate

conformity with social expectations to secure resources and reduce the likelihood of

their conduct being questioned (DiMaggio & Powell, 1983; Scott, 1998).

A review of financial statements over the past 10 years revealed that the University

now structures its annual report according to the strategic priorities set out in the

organisation’s strategic plan. This is a distinct shift in focus from the report centred

on the four academic groups, which the University had used in the past. This

further demonstrates the Universities commitment to complying with Federal

Government expectations for the use of strategic planning in the organisation. It


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also reiterates the argument that the University makes visible those routines and

practices that are likely to improve community confidence (DiMaggio & Powell,

1983; Scott, 1998).

The second form of reporting required is the educational profile. It was explained in

Chapters 2 and 8 that the Higher Education Funding Act requires this process to be

carried out to secure the Federal Government Operating Grant. This linking of

behaviour and resources is pursued in both the resource dependence and power

theories; the theories suggesting that organisations will comply with expected

behaviours to secure resources (Hardy, 1996; Pfeffer & Salancik, 1978; Slaughter,

1998).

The third form of reporting used to regulate the Universities performance is

statistical information. Several of the administrative employees interviewed

explained that the University submitted statistical information to DEST as part of

the Higher Education Funding Act 1988 requirements. Recently, Minister Nelson

(Nelson, 2002c, p. 10) suggested the statistical information serves the following

purposes:

• Accountability, particularly the determination of the level of student load in each institution and the production of a range of comparative data on the characteristics and performance of institutions;

• The administration of programs, primarily the calculation of operation grants which depends on the level of an institutions HECS receipts; and

• The development of public policy.

Administrative employees and the senior managers explained that the information

includes: courses provided, numbers of students enrolled in courses, student loads,

number of graduates, number of staff, and staff research activity.


378

From the above discussion it seems that the introduction of the Higher Education

Funding Act induced the preparation of external performance reporting in the

University. The evidence further explains that information collected as part of the

performance appraisal process provides an important source of information used to

report to Federal Government. No resistance was reported to the preparation of the

financial report, the educational profile, or the statistical information. All of the

employees who spoke of these processes recognised their importance for securing

funding. The next section describes, in detail, the rationales and implications of

performance management practices in the organisation.

9.4 Behavioural Consequences and Implications of Performance Management

On the one hand, Griffith University has benefited from the introduction of

performance management procedures because staff awareness has been heightened:

they are now more aware of the need to be more accountable for their use of time

and resources. There are however several implications that have emerged from the

introduction of the existing system.

On a broad level, the performance appraisal process has been criticised for

absorbing a significant amount of time. The words of a Head of School represent

the general view held:

The interview process can take a lot of time, especially if you have a large number of staff or if you have staff that is not performing satisfactorily.


379

Furthermore, the Heads of School interviewed suggested the extent of the reporting

requirements required by DEST placed an unnecessary burden on them and their

staff. The comments of two Heads of School are provided:

There seems to be an increase in reporting, a lot of requirements to contribute to record keeping and so forth, and that responsibility falls mainly on the Head of School. For example, this week I got information requests for work for outside bodies. We have to provide a report and other information, which I would have thought would normally have been kept in the University as a matter of course on every project that we have undertaken in the past 12 months. Staff also feel as if they are constantly being asked to provide information about things (i.e. publications, teaching loads). (Interviewee 1) Performance reviews are something that is more recent, and I see it as good management but my staff is concerned about having to provide detailed information to multiple sources on multiple occasions. (Interviewee 2)

The second manager then went on to suggest that the process should be

streamlined to become more efficient and make more effective use of staff time.

The Department of Education recently also recognised the extent of reporting

occurring in higher education institutions. For example, the Honourable Brendan

Nelson, the Minister for Education, recently remarked:

Commonwealth, as well as State and Territory, reporting requirements place a considerable burden on universities. (Nelson, 2002c, p. ix)

More specifically, among the problems with the process, academic staff suggested

the activity log, as a measure of staff performance does not befit their full job

requirements. In particular, it was suggested the activity log privileges research-

intensive schools. An interviewee offered the following comment:

At the moment the performance measurement system is skewed to research – how many publications you have, what category is that, how many DEST points can you receive and that kind of thing. And so it gives the impression that there would be some people in the Schools that take the view, why should I care so much about teaching. If that is the case I might as well go and do my research and get published. If I do that, I can get promoted.


380

Based on this quote and other similar comments offered by other staff it appears

that staff who were able to produce evidence that they had published a certain

number of papers throughout the year were guaranteed a favourable performance

review. On the other hand, problems with this approach to performance appraisal

have been dealt with by requiring that Finance and Business Services and the Office

of Human Resource Management provide additional evidence to corroborate the

activity log reports. It is important to recognise, however, that those staff members

who spend considerable time and effort teaching find it difficult to quantify their

efforts on the basis of teaching. For example, one staff member commented, “The

issue of monitoring, registering, and getting an equal basis from which to make an

incentive decision is very difficult in both the teaching and research areas.” Instead,

she explained that teaching was only highlighted when student complaints were

received.

In addition to this, several participants expressed concerns about the outcome of

the performance appraisal process. One Head of School, for example, contends the

major limitation of the current activity log is that there is too much of a difference

between satisfactory and unsatisfactory performance. The staff member offered the

following explanation:

The major limitation of the performance appraisal process is that there is too bigger difference between satisfactory and unsatisfactory performance. It is a major consequence to declare an individual unsatisfactory on teaching or research and then have to go through the staff committee. It becomes a major event. A normal management process would suggest a much greater gradation of concerns and strategies to cope with people’s poor performance.

Another Head of School collaborated this view:


381

It is difficult to mark someone as unsatisfactory for teaching unless you have student complaints. On the other hand, when it comes to research what is enough? Clearly if they have none that is unsatisfactory, but how many is enough?

A further issue that was identified from the current process stems from the short-

term nature of Head of School positions. There was some suggestion that because

Heads of School are on a limited tenure they were not willing to manage

unsatisfactory performance. A possible reason identified for this is the fact that at

the end of the Head of School tenure, that Head of School may become a general

academic staff member again. A senior manager elaborated:

I think the problem is that Heads of School are on limited tenure and they don’t want the hassle of having to manage unsatisfactory performance, particularly if sometime they come back to be a member of the School. That puts them in a difficult position.

The argument forwarded here is that the staff member could then be subject to

performance reviews by another (other) colleague(s) who have taken on the Head

of School role.

A related issue to the devolution of Head of School responsibility is the managerial

skills required to conduct effective performance appraisals. Several Heads of School

made comments similar to the following:

I have a researcher background. Yes, I have been subject to the review process but am I really the best person to assess staff performance?

Vasu et al. (1998) also question the level that performance management

responsibilities should be devolved to staff. For example, they claim that managers

must have a clear understanding of each of the purposes of the review for it to be

effective. Furthermore, it is acknowledged that knowledge of appraisal interviewing


382

skills can improve the effectiveness of the appraisal (Vasu et al., 1998). There was

no evidence to suggest that managers held such skills or knowledge at Griffith

University.

Importantly, most Heads of School interviewed took the view that a good manager

would have an ongoing review of their staff performance and not wait until the

annual performance review to highlight areas of concern. The following explanation

was representative of the views held by most of the Heads of School interviewed:

You don’t let it get to the stage where students are coming in and complaining on a regular basis. I have an open door policy; people can come and see me when they want. If you let the problems build until the yearly performance review you build up a pressure stream and as a Head of School you are angry about things. For example, if a person was finishing their lectures early, you might remind them that the Faculty teaching and learning plan requires them to have at least 50 minutes contact for every hour. You can’t wait until next July or whenever we have the performance appraisal process to do that. It is this informal process which is the real management system.

Equally, many of the same Heads of School suggested that it was important to take

an interest in what their staff were doing and be able to give them encouragement

as well as to deter poor performance.

Quite apart from the last point, but still related to the issue on hand was the use of

incentive systems. It appears that the current system provides few extrinsic

incentives to motivate staff to improve their performance. There were for example,

no bonuses tied to the performance of academic staff. It could be argued that

academic staff receive incentive payments based on their research and publications,

however, the issue still remains as to whether this is enough for maintaining quality

performance and encouraging innovation and improvement. In any case,


383

organisational literature would suggest that employees tend to focus their efforts on

areas where they believe they will be positively rewarded for their performance

(Vasu et al., 1998). The consequence of this for Griffith then is that some

academics admitted to focussing most of their efforts on research, because they

knew they would be rewarded for their performance. In the present case, however,

the lag between when research is published and when payments are received was

believed to further reduce the effectiveness of such incentives. On a related note, a

problem of introducing such systems in the public sector stems from the fact that a

large portion of the University operating grant is received from the Federal

Government. Hence, using funds on incentive schemes is not always viewed as an

effective way to spend taxpayer dollars. It is therefore reasonable to suggest that the

unique characteristics of higher education institutions impede incentive systems

from being viewed as legitimate.

Another problem identified concerned the ceiling on the increments for

administrative staff. As the system currently exists, once an administrative staff

member reaches the highest increments there is little chance of either their duties or

wages increasing. Some administrative employees suggested this could reduce

employee motivation and result in poorer performance.

Finally, staff suggested that it could take up to three years to get rid of

unsatisfactory staff. A Head of School took the following view:

Because we have to adhere to the EBA, behaviour must be consistently bad for three years before the University can take action.


384

A second Head of School who expressed the following reservations confirmed

this:

If when we review the activity log and there is evidence, which tends to suggest a person is not performing we tick the performance as unsatisfactory. Then I have to list the evidence I have to support this claim. I then send the evidence and the activity log and report to the Dean and they are informed. It then goes before the Faculty Staff Committee and they make a recommendation whether to uphold the view of the Head of School. This occurs in the first year. In the second year, there is increased monitoring of the staff member, at least monthly. This becomes a fairly heavy obligation on the Head of School, to watch the performance of the person that has been ticked as unsatisfactory. By the end of the third year, if performance is still deemed to be unsatisfactory the person is dismissed.

This was perceived as a major limitation of the current process. To overcome this

problem some staff admitted to using other means to get rid of under performing

staff, such as paying them out.

Although Griffith University appears to be facing a number of problems with the

structuring and effectiveness of their performance appraisal process, recent DEST

(Nelson, 2002c) publications suggest these problems are sector wide. Similar to

other areas in the public sector, DEST (Nelson, 2002c, p. 44) suggests the problem

may lie with the fact that performance is not linked to pay and the fact that the

procedures for unsatisfactory performance tend to be complex.

9.5 Discussion

The chapter documented the incidence of performance management practices at

Griffith University. As indicated earlier, this thesis conceptualises change as

consisting of three processes: conception of the need to change, the transitional


385

phase, and institutionalisation. Each of these processes is used to analyse the

performance management system described above.

The first phase of the change framework is the conception of the need to change. It

appears that the introduction of performance management systems was a reactive

response to external imperatives for a more efficient, effective, and market driven

approach to management. In particular, the Federal Government communicated

their expectations for these imperatives in legislation and policy. As part of these

policies, performance management has been emphasised as a critical tool for

making organisations newly effective in the competitive environment. It seems that

senior managers recognised the importance of organisational performance

indicators for maintaining their competitive position in the sector and for securing

Government funding for the institution. This is consistent with the institutional

view that political pressures can provide the necessary momentum for organisations

to change their routines (DiMaggio, 1991; Scott, 1995; Scott & Christensen, 1995).

Lafferty and Fleming (2000) reported similar findings in their study on work

performance of Australian academic staff. In particular, they suggest that corporate

managerialism and greater competition has contributed to a more intense regulation

of academic staff performance (see Chapter 2 for further discussion of this study).

Organisational theory suggests a change in the environment requires an

organisational response or a change if it is to survive. This means that management

must be receptive to environmental changes as well as internal changes in the

organisation. Such a perspective infers that with a change to government

imperatives, for Griffith University to continue operating as a legitimate


386

organisation they have to respond to the change (Deegan, 2002). Determining this

response and the management of the response is referred to as the transition phase.

In Chapter 6, the design and operation of the strategic planning process was linked

to the senior managers in the organisation. This suggests the senior or most

powerful individuals in the organisation also determined the design and use of

performance indicators. As mentioned in Chapter 6, this is to be expected given the

authority bestowed in those holding management positions. To be clear, despite the

Governments requirement for strengthened systems of accountability, the chapter

demonstrates that the form and operation of the performance management

processes was left to the University’s senior managers to decide. Based on the

evidence provided in the chapter, it appears that organizations can display a range

of responses to institutional pressures (Oliver, 1991), and that the acceptance of the

response is related to internal power relations in the organization (Pfeffer, 1992a,

1994).

Because the organisational performance indicators were assigned to the senior

managers of the University, it appears that the introduction or changes to the

system at this level did not face any resistance with the academic and general staff.

This is consistent with Kotter and Schlesinger’s (1979) suggestions that

participation and involvement can reduce the degree of resistance to change.

At an individual level, however, the findings suggest that competitiveness brought

about the Dawkins amalgamations combined with the EBA has resulted in a

heightened interest in the regulation of academic work pressuring the University to


387

place increasing importance on the development and operation of a standard

performance appraisal system. In this chapter, it showed that the performance

indicators were designed based on the individual institutional needs. It should be

noted, however, that the design and operation of the performance appraisal

processes were strongly influenced by the NTEU and other related union

requirements. As intimated in this chapter, the evidence collected suggested the

Office of Human Resource Management and the NTEU negotiated the specifics of

the performance appraisal system. Leadership theories interpret the response then

as a negotiation of the values and priorities of these key groups (Bennis & Nanus,

1985). Going further from a strategic response perspective, we can categorise the

response as a compromise (Oliver, 1991) in the sense that the organisational

priorities were negotiated with the expectations of the unions. Such views are also

consistent with performance management literature that suggests that the

organisational culture and political environment need to be considered for the

systems to be successful (Holloway, 1999). These results are also consistent with the

institutional view that whilst the sector may be subject to homogenous pressures,

the response to those pressures is self-determined by key political figures in the

organisation: in this case, the Office of Human Resource Management (Marginson

& Considine, 2000; Miller, 1995; Oliver, 1991).

It seems that the Office of Human Resource Management derived their power to

control the design and operation of the performance appraisal process based on the

fact that other segments of the University were dependent on them for information

and expertise. Again this is consistent with the resource dependence and power

theories described in Chapter 3.


388

It seems that academic staff in the University have accepted the performance

appraisal process on the grounds that it is perceived to offer improved

accountability and perhaps more tellingly, that failure to comply has the threat of

disciplinary action. The latter suggesting that the Office of Human Resource

Management has power emanating from their ability to discipline employees for

non-compliance. It is important to realise that this is consistent with the power

theories, in particular the power of resources: in this case that the Office of Human

Resource Management had knowledge and the capacity to inflict disciplinary action

if procedures were not followed (Hardy, 1994). Furthermore, it appears that senior

managers in the organisation supported the introduction of the performance

appraisal process, and on this basis there was acceptance of the change.

As indicated in the previous chapters, the institutionalisation of change is

determined by comparing the features of the change with those proposed as the

response archetype. The outcomes of the performance management change

processes are noticeable. Interviewee comments were corroborated with

documentation such as the activity log, the business plan, and the operational plan.

This evidence suggests that these processes have been introduced and continue to

be used in the organisation. It appears that they have achieved one of their desired

purposes, to improve staff awareness of their own contribution to the

organisational objectives. From an organisational perspective, the preparation of the

most recent plans and the observation of a number of surveys suggest that

performance indicators are fast becoming a habitual part of organisational

functioning.


389

At an individual level, interviewees comments relayed in the chapter revealed the

performance appraisal a process has not been reviewed since the introduction of the

activity log process. Based on the observations of this chapter, one could argue that

the processes have become institutionalised; they are also a habitual part of most

departments in the organisation. Their effectiveness is however questionable. This

chapter highlighted a number of issues for practitioners designing performance

management systems.

Comments in the chapter suggest that the effectiveness of the performance

management system has been limited by problems with measuring academic

outcomes. For example, what should be measured and how should it be measured?

These are two issues of concern. To provide an example, if teaching performance is

going to be measured, who should measure it (students/peers), how should it be

measured (for example, using student pass/failure rates or student survey), and how

often should it be measured (semester/annual)? In many ways the chapter revisits

the debate generated by Moses (1989) as to whether the University environment is

appropriate for the use of such systems. Nonetheless, the chapter suggests that

significant efforts and resources have been spent developing the existing system

which have been beneficial to the organisation in the sense that the organisations

operations have been legitimised. The government, union officials, students, and

staff now hold the perception of strengthened systems of accountability and as

suggested previously this has served an important function, to secure funding. On

the other hand, the ever-increasing inspection and reporting requirements of the

Federal Government suggest that in general the performance management systems

of Australian universities have not met their expectations. Similar views were noted


390

by Holloway (1999) who argues that if public sector organisations have been

successful in the design and operation of their performance management systems

why then have inspection and reporting requirements increased? This is an issue

worthy of further investigation.

In the case presented here, the short-term nature of the Head of School position,

combined with unclear performance standards and a lack of clarity between

satisfactory and unsatisfactory performance reduced the effectiveness of the

academic performance appraisal scheme. With regard to the administrative staff it

was highlighted that the processes do not seem to be uniformly applied to all staff.

In particular, the staff still working in the Schools were reported not to have

undergone an annual performance review. In addition to this, the incentive for

increasing the roles and duties of staff appears to be limited by the staff

classifications. This offers lessons for other universities embarking on the

performance appraisal process and for policy makers.

9.6 Conclusion

This chapter was the final chapter in a series of chapters that discussed the internal

context of the management control system (MCS) change at Griffith University. It

described the performance management systems at the University including the

systems used to discharge external accountability requirements and those used to

hold individuals accountable for their actions and behaviours. The chapter points to

Federal Government reform and policy as the trigger for the introduction of these

control systems. The chapter suggests that the heightened focus on the regulation

of academic work has had significant implications, particularly for Heads of School


391

who are now responsible for administering and monitoring the performance of

their academic and administrative staff. The next chapter summarises the study’s

findings and concludes.

392

SSuummmmaarryy,, CCoonncclluussiioonnss aanndd IImmpplliiccaattiioonnss

10.0 Introduction

This chapter is divided into three parts. First, the chapter begins by drawing

together the findings that emerged in the preceding chapters. Next, the lessons

learned from the case study are reviewed. The third part of the chapter comprises a

number of sections that conclude the study including a discussion of the strengths

and limitations of the study. This part is concluded with some directions for future

research.

10.1 Summary of Evidence

There were five questions of interest in this study. At the risk of oversimplifying the

complexities of accounting change processes, this section provides an attempt to

draw together the findings of the previous four chapters in relation to each

question.

(1) To what extent has ‘external’ institutional pressures forced the organisation to change?

This case demonstrates that the design and operation of management control

system (MCS) is a function of the firm’s institutional environment. Figure 10.1

represents the institutional environment of Griffith. The institutional actors shown

in Figure 10.1 influence the operations and processes of the organisation.

10

Chapter 10 – Summary, Conclusions and Implications

393

Figure 10.1: Griffith University Institutional Field


Arguably, the Federal Government reforms have provided the most pressure for

how the University designed its MCSs. In each of the findings chapters there was

clear evidence of the government pressures for a more managerialist approach. In

particular, the Dawkins reform was seen to have significant repercussions for

strategic planning and the design and operation of the governance, budgetary, and

performance management systems. It appears that Governments have used

financial steering mechanisms and increased reporting requirements for

accountability to pressure the institution to become a more corporate type of

organisation.

It was shown in this thesis that the introduction of managerialism into Griffith,

similar to other higher education institutions in Australia, was a deliberate response

Griffith University

State Government Education Department

Office of Higher Education

Federal Government DEST

Other Higher Education Institutions in Australia

IndustryProfessional Affiliations

Unions

Students


394

by management to adhere to Government pressures for improved efficiency,

effectiveness, and accountability (Marginson & Considine, 2000). The chapters

showed a number of ways that managerialism has been introduced. First, there was

the introduction of strategic planning and business planning based on private sector

models. A second indication was the introduction of devolved organisational

structures, also modelled on private sector conceptions of how best to manage a

large organisation. Third, it was shown in the evidence presented in Chapter 8 that

budgetary systems have been given increasing importance in the organisation for

ensuring that money is spent as efficiently and effectively as possible. Finally,

Chapter 9 noted the intensified regulation of academic work to strengthen the

systems of accountability.

(2) How was the organisation’s response determined? In what ways do intraorganisational dynamics such as power, interests, and values influence the type of change?

Griffith responded to the institutional and contextual pressures in a number of

ways: they reorganised both academia and administration, they introduced new

formulae based budgeting systems, and they modified the performance

management systems. The empirical evidence suggests the design of the various

MCS components is shaped by the strategic choices of top management, in

particular the Vice-Chancellor and Pro-Vice-Chancellors. That is, the evidence

presented in Chapters 6, 7, 8, and 9 shows that the decisions to change the

organisation were shaped by the priorities, values, and understandings of the senior

managers. This is hardly surprising given the authority of these individuals to

influence or control the operations of the organization (Pfeffer, 1992a, 1997).

Abernathy and Chua (1996) also drew similar conclusions in their study of the

control system in a public teaching hospital in Australia.


395

It appears that by restricting access to decision making, also known as the power of

process (Hardy, 1991; Hardy, 1994, 1996), the senior managers were able to reduce

the likelihood of conflict arising from a difference in the opinions and values of

powerful individuals and groups. Despite the influence of the Vice-Chancellor and

the Pro-Vice-Chancellor’s values and interests for shaping the organisational

response it is important to recognise that in most cases the response took the form

of models imported by other higher education institutions or Federal Government

departments, such as the Department of Education, Science and Training (DEST)

from the private sector. This suggests that these managers were keenly aware of

their external environment and the need to comply with external expectations to

maintain public funding for the institution’s survival.

(3) How was the transition to a new archetype managed amongst the functionally differentiated groups? Specifically, in what ways do power, interests, and values influence the outcome of the change process?

Change is always likely to be problematic, especially where the values held by

individuals or groups are not supported by the change. The findings chapters

suggested that managers used symbolic power in the form of the hierarchy to

manage the changes occurring to the MCS. They relied on the legitimated authority

of their position to exercise power and overcome resistance in the organization

(Pfeffer, 1992a). This power was evidenced by a number of communication

strategies the Pro-Vice Chancellors used to manage the meaning and legitimacy

given to new techniques and procedures. These strategies represent intentional

efforts to change employee thinking and behaviour. Notwithstanding, it is

important to note that similar methods of communication were used to inform

employees of the various systems change, regardless of functional differentiation.


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For example, all employees on each campus at each level suggested that talking

campaigns had been used to inform them of the changes. From this evidence it

would seem reasonable to suggest that the resistance to the new techniques

occurred because the differences in subcultures of the differentiated groups was not

taken into consideration by senior management during transition phases. In other

words, managers did not acknowledge and respond adequately to the viewpoints

held by the functionally differentiated groups. Hardy (1991) too has observed that

new procedures cannot be successfully implemented in universities without

consideration and management of the opposition groups.

In addition to this, it appears that by withholding information and only

disseminating information that was convincing of the benefits and rationalities of

the proposed changes, management was able to convince employees that the system

would improve the organisation. As indicated in the findings chapters, the reasons

for the introduction tended to revolve around improved and more rational systems

that would benefit the employees. The chapters showed how problems with the

system only came to lower management and employee attention once the systems

were in place.

(4) What were the outcomes of change?

The findings chapters highlighted that a number of corporate or business-like

techniques had been given increasing importance in the University. In particular, the

chapters focused on the introduction of four business techniques: strategic

planning, devolved governance, formulae-based accounting, and performance


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management. As mentioned in previous sections, the introduction of these systems

could be traced to a number of government reform efforts. Internally however, the

evidence suggests that in most cases the techniques have not been welcomed and

are not used for planning and control, as expected.

In many cases, the findings chapters suggest that senior managers failed to sustain a

commitment to their practice in the organisation. For instance, Chapter 8 reported

how the business planning process was further deinstitutionalised by the clawback

of funding. That is, the efforts to redefine the meaning attributed to the new model

failed when the money was clawed back. Interestingly, the clawback was also linked

to the strategic planning process in the organisation. This suggests that inadequate

emphasis was placed on managing the meanings attributed to both the budget

model and the related business planning process during the transition phase of the

clawback (Hardy, 1991). Based on this evidence, it would appear that a more

compelling explanation of the decision to implement these techniques was for

legitimacy purposes rather than efficiency during the period of study (Jones, 1994a;

Thomas, 1999). From an institutional perspective this could be interpreted as

‘window dressing’ the organisation (Mouritsen, 1994). Notwithstanding, it is

recognised that this view may change in the forthcoming years because of the

tightening budget situation.

(5) What were the implications of change? How were other components of the MCS influenced by the change? How were employees influenced by the change?

This thesis demonstrated a number of ways that change in one component of the

MCS produced changes, sometimes unintended, to other components. First, the


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budgetary system was demonstrated to be implicated by the design and use of

governance and accountability structures and the strategic planning processes. The

study showed how the devolved design of the budgetary system was influenced by

the positions of the managers in the institution. Similarly, the study showed how the

changes to the budget could have significant repercussions for the effectiveness of

strategic planning systems. Second, Chapter 9 demonstrated the expectation for a

link between the organisation’s strategic plans and the individual performance

appraisal process.

The study illuminates a number of the behavioural implications of the changes to

the MCS. In particular, the study reported that the Head of School and the Dean

roles have changed dramatically. The Head of School role is now more

administrative than before. The Dean role, on the other hand, is more strategically

focused. These changes signify a shift in the culture of the University from the

traditional collegial to the managerialist and bureaucratic.

More generally, it was demonstrated that the academic employees were implicated

by the change in the following ways: they have become increasingly aware of the

need to supplement government revenue with other sources of revenue; they have

noted an increase in reporting requirements; and many have increased their

commitment to research based on the activity log.

The empirical evidence also described that administrative staff appear to have been

the most severely affected group of employees from the restructure of the

University. From their view, the restructure required them to learn new skills and


399

techniques as well as to be moved to centralised units. More seriously, perhaps,

Chapter 7 and 8 showed that in the beginning transition phase few efforts were

made to infuse value in the administrative structure: position descriptions were

loose and there was a lack of support.

So what lessons can we learn from this study? The next sections reviews the lessons

learned from the case study.

10.2 Lessons of the Griffith University Case

Whilst it is acknowledged that it is difficult to predict how an organisation will

respond to specific pressures using the case study approach, the evidence in this

study offers a number of practical implications for practitioners working in

universities adopting or planning to adopt similar private-sector business practices.

10.2.1 Strategic Planning

The empirical evidence has shown that to be effective in the organisation the

strategic plans must be integrated at all levels, beginning with the corporate level. In

addition, Chapter 6 demonstrated how when the purpose of the process has not

been effectively communicated to employees, the system is less likely to succeed.

This would suggest that further training is required to inform the Heads of School

of how the process is to be carried out, what its benefits are, why it is done, and

how they, as managers, can contribute to its effectiveness. Participation with the

Faculty Teaching and Research Plans may also help to improve the

institutionalisation and effectiveness of the process.


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10.2.2 Governance and Accountability

Several issues were raised about the governance of the institution, especially in view

of the 1997 restructure that devolved management responsibilities to Heads of

Schools. These included the role ambiguity, and the size and number of schools.

Role ambiguity, especially for Deans was identified as one of the areas causing the

most angst in the organisation. Deans and subordinates had reported that the

Dean’s position had lost most of its power when the budget had been devolved and

Deans were handed the new role as the ‘Strategic Manager’. The lack of

understanding of this new role by all members of the University caused confusion

and a loss of confidence in the position. This could have been overcome had more

time been spent retraining Deans and clarifying the expectations of the new role.

Furthermore, unlike the present practice, instead of the Heads of School being

devolved the entire budget, more money should be held at this level. This would

help to improve public perception of the role, and improve the Dean’s ability to get

Schools to co-operate and to operate in accordance with the Strategic plans for the

Faculty, and ultimately the University.

In addition to role ambiguity, the devolution had other unintended effects: it led to

competition between academic budget units for resources; inefficient resource

allocations; and in some cases a loss of economies of scale (Griffith University

Budget Review Committee, 2002, p. 6). This offers several lessons. First, before

control is devolved, executive management needs to consider the skills of the

persons to which they intend to delegate authority. In Griffith University’s case,

management skill proved to be a major limitation for improving the efficiency and


401

effectiveness of the total operations. Despite a lack of management experience, and

the fact that Heads of School were appointed to their positions based on their

teaching and research output, Heads of School were expected to be able to manage

and control the financial position of their element. According to Tomkins and

Mawditt (1994), this is one of the fundamental differences between the private

sector and the public sector. Similar to their observations, the findings here suggest

the inexperience, and in some cases the resistance to financial controls can lead to

the failure of financial control systems. In similar vein Sandbach and Thomas (1996)

suggest that appropriate training and staff development is a prerequisite for a

successful system of devolution (see p. 62).

In addition to this, the case study findings suggest that the level and extent of

devolution should also consider the power bases of the University to determine the

most appropriate level for devolution. For instance, Sandbach and Dopson (1996)

argue that while it might be useful to arrange organisations according to discipline,

this can result in the creation of units that are too small to exercise effective

controls. This appears to be the case here. Heads of School from small Schools

suggested the size of their School had limited their scope for economies of scale.

More commonly, those Schools operating with less than 20 to 30 staff complained

they were too small to have any real effect on their budget situation. Equally, those

Heads of School managing the larger Schools suggested there was more money at

their disposal and thus there was more opportunity to use those funds to generate

additional revenue and to fund innovation.


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Finally, the research findings suggest the Heads of School took the view that

devolution meant autonomy and as such many of them pursued goals and priorities

of their unit, which were often to the detriment of the organisational strategies. For

example, many Heads of School advised that the budget was the dominant focus of

the decision making process. If a decision were viewed to have an adverse financial

impact on the School, the School would not participate even if it were in line with

organisational strategies. This thesis then supports Benjamin’s (1996) argument that

devolution should be framed around the broad strategic framework of the

organisation and not give the impression that the responsibility centres should act as

autonomous units.

10.2.3 Budgeting

Several lessons can be learned from the findings in Chapter 8. First, it was shown

how the budget had been given increasing importance for decision making in the

organisation. In particular, it was reported that subjects and schools were being

closed or removed on the basis that they were not able to operate within the

budgetary lines handed down by the Vice-Chancellor. The overly economic rational

approach was shown to have implications for innovation and the contribution of

knowledge. If research innovation and the contribution of knowledge are to

continue to be held in high regard in the institution, management must take action

to show support for such initiatives in their funding policies.

Second, devolving the majority of the budget was shown to have implications for

the effectiveness of control procedures. Specifically, it was shown that money was

not easily transferable between the budget units, that Heads of School had few


403

constraints when it came to spending, and that few Heads of School had training

for using such business practices. First, it is suggested that if the budget is going to

continue to be devolved, Heads should be trained in basic management procedures

such as the budget. Second, they should be held accountable for the budget; there

should be more regular budget reviews, especially for those schools that are facing

deficit, or those with excessive surplus. Third, a budget manual may help to

improve the Head of School decision making process. It might outline acceptable

spending, the budget deadlines, and how to read reports. Alternatively, unlike the

present practice, some of the budget needs to be held at a higher level in the

organisation so that funds can be transferred and monitored more closely.

Third, Chapter 8 showed how when there is inadequate linking between the budget

allocations and the strategy, funds may be used improperly. For instance, funds

were described as being wasted at the year-end to ensure that the same amount of

funding was secured for the following year. They were reported to be wasted in the

sense that they were not spent to achieve the strategic objectives laid out in the

business plan. Related to this, the chapter showed how when there were changes

made to either the strategy or the budget, it was necessary for the related system to

be assessed for the change to have its intended effect. To clarify, not only must the

change process for the element being changed be managed, but also the effects on

the other technical systems. One example provided in this thesis was the clawback.

When the related control system, the strategic planning process, was not considered

and the clawback was put into effect previous efforts to infuse value in the strategic

planning process were sabotaged. Given that the budget is a component of the


404

strategic plan, it could be foreseen that there would be some consequences for this

process.

10.2.4 Performance Management

In the empirical evidence presented in Chapter 9, the following issues were

highlighted: measuring academic outcomes, unclear performance standards, the

short-term nature of Head of School terms, and the lack of clarity between

unsatisfactory and satisfactory performance.

It was suggested that the problems inherent with measuring academic outcomes are

not unique to Griffith University. Notwithstanding, it is argued that measuring

performance is required in the institution because of government pressures for a

more accountable sector, and the related attachment of funding. Furthermore, while

the short-term nature of the Head of School position has been shown to have

problems with regard to measuring subordinate performance, this process is

required to make employees aware of how they can contribute to the organisational

goals, and to motivate employees to achieve personal objectives. While these

problems have been recognised, it is acknowledged that there is no easy, or quick

solution to this problem.

With regard to satisfactory or unsatisfactory performance, the Office of Human

Resource, as the developers of the performance appraisal policy, should define

these terms more clearly for the Heads of School. Furthermore, it is suggested that

Heads of Schools undergo training or workshops in performance evaluation to

improve their ability to carry out this task effectively.


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10.2.5 The Behavioural Considerations of Management Control Change

Adequate planning beyond the technical is required to reduce dysfunctional

behaviour in the organisation. Although it would seem common sense to plan for

human behavioural considerations as well as the technical component of change

few organisations adequately do so (Vasu et al., 1998). The level resistance

described in the Griffith University case further explicates the need to spend time

planning strategies to reduce or deal with resistance to change.

The findings presented in this thesis suggest that power relationships in the

organisation are diffuse and difficult to manage. Subordinates were documented to

be conflicted by both geographical location and position affiliations. For example,

the School of Accounting and Finance operated with a completely different culture

to the School of Nursing. This would suggest that if change is to be effectively

managed, those opposition groups should be acknowledged and responded to. For

example, it could be foreseen that a change to the budget allocation basis would

face a degree of resistance from employees, particularly where some less well-

managed Schools were viewed to have been given favourable treatment over other

Schools. This is not to suggest that Griffith management did not consider the

behavioural dimension at all. All employees admitted to being informed of the

changes. Notwithstanding, the empirical evidence tends to suggest the change

processes may have been smoother had the managers devised additional strategies

other than their talking campaigns, and acknowledged and responded to the various

opposition groups (Bass, 1960; Brown, 1998).


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10.2.6 Theoretical Issues

Of course, there could be a variety of explanations or theories to explain how and

why accounting change occurs. The evidence in this study shows that while this may

be the case, no single theory is capable of offering a complete explanation of

accounting change or a superior explanation of accounting change. Because of this,

this thesis adopted a theoretical triangulation approach, drawing on organisational

and sociological theories that complement each other to offer a wider explanation

of what was occurring in the organisation. Such a view also acknowledged the

overlap in these theories. Adopting a triangulation approach offered the following

benefits to this study. First, it allowed the researcher to develop a wider explanation

of the phenomena. Second, it allowed for more plausible explanations of change to

emerge. In some cases this meant that theories that did not inform the evidence

collected were discarded and alternative explanations sought, in others it meant that

additional theoretical insights were required to provide a more complete explanation

of change. For instance, critical theories were discarded because their focus on the

‘modes of organization’ were inconsistent with the aims of the study which were to

examine the role of the individual actor in the processes of change and to

understand the ways that intraorganisational dynamics such as power, interest, and

values influence the types of change. Having said that, insights from resource

dependence theories, power and political theories, strategic choice, and resistance

theories were combined to complement institutional theory. This combination of

theories was referred to as the ‘new institutional sociological perspective.’ The

theories were chosen based on their ability to provide partial explanation of the

phenomenon. It is argued that more compelling explanations of the change process

at the University were achieved by using this theoretical approach. Consequently,


407

one of the contributions of this thesis is the different ways that the theories can

combine to provide a more complete explanation of the phenomenon studied. This

new perspective guided the data collection, data analysis, and data reporting phases

of the study.

This perspective demonstrated that whilst external pressures may provide

homogenous pressures for change within an institutional field, the individual actors

in the organisation determine the response and ultimately the outcome of those

pressures. The linking of the power dynamics with the external environment proved

useful for both understanding the accounting control systems (ACSs) design and

operation and for overcoming some of the criticisms of institutional theory. In

particular, institutional theories were used to provide insight into the reasons why

organisations change (e.g. government, socio-political forces). Political, power,

resource, and resistance theories on the other hand complemented the institutional

theories by providing explanations of the role of individual actors in the processes

of change. In this way, the theoretical framework provided an attempt to overcome

several of the power and interest criticisms of the institutional theory. Whilst the

perspective was tested in this study, this thesis acknowledges that the robustness of

the framework will depend on its ability to inform other studies of accounting

change.

10.3 Conclusions

Universities, their staff, students and managements are not simply passive recipients of state orders or market forces; they have their own resources, models, cultures and agendas. (Miller, 1995, p. 91)


408

This thesis has described the processes of MCS change in a higher education

institution in an attempt to get a better understanding of how ACSs are designed

and operate in higher education institutions. The thesis has documented how one

university changed its accounting system to legitimise the organizations operations

in the face of government pressures for a more managerialist approach. It was

reported that the design of the MCS and the success of efforts to change that

system were dependent on the legitimated authority of senior managers in the

organization and consequently their preferences and priorities.

The primary focus of this thesis was the accounting system, however, the view

taken in the thesis was that the system needed to be studied in its organisational

context for a good understanding of the complexities inherent in its design and

function. More importantly, the thesis demonstrated some of the possible

difficulties that might occur when changes are made to the ACSs without

consideration of the other control systems.

The evidence presented in this thesis suggests the ACSs had a number of purposes

in the organisation. First, they were used to provide visibility to external

constituents, imparting the perception that rational techniques have been employed

that were consistent with those prescribed by governments (Berry et al., 1985;

Hopwood, 1983). In particular, the annual report and the education profile was

described to be prepared in accordance with external expectations. So, they were

used to legitimise the operations and to secure funding. Second, it was shown that

the ACSs, in particular the budgetary systems, were used to provide visibility to the

organisation’s activities for employees to promote a sense of equity and fairness in


409

the organisation, at the same time reducing conflict in the organisation. Third, the

budgetary systems were a source of power in the organisation; they determined the

level of control that could be used to direct organisational activity (Covaleski et al.,

1985; Markus & Pfeffer, 1983).

The thesis argued for a case study approach to research based on the research

objectives and questions, and argued that the findings presented in the past four

chapters would not have been identified using any other research method. The

following two sections explore the strengths and limitations of the Griffith case

study more fully.

10.3.1 Strengths

The study presented in this thesis has several strengths. First, the researcher was

given access to a significant number of resources. In addition to conducting

interviews, large amounts of documentary evidence were made available. The

researcher was also given the opportunity to observe several meetings. Through the

process of data triangulation, similar responses and documentary evidence

supporting responses were used to overcome the limitations of using a single data

collection method and allowed for a checking device of the findings.

Second, quotes and citations of pieces of evidence in the findings chapters further

strengthened the representations made here. This was necessary to appease reader

concerns for validity and reliability. In addition to this, several pieces of evidence

are provided as Appendixes for the same purpose.


410

Third, the theoretical framework developed in Chapter 3 combined multiple

perspectives to explain the findings. This means that where required, alternative

organisational theories were applied to increase the explanatory power of the

framework, so that it more closely resembled the data. This allowed for a fuller

understanding of the complexities of change to emerge.

The final strength of this thesis is related to the insights the case study provides for

managers of other institutions faced with similar pressures. It has been argued in the

course of this thesis that the rate at which organisations respond to change and the

type of response is dependent on key organisational actors within the organisation.

Thus, other tertiary institutions may only just be responding to the pressures. The

findings presented here then provide some important lessons for those

organisations.

10.3.2 Limitations

The main limitation of this study stems from the fact that it is a single case study

and thus findings cannot be generalised to a wider population. From the start it was

pointed out that this was not a main concern of the study and that numerous

studies had already been conducted with this objective (Hagg & Hedlund, 1979;

Scapens, 1990; Schensul et al., 1999; Yin, 1981, 1994). In this case, the single case

study was the preferred method because the research focus was aimed at getting an

in-depth view of ACSs change in a single organisation. Furthermore, as indicated

earlier, it was believed that multiple cases would only lend to a superficial view of

ACSs change and that an understanding of variation within the control system was

less likely given the time and resource constraints.


411

The second limitation occurred from the focus on managers and academics as

participants. Interview data was limited by the fact that some of the managers who

had been key determinants in determining organisational response had moved on to

other institutions. Notwithstanding, the sample size and participants chosen was

based on the positions held by employees and the emergence of new data.

Third, it is possible that there were other events not described in this thesis that

may have occurred that could have influenced academic perceptions and recall. To

reduce the likelihood of this happening, the researcher spent a considerable amount

of time in the field collecting data.

Fourth, despite significant efforts to include DEST employees in the study to get a

better understanding of the Federal Government’s influence on the changes

occurring within the institution, interview question responses were never received

from DEST. Notwithstanding, documentation was retrieved from the website and

government policy documents to understand their influence.

10.3.3 Directions for Accounting Research

There are several implications of this study for future research. First, although many

have argued that the University has become more corporate, no study has been

conducted to determine the degree to which the corporatised university’s MCS

parallels the private corporation. Clearly, there exists an opportunity for conducting

a comparative study of the MCS of a private corporation and a corporatising

university.


412

Second, it has been argued that the single case study restricts the researcher’s ability

to make generalisations. Although the findings presented in this thesis shed some

light on how management control is exercised in a university environment, a

comparison of the impact of government reforms on multiple publicly funded

institutions could prove useful for policy makers. At first glance, it would seem that

government is continually churning out new policy despite few in-depth reviews of

what is actually incurring. For example, Marginson and Considine (2000) noted “the

fact that the universities had adjusted their systems of organisation – indeed they

had changed immensely in the decade since Dawkins – was not acknowledged by

the West Committee” (p. 61). This comment combined with the findings presented

here would suggest it is important, then, to take an in-depth look at how institutions

are operating so that government policy can help institutions to improve the

efficiency and effectiveness of their operations rather than blindly prescribing

outcomes.

Third, it would appear at the outset, based on the empirical evidence collected here,

and a review of literature, that no university in Australia has undertaken full costing

exercises. Notwithstanding, few academics and administrators in the University

deny the importance of determining the costs of course delivery for improved

budgeting and management control. A common feeling expressed by some of the

administrators at the University was that it could benefit from the adoption of

activity-based accounting. This provides a key opportunity for future researchers to

assess why such systems have not been implemented in Australia, despite their use

in international sectors (see, for instance, Berry, 1994) and to develop models for

their use.


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Fourth, as suggested in Chapter 9, whilst there have only been a few studies

conducted on the effectiveness and the development of performance management

systems in universities, the Federal Government continues to increase their

inspection and reporting requirements suggesting that they are not yet confident

with how individual institutions are run. At the same time, they have continued to

reward those universities who can demonstrate effective performance through the

Federal Government Operating Grants. The inconsistencies between policy and the

basis of reward presents an interesting issue, worthy of further research.

Fifth, the amalgamation of Griffith and the Colleges of Advanced Education

(CAEs) was highlighted to have serious implications for effectiveness of the MCS.

Based on this, there exists an opportunity for a more in-depth study of the impact

of amalgamation on the design and operation of the MCS, such as the budgetary

system. How for example, do institutions that are forced to amalgamate create a

cohesive and effective budgetary system?

Finally, as suggested above, it is important that future studies retest the new

institutional sociological perspective developed here for the model to be considered

robust.

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Appendix 2.1- Management, Accounting and Education Journals Reviewed

Management & Accounting Journals Education Journals

Abacus

Academy of Management Journal

Academy of Management Review

Accounting and Business Research

Accounting and Finance

Accounting, Auditing and Accountability Journal

Accounting Forum

Accounting, Organisations and Society

Accounting Research Journal

Administrative Science Quarterly

American Behavioral Scientist

American Journal of Sociology

American Sociological Review

Australian Accounting Review

Australian Economic Review

Australian Journal of Management

Australian Journal of Public Administration

Behavioral Research in Accounting

British Accounting Review

British Journal of Management

Contemporary Accounting Research

Critical Perspectives on Accounting

Economic Papers

European Journal of Operational Research

European Journal of Work and Organisational Psychology

Facilities

Financial Accountability and Management

Governance

Harvard Business Review

Human Organisation

Human Relations

Human Resource Management Australia

International Journal of Public Sector Management

International Public Management Journal

International Studies of Management & Organisation

Advances in Accounting Education: Teaching and Curriculum Innovations

Australian Universities Review

British Journal of Sociology of Education

Change

Education Economics

Educational Management and Administration

Education Research and Perspectives

Higher Education

Higher Education Management

Higher Education Policy

Higher Education Quarterly

Higher Education Review

Higher Education Research and Development

International Studies in the Sociology of Education

Issues in Accounting Education

International Journal of Educational Management

Journal of Accounting Education

Journal of Educational Administration

Journal of Higher Education Policy and Management

Journal of Tertiary Educational Administration

Journal of Tertiary Education and Management

Melbourne Studies in Education

New Directions for Higher Education

Oxford Review of Education

Spectrum

Studies in Higher Education

The Review of Higher Education

Appendix 2.1 – Management, Accounting and Education Journals Reviewed

415

Management & Accounting Journals Management & Accounting Journals

Journal of Accounting and Public Policy

Journal of Accounting Research

Journal of Applied Management Studies

Journal of Communication

Journal of General Management

Journal of International Accounting, Auditing and Taxation

Journal of Management

Journal of Management Accounting Research

Journal of Management Studies

Journal of Operations Management

Journal of Public Administration Research and Theory

Leadership and Organisation Development Journal

Leading and Managing

Long Range Planning

Managerial Auditing Journal

Management Accounting Research

Organisation Studies

Personnel

Psychological Review

Public Administration

Public Money and Management

Qualitative Market Research

Quality and Quantity

Social Forces

Social Science Information Studies

Sociological Review

Spectrum

Scandanavian Political Studies

The Australian Economic Review

The Academy of Management Review

The Accounting Review

The American Behavioral Scientist

The Australian Economic Review

The British Accounting Review

The British Journal of Sociology

The Journal of Business Communication

The Journal of Applied Behavioural Science

The International Journal of Accounting

The Sociological Review

Theory into Practice

416

Author Date Area Purpose of the Study Research Methodology

Findings

Conway, Mackay & Yorke 1994 Strategic Planning To discover the degree to which new universities and higher education colleges apply a market orientation to their strategic planning.

Content Analysis Nearly half of the institutions only implied a customer orientation in their planning. Only one institution clearly identified the dual role of a student. Higher education institutions are ill prepared to respond to commercial environment.

Anderson, Johnson & Milligan 1999 Strategic Planning To perceive the development and use of strategic plans to provide guidance to good practice in this area for Australian universities.

Interviews at 12 Institutions 2 Workshops

Strengths of process: • All strategies discussion social financial and

political context • Some discussion on information technology • Some strategies have commitment to equity • Plan is on the web • Some universities used reward systems to engage

the interest of staff Weaknesses of process: • Absence of any perceptible link between

strategies and the financial provision • Do not articulate a philosophy of education in

plans • Do not know the extent to which staff knew

about the plan or identify with it Not all universities state what their defining characteristics are.

Appendix 2.2: Summary of Previous Research in the Higher Education Sector

Appendix 2.2 – Summary of Previous Research

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Findings

Crebert 2000 Strategic Planning To identify the ways in which heads of Schools perceived the strategic planning process.

Electronic Survey 9 Workshops

Not all staff were aware of the purpose of the strategic planning in the organisation. The strategic planning process had little effect on aligning the strategic direction of the School. People felt that a more consultative and participatory model was needed. There was a need for greater integration of plans.

Nelson, Bailey & Nelson 1988 Strategic Planning To examine the implications of the recent environmental changes facing accounting departments.

Commentary Builds on models presented by Hofer and Schendel (1978) and Porter (1985) to outline steps required to enhance the likelihood of making change with a purpose.

Wood & Smith 1992 Governance To examine the governing structures of 26 Australian universities.

Survey University governing bodies ranged in size from 17 to 44, the average being 27 members. Bodies were composed mostly of external constituents rather than internal constituents.

Meek & Wood 1998 Governance To determine what senior managers viewed as the main issues and problems of operating the University.

Survey The Executive Officers, Heads of Departments and Deans responded positively to having two levels of leadership: department and Faculty. The Heads of Departments and the Deans viewed the decision making as more managerial than collegial. Disagreed that Council should be more involved in the running of universities.


418


Findings

Currie & Vidovich 1998 Governance To determine whether universities were collegial or corporate managerial

Interview 73% respondents in the USA and 59% respondents in Australia indicated their university used a centralised approach. 63% USA and 53% Australian respondents perceived a shift towards a more centralised decision making over the last 5 years.

Piper 1995 Budgeting To describe the use of performance related funding within universities in Australia.

Commentary No conclusions drawn.

Scott 2001 Budgeting To investigate the implications of devolved budgeting.

Commentary Advantages: • Improved flexibility for using resources • Increased cost consciousness • Motivation of managers Disadvantages: • Lack of training • Lack of useable information to control budgets

Covaleski & Dirsmith 1988a Budgeting To investigate the demise of a budgeting system and the creation of a new budget category at a State college in the USA.

Case Study The investigations provided strong evidence to suggest that budgets can be used to justify the organisations operations to key persons. The interests of powerful actors and groups within the organisation largely shape the contents of the budget.


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Findings

Bourn 1994 Budgeting To investigate the evolution of devolution of budget responsibilities in universities.

Commentary Author suggests that a University’s structure and process are influenced by its need to shape a strategy, which responds to its environment (p. 23).

Doost 1997a Budgeting To examine the financial reports of a university to determine if they give an accurate reflection of the financial affairs.

Case Study The reports were of little use to the internal audience (the Faculty and administration) and thus reduced their ability to be accountable for the use of university resources.

Doost 1997b Budgeting To determine how the University overhead costs were allocated and what the University overhead costs were.

Case Study Over 41% of the University budget were classified as indirect or overhead cost the remaining 59% attributable to direct costs Investigations revealed that indirect costs had been over budgeted by around 29 million dollars

Jones 1994 Budgeting To investigate how three different universities responded to external pressures for efficiency (i.e. from the Jarrat Report, funding restraints).

Case Study Each university responded to the pressures in a different way. Consistencies existed in the following areas: • Top down management approach • Incremental or historical based budget • Use of extensive committee structures for

decision making.


420


Findings

Watts 1996a Budgeting Commentary to examine the changes in budgetary practice across Australian Tertiary Institutions since the demise of the binary system in 1988.

Survey (Gawthorne, 1993)

Universities adopted the Relative Funding Model (RFM) for two reasons: 1. To give the impression of rational, legitimate

budgeting while the universities were actually in a State of flux; and

2. To overcome a lack of information about teaching and research costs which would be required for the development of a budgeting method, which addressed their individual requirements.

Watts 1996b Budgeting To investigate the creation of slack by academic budget managers.

Case Study Identified three reasons for creating budgetary slack: 1. Budget managers introduce slack in their budgets

to give them a degree of flexibility in meeting their departmental objectives;

2. To allow them to pursue specific academic goals; and

3. To act as a buffer in case of reduced funding allocation.

Thomas 1999 Budgeting To investigate the use of

formula-based systems of resource allocation in a higher education institution.

Case Study The adoption of external funding model is not sufficient for allocating resources within institutions.


421


Findings

Thomas 2000 Budgeting To investigate the implications of adopting devolved formulaic budgeting systems for power and influence of key senior managers.

Case Study Implications of devolved funding: • Budgeting process still subject to micro-political

activity • External methodologies may not be rational • Models need to be understood for them to be

effective • Decisions may be motivated by financial rather

than academic considerations • Those holding budget responsibility may have

increased power • Managers may not have the requisite skills to

make effective decisions Goodwin & de Gouw 1997 Budgeting To find out the determinants of

attitudinal responses to the resource allocation processes used.

Survey Despite s significant relationship existing between the budgetary communication and influence over goals, budget responsibility had little to no bearing on the budgetary response attitudes of the staff surveyed.

Angluin & Scapens 2000 Budgeting To investigate academic staff perceptions and understanding of the resource allocation process.

Survey Significant differences existed in the use of financial information between institutions. Significant differences existed in the transparency of resource allocation procedures. A high degree of transparency appeared to be related to the perception of a fair allocation process.


422


Findings

Walker 2000 Budgeting To investigate New South Wales universities compliance with the NSW Annual Reports Act 1984 and other requirements.

Content Review The universities were meeting not all reporting requirements. Some university annual reports neglected to include the budgets. Universities use budgets to authorise expenditure and not as a planning device or a means to discharge their accountability to external stakeholders as originally proposed by Emmanuel et al. (1990).

Johnes 1996 Performance Management

To explore the development and interpretation of performance measures for use by universities.

Multiple Regression That a failure to include university inputs in assessing the efficiency of a university can lead to a misleading interpretation of performance

Lord, Robb, & Shanahan 1998 Performance Management

To investigate the use of performance indicators in New Zealand Universities.

Case Study Not all activities are able to be assessed using mechanistic measures and therefore other measures should be used.

Taylor 2001 Performance Management

To try and understand how academic attitudes had changed with the introduction of performance indicators.

Survey Universities should use performance indicators for control purposes and not simply as a ‘cosmetic’ adjustment to suit external requirements

Lawrence & Sharma 2002 Performance Management

To evaluate the incidence of TQM and the balanced scorecard in corporate universities.

Case Study The balanced scorecard had been introduced as a response to the State’s commitment to efficiency and effectiveness.


423


Findings

Lafferty & Fleming 2000 Performance Management

To examine how the restructuring of Australia’s university system and the introduction of corporate managerialism has changed the work performed by academic staff

Case studies: • University of

Queensland • Griffith University • Queensland University

of Technology Content Analysis of: • DEST publications • Commonwealth

Government data.

The corporate managerialist processes have worked to undermine the effective implementation of Equal Employment Opportunity initiatives. The paper demonstrates how women predominantly hold positions, which are the lowest paid and least secure in the organisation. The authors suggest that performance management is exercised at the junior levels of the organisation, but not as rigorously at the senior management levels.

Amaratunga & Baldry 2000 Performance Management

To explore the use of the balanced scorecard as a technique for performance evaluation.

Interviews and a Survey The use of the balanced scorecard offered significant advantages to performance management including a feedback loop in the process of strategic change; improved communication and teamwork; improved employee commitment; and improved feedback and learning

424

Appendix 4.1- Information Sheet

Information Sheet Organisational Change and Accounting Control Systems at an Australian

University: A Longitudinal Field Study

Investigator: Jodie Moll PhD Candidate School of Accounting and Finance Gold Coast Campus Griffith University Phone: (07) 5552 8799

Email: [email protected]

Supervisor: Dr. Zahirul Hoque Phone: (07) 5552 8703 Email: [email protected] Research Methodology: Case study Interview (open ended)

Observation Document Analysis

Intensive Study Dates: June 2001- June 2002 Objectives: 1) To understand how and why the accounting control system changed

2) To understand how accounting shapes and can be shaped by existing institutions

3) To understand the roles accounting control systems play in higher education institutions Research Questions:

(1) To what extent have ‘external’ institutional pressures forced the organisation to change? (2) How was the organisation’s response determined? In what ways do intraorganisational dynamics such as power, interests, and values influence the type of change? (3) How was the transition to a new archetype managed amongst the functionally differentiated groups? Specifically, what ways do power, interests, and values influence the outcome of the change process?

Appendix 4.1 – Information Sheet

425

(4) What were the outcomes of change on organisational structures and operation processes?

(5) What were the implications of change? How were other components of the MCS influenced by the change? How were employees influenced by the change?

Frequently asked questions: 1. How can I contribute to this study?

As an employee of the University, your understanding of the management control system (i.e., structure, budgeting and performance management) is vital to furthering this study. Your responses will be used to answer the research questions listed above.

2. What is the intended outcome of this study? This is the case study to be conducted to understand how accounting control systems have changed in a university. The study will make the wider community more aware of how the University is attentive to their changing demands and perceptions. Furthermore, the study will form a narrative of the University history. In addition the academic community will benefit from theoretical advancement of existing theories in the higher education sector.

3. How long with the interview last? It is expected that the interview will last 1 hour.

4. Will my interview be taped? Your interview will only be taped with your permission.

5. Who will have access to my responses? Only the interviewer (Jodie Moll) and the interviewee will have access to the responses.

6. Will I be able to be identified in the final submission?

No. Interviewees will be identified according to their general position (i.e., head of School, administrative personnel, senior lecturer). Where material is considered highly sensitive employees will be referred to as senior management (Pro-Vice-Chancellor, Vice-Chancellor, Deputy Vice-Chancellor, Senior Administrative staff) or Academic Managers (Heads of School and Deans). Department names will not be used to identify interviewees.

7. Will I be able to see the final submission?

Yes. The final submission will be made available to the relevant authorities (i.e., Pro-vice Chancellors etc.). I can be contacted about the final submission upon completion in 2003.

8. What if I decide not to participate in the study?

It is your right to decide not to participate or to withdraw from the study at any time. No questions will be asked about your reasons for non-participation.

9. What if I have further questions about my role in the study or general questions about the study?

Please phone, me on 5552 8799. Alternatively, email me on [email protected]

Your contribution to this study is appreciated!

Should you feel the need to make a complaint about the conduct of this study please direct these to: The University’s Research Ethics Officer Office for Research Bray Centre Griffith University Kessels Road Nathan QLD 4111 Ph (07) 3875 6618

426

Appendix 4.2- List of Individuals Interviewed at Griffith University

Name School/ Faculty/Department Interview Dates

Alison Harris (Group Resources Manager- Business) 24/08/2000

Lyn Holman Academic Registrar 12/11/2001

Lokman Mia Accounting and Finance 2/08/2001

Nava Subramaniam Accounting and Finance 3/08/2001

Ross Guest Accounting and Finance 2/08/2001

John Sands Accounting, Banking and Finance 20/07/2001

Chew Ng Accounting, Banking and Finance 30/07/2001

Joy Cumming Cognition, Language and Special Education 9/08/2001

Liisa von Hellens Computing and Information Technology 14/09/2001

Susan Nielsen Computing and Information Technology 14/09/2001

Barry Harrison Engineering and Information Technology 7/11/2001

Drew Nesdale Commerce and Management 29/08/2000

William MacGillvray Science 9/11/2001

William Lovegrove Deputy Vice-Chancellor 6/12/2001

Rangan Srinivasan FBS 31/07/2000

Shane Carroll FBS 14/09/2001

Nathan Dunton FBS 14/09/2001

Greg Hopper FBS 17/09/2001

Suzanne Smith FBS 10/10/2001

Dennis Geraghty FBS 25/09/2001

Gilbert Lee FBS 26/09/2001

Nickie Pruden FBS 21/09/2001

Tony Naughton Accounting and Finance 27/09/00, 29/08/02

Linda Hort Marketing/ Tertiary Union 30/08/2000

Peter Brosnan Industrial Relations 24/07/2001

Chris Auld Leisure Studies 22/08/2001

Bradley Bowden Management 3/08/2001

Appendix 4.2 - List of Interviewees

427

Name School Interview Dates

David Thiel Micro-electronic Engineering 30/08/2001

Anne McMurray Nursing 27/09/2001

John Wanna Politics and Public Policy 1/07/2001

Max Standage Health, Science 22/10/2001

James Walter Arts 11/10/2001

Ms Janice Rickards Information Services/ Equity 18/10/2001

Megan Piggott Accounting and Finance 11/09/2001

Jan Bickerton Tourism and Hotel Management 4/10/2001

Christine Smith School of Economics 29/08/2001

Yew Cheye Loo School of Engineering 15/08/2001

John Kane School of Politics and Public Policy 6/09/2001

Hugh Wilkins Tourism and Hotel Management 21/09/2001

Richard Bagnall Vocation Technology and Arts Education 23/08/2001

428

Appendix 4.3- Consent Form

CONSENT FORM

Organisational Change and Accounting Control Systems at an Australian University: A Longitudinal Field Study

I __________________________ have read the conditions of this study. I understand that participation in this study is voluntary. More importantly refusal to participate with the study will not result in a penalty of any kind or loss of benefits to which I might otherwise be entitled. I understand that it is my right as a participant to withdraw from the study at any time without explanation or penalty. I have read the information sheet and consent form. I agree to participate in the “Organisational Change and Accounting Control Systems at an Australian University” project and give my consent freely. I understand that the project/study will be carried out as described on the information Statement, a copy of which I have retained. I realise that whether or not I decide to participate is my decision and will not affect my employment at Education Queensland. I also realise that I can withdraw from the (project/study) at any time and that I do not have to give any reasons for withdrawing. I have had all the questions answered to my satisfaction. Signatures: …………………………………………………………………… …………………………. Parent/Caregiver(s)/Participant Date …………………………………………………………………… …………………………. Investigator(s) Date Witnesses to signatures are not required unless the participant is unable to take personal responsibility for their action. If the participant is in this category it is likely that the consent of their carer should be sought (parent, relative, guardian etc.)

429

Appendix 4.4- Interview Questions

Griffith University

Pro-Vice-Chancellor/ Deputy Vice-Chancellor Question Protocol

Jodie Moll

BBus Accy, PS Finance (Hons)

Faculty of Commerce and Management School of Accounting and Finance PMB 50, Gold Coast Mail Centre

Queensland 9726, Australia

Appendix 4.4: Interviewee Questions

430

DATE: TIME: LOCATION: INTERVIEWEE: Aim: To try and understand change at the University and the role of the Pro-Vice-Chancellor/Deputy Vice-Chancellor in change, stability, and management.

1. What does your position involve? What tasks do you carry out?

2. How long have you been in that position? How long have you been working at Griffith University?

3. Has your position changed in recent years? How has your position changed?

4. In my study I am looking at the changes that have occurred to the management control system (i.e., in management style- budgeting, responsibility, performance) at the University in recent years. What are some of the critical changes in Griffith University that you have observed over the past few years?

5. Why do you feel that these changes were critical?

6. In your opinion, why do you feel the University has been going through so much change in recent years?

7. How was the University (system) before?

8. Who promoted the changes? Did senior management promote the changes? Do you think it came from government? Was it a university initiative? (i.e. internally driven or externally driven)

9. What levels of university staff participated in the planning of the changes?

10. In your opinion how did the employees of the University react to the change? Did they react positively or negatively? Why do you think they reacted that way?

11. Who resisted the change? Groups/ Individuals/ Schools?

12. Do you feel that staff now participates in the management function much more in recent years than they did before? Do you feel that all staff should be involved in the management control of the University? If not what levels do you feel should be involved in the management control function?

13. Has there been a change in your role or participation in the management decisions of the University. Please explain. In what way? How do you feel about this?

14. How is the University coping with government budget cuts (1996 onwards) to the operating grant?

15. What do you see as the biggest challenges facing Griffith University?


431

BUDGETING

16. What do you see as the purpose of budgeting at the University?

17. Can you describe the budgeting process applied by the University? Who participates in budget planning (i.e., who decides what goes into the budget)? How are funds allocated? What is the Pro-Vice-Chancellor role in the budget process?

18. Has the method of budgeting changed in the last couple of years? If so how and why? What do you see as the advantages/disadvantages of the change? Are there any issues yet to be addressed from the change in budget method?

19. What do you think of the devolution of the budgeting function in the University? For example, most public sector organisations employ more accountants (from private sector) to deal with a devolution of the accounting function or provide training in this area. How do you feel about the idea of HOS being in change of the budget instead of the Dean?

20. What was the reason for the devolution of the budgeting function from the Dean to a HOS level? How was the change from Faculty budget to School budget managed?

21. What is the role of the Deans now?

22. From an efficiency perspective, do you believe that the University has become more efficient by centralising the administration of the University? From an academic point of view, what do you see as the positives and negative from the centralisation of the University administration?

23. What happens if a School is over or under budget? How is that dealt with?

24. Are there any incentives for the HOS to keep within the budgetary limits set?

25. To what extent does the budget information drive the decision making process in the Faculty? What kinds of decisions would you use budget information for?

26. How do you feel that Schools could be better managed to deal with budget restraints? How can they become more efficient?

27. What alternative arrangements do feel would improve the senior managers’ ability to manage such a large organisation?

28. How often, if at all do you compare the actual expenditure with the budgeted?

PERFORMANCE MANAGEMENT

29. Is your performance measured? How? Can you describe the process

30. What about the University performance? What is the purpose of performance measurement at the University?

31. What is your opinion of the performance measures used? Are they effective?


432


Griffith University

Dean Question Protocol

Jodie Moll





433

DATE: TIME: LOCATION: INTERVIEWEE: Aim: To try and understand change at the University and the role of the Dean in change, stability and management.

1. What does your position involve? What tasks do you carry out?

2. How long have you been in that position? How long have you been working at Griffith University?

3. Has your position changed in recent years? How has your position changed?

4. In my study I am looking at the changes that have occurred to the management control system (i.e., in management style- budgeting, responsibility, performance) at the University since 1996. What are some of the critical changes in Griffith University that you have observed over the past few years?




8. Who promoted the changes? Did senior management promote the changes? Do you think it came from government? Was it a university initiative? (i.e. internally driven or externally driven)

9. What levels of university staff participated in the planning of the changes?

10. In your opinion how did the employees of the University react to the change? Did they react positively or negatively? Why do you think they reacted that way?

11. Who resisted the change? Groups/ Individuals/ Schools?

12. Do you feel that staff now participates in the management function much more in recent years than they did before? Do you feel that all staff should be involved in the management control of the University? If not what levels do you feel should be involved in the management control function?

13. Has there been a change in your role or participation in the management decisions of the University. Please explain. In what way? How do you feel about this?

14. How is the University coping with government budget cuts (1996 onwards) to the operating grant?

15. What do you see as the biggest challenges facing Griffith University?


434

BUDGETING

16. What do you see as the purpose of budgeting at the University?

17. Can you describe the budgeting process applied by the University? Who participates in budget planning (i.e. who decides what goes into the budget)? How are funds allocated? What is the Deans role in the budget process?

18. Has the method of budgeting changed in the last couple of years? If so how and why? What do you see as the advantages/disadvantages of the change? Are there any issues yet to be addressed from the change in budget method?

19. What do you think of the devolution of the budgeting function in the University? How do you feel about the HOS being in change of the budget instead of the Dean?

20. What was the reason for the devolution of the budgeting function from the Dean to a HOS level? How was the change from Faculty to Schools managed?

21. What is the role of the Deans now? How has the devolution changed the role of the Dean? How has it affected your ability to carry out your other work?

22. From an efficiency perspective, do you believe that the University has become more efficient by centralising the administration of the University. From an academic point of view, what do you see as the positives and negative from the centralisation of the University administration?

23. To what extent does the budget information drive your decision making process? What kinds of decisions would you use budget information for?

24. How do you feel that Schools could be better managed to deal with budget restraints? How can they become more efficient?

25. What alternative arrangements do feel would improve the senior managers’ ability to manage such a large organisation?


26. Is your performance measured? How?




435


Griffith University

Heads of School Question Protocol

Jodie Moll





436

DATE: TIME: LOCATION: INTERVIEWEE: Aim: To try and understand how management control is exercised in a university environment at both a School and managerial level and to understand how accounting can shape and is shaped by institutions.

1. What does that position involve? What tasks do you carry out?

2. How long have you been in that position?

3. Has your position changed in recent years (i.e. do you do more administration)? How has your position changed?

4. What kinds of decisions do you make in your position?

5. In my study I am looking at the changes that have occurred to the management control system at the University. What are some of the critical changes in Griffith University that you have observed over the past few years?




9. Who promoted the changes? Did senior management promote the changes? Do you think it came from government? Was it a university initiative?

10. In your opinion how do you view the management of these changes? What about other employees?? i.e. did they react positively or negatively? Why do you think they reacted that way?

11. Who resisted the change? Groups / Individuals / Schools?

12. Do you feel that academic staff now participate in the management function much more than they did before? Do you feel that all staff should be involved in the management control of the University? If not what levels do you feel should be involved in the management control function?

BUDGETING

13. Can you tell me how you participate in the budgeting process at the University? What about the general role of academic administration?

14. Who participates (i.e. who decides what goes into the budget) in planning the administrative budget? How are funds allocated?

15. When does the budgeting process start?

16. To what extent does the budget information you provide determine how the University budget is allocated?

17. What kind of information do you use to determine student numbers for the following year? Is it based on past years?


437

18. How accurate are your student numbers? What happens if you over or under in estimate your student numbers? How does that affect the allocation of resources to Schools?

19. Has the method of budgeting changed in the last couple of years? If so how and why? Also, has your role in the budgeting process changed in recent years? How has it changed? Why do you believe it changed?

20. In your opinion how effective do you think the current governance structure of the University is? Why or why not?



22. What about the administration performance?


24. Do you feel that the use of performance measures within the University has increased/decreased/remained the same? In what way have the performance measurement process increased/decreased?


438


Griffith University

Administration and General Staff Question Protocol

Jodie Moll





439

DATE: TIME: LOCATION: INTERVIEWEE: Aim: To understanding how management control is exercised in a university environment at a managerial level and to understand how accounting can shape and is shaped by institutions

1. To begin with can you State your name and tell me what your position is at Griffith University? What does that position involve? What tasks do you carry out?

2. How long have you been in that position?

3. Has your position changed in recent years (i.e. do you do more administration)? How has your position changed?

4. In my study I am looking at the changes that have occurred to the management control system at the University since 1996. What are some of the critical changes in Griffith University that you have observed over the past few years? (I.e. university policy, management changes etc.) Would it be fair to say that funding has decreased and control by Federal Government increased?



7. Who promoted the changes? Did senior management promote the changes? Do you think it came from government? Was it a university initiative?

8. How do you view the management of these changes? What about other employees? How did they view these changes? i.e. did they react positively or negatively? Why do you think they reacted that way?

9. Who resisted the change? Groups / Individuals / Schools?

10. What do you view as the management problems or issues faced by your department? Where do you feel these problems stem from?

11. Do you feel that staff now participate in the management function much more than they did before? Do you feel that all staff should be involved in the management control of the University? If not what levels do you feel should be involved in the management control function?

12. What kinds of decisions do you make in your position?

13. What information do you require to make effective decisions as an administrative staff member? What information do you receive? What do you do to compensate for the information that you don’t receive?

14. Has there been a change in your role and participation in the management decisions in your School. Please explain. In what way? How do you feel about this?


440

15. What do you think of the devolution of the budgeting function in universities? For example, most public sector organisations employ more accountants (from the private sector) to deal with devolution of the accounting function or provide training in these areas? The HOS are now responsible for this function? How do you feel about the Heads of School rather than the Deans being in charge of the budgeting function? What so you see as the positives and negatives of this arrangement?

16. How has the University budget cuts affected your ability to carry out your job?

17. In your opinion, how do you feel that the University could be managed more efficiently given the large budget cuts? Or what alternative arrangements of management techniques do you feel would improve their ability to deal with these cuts?

18. In your opinion how effective do you think the current governance structure of the University is? Why or why not?




22. Do you receive feedback on your performance?

Thankyou for your time and cooperation.


441


Office of Higher Education

Education Queensland

Staff Question Protocol

Jodie Moll





442

DATE: TIME: LOCATION: INTERVIEWEE: 1. Name 2. Position 3. Length in that position 4. What tasks do you carry out in that position? 5. What do you view as the role of Education Queensland in the Higher Education Sector? 6. How does the Office for Higher Education carry out that role? 7. How does the role of Education Queensland differ from the DEETYA? 8. What do you see as the biggest or most important issues facing universities today? 9. Why do you feel that these are the biggest challenges? 10. What are some of the changes that universities have had to deal with? (e.g., from

government policy) 11. In your opinion, why do you feel the higher education sector has been going through so

much change? 12. In your view how have individual universities dealt with the pressures for change? Can

you provide examples? Has management improved? 13. Who exercises control and what at types of control are exercised in universities? How is

that control exercised? 14. How do you feel the management of universities could be improved? 15. Why? (for particular suggestions) 16. How do you feel universities should deal with cuts in government budget funding? 17. On what basis does Education Queensland provide funding for universities? (i.e. can you

take me through the method of funding allocation) Has the method of funding allocation changed in recent years?

18. How is the use of those resources monitored? Do you monitor any other activities of

universities that are not funded by State Government? Thankyou for your time and co-operation. Do you mind if I contact you at a later date if I need to follow up any of these questions.


443


Higher Education Division

Department of Education, Science and Training

Question Protocol

Jodie Moll BBus Accy, PS Finance (Hons)




444

DATE: TIME: LOCATION: Questions to be answered via policy document and employee written response INTERVIEWEE: 1. Name 2. Position 3. Length in that position 4. What tasks do you carry out in that position? 5. What is the role of DEST in the Higher Education Sector? 6. How does the Higher Education Division carry out that role? 7. How does the role of DEST differ from the Office for Higher Education at Education

Queensland? 8. What do you see as the biggest or most important issues facing universities today? 9. Why do you feel that these are the biggest challenges? 10. What are some of the changes that universities have had to deal with? (e.g., from

government policy) 11. How have individual universities dealt with the pressures for change? Can you provide

examples? Has management improved? 12. Who exercises control and what at types of control are exercised in universities? How is

that control exercised? 13. How do you feel the management of universities could be improved? 14. Why? (for particular suggestions) 15. How do you feel universities should deal with cuts in government budget funding? 16. On what basis does DEST provide funding for universities? (i.e. can you take me

through the method of funding allocation) Has the method of funding allocation changed in recent years?

17. How is the use of those resources monitored? 18. Do you review the performance of higher education institutions? If so, how is this done?

What happens if they are under performing?

Thankyou for your time and co-operation!

445

Appendix 4.5- Summary of Documents

Griffith University Summary Contents

The Griffith Project A strategic direction paper adopted as university policy by the Griffith Council June 2002. Provides details of the foundation values of the University, federal policy and funding, and the University strategy.

Review of the University Budget Process (July 2002)

This provides details of a review of the existing budgeting system. Review committee members included all senior managers, the Deputy Secretary of the Department of Finance and Administration, two Academic Managers and a Professor. Provides details of the current budget process and then provides recommendations for future budget based on limitations in the current model.

Management Structures at Griffith University Prepared by Vice-Chancellor Glyn Davis. The paper reviews the issues around management structures and makes recommendations.

Griffith University Profile Powerpoint presentation. Outlines Griffith University growth in student numbers, growth in staff numbers, campus distribution, growth in total income, general staff as a percentage of staff, sources of income, progress and retention rates, graduate experience.

The Key Issues Facing Griffith University: A Discussion Paper (February 2002)

Prepared by Glyn Davis, Vice-Chancellor of Griffith University to identify the key issues facing Griffith University. Includes commentary on changing funding context, the Griffith Profile, working with other universities and key strategic issues

Griffith University Functional Thesaurus November 2001

Provides a list of accepted terms. Outlines how these related to the University. For instance, Governance is “the activities associated with management the government of the University including the Council and Committees of the University, Schools and Faculties” (p. 38).

Griffith University Annual Reports (All volumes 1989-2000)

Discloses the financial position of the University. Includes a Statement of financial performance, a Statement of Financial Position, a Statement of Cash Flows and notes to the reports. Most recent copies were prepared in accordance with the Griffith University Act 1998, the Financial Administration and Audit Act 1977 and the Financial Management Standard 1977.Also includes highlights for the year, senior management structure, strategic plan, list of Principal Officers and Council Members and a report on overseas travel.

Griffith University Budget Operating Fund Allocations 2002-2004

Explains the operating fund allocations for 2001-2003. Includes the funding rates for each of the Schools, the budget allocation strategy and the challenges underpinning the budget.

Appendix 4.5 – Summary of Documents

446


Griffith University Strategic Plan Outlines the vision, mission and values of the University.

Griffith University Operational Plan The operational plan includes plans for teaching and learning, research and research training, community service and staff.

Griffith Gazette A staff newsletter published by External Relations at the University. Includes management issues, staff research projects, student awards.

IT Update Internal newsletter prepared by the Department of Information Technology Services to inform staff on new software, changes to web interfaces and email.

Griffith University educational profile for the Triennium (1995-1997)

This is prepared for DEST on an annual basis to secure university funding. Contents of the profile include mission, vision and values, staff and student statistics, quality reports, equity, flexible learning.

Griffith University Budget Presentation (Prepared by the Academic Registrar)

Explains the operating fund allocations for 2001-2003. Includes the funding rates for each of the Schools, the budget allocation strategy and the challenges underpinning the budget.

Griffith University Budget Operating Fund Allocations 2001-2003

A document that sets out the operating fund allocations for the triennium. Commentary also included on changes to the budget methodology, Federal Government policy implications, identification of cost pressures, enterprise bargaining agreements.

Management of Teaching and Learning 1998-2000 Funding

Outlines the resources allocated to teaching and learning initiatives.

Chart of Accounts and Posting Guide Provides an overview of the chart of accounts, including the general ledger account format, account number character definitions, financial element codes, expenditure segments, and restricted fund types.

Financial Procedures Manual Outlines the current levels of financial delegations and provides a description of the financial systems and procedures in place to record revenue received, expenses incurred and assets purchased.

Quality of Higher Education Manual Provides background information on Griffith University and reports on quality initiatives

Guidelines for Faculty Teaching and Management Plans

Provides a framework for the preparation of Faculty Teaching and Management Plans

Teaching and Learning Management Plans Prepared by each of the Faculties. Outlines the initiatives and strategies of the Faculty.

NABS Status Update Report and NABS news…news…news…news…

Prepared monthly to update staff on the progress of the NABS committee, information systems available and any problems of the systems.


447


Griffith University’s Staff Support and Development Plan

Prepared by the Office of Human Resource Management, the plan detail the Griffith-wide strategies that the University wants to achieve and delegates responsibility for their implementation.

Probation and Performance Reviews Documents collected included: • Performance management for academics • General staff performance management scheme • Academic staff review procedures • Performance Management Framework for Academic

Managers • Academic Activity Log • Extracts from the Griffith University Academic Staff

Certified Agreement • Appointment of Deans, Heads of School and Deputy

Heads • Appointments and Remuneration • Dean of Faculty: Position Description • General Staff Performance Management Scheme These documents outlined the performance review procedures for the various staff levels including how unsatisfactory performance would be dealt with.

Statistics • 1994 to 2000 Statistics in Brief • 2000 Staff (Full time equivalents) • 1999 Staff (Full time equivalents) • 1998 Staff (full time equivalents) • 1997 Staff (full time equivalents) • 1996 Staff (Full time equivalents) • 1995 Staff (Full time equivalents) • 2000 Teaching Load by Funding Source • 1999 Teaching Load by Funding Source • 1998 Teaching Load by Funding Source • 1997 Teaching Load by Funding Source • 1996 Teaching Load by Funding Source • 1995 Teaching Load by Funding Source • 1994 Teaching Load by Funding Source • 1995- 2000 Student Enrolments

Griffith Institute for Higher Education Describes the Griffith Institute for Higher Education.

Business Planning and Strategic Planning at Griffith University.

This is an internal document used to inform staff on the business planning and strategic planning practices used by the University.

Business Group Communication 1999-2002

Internal newsletter distributed to staff employed in the Faculty of Commerce and Administration. Provides details of new courses, teaching awards, promotions, and transitions.


448


A guide to Committee Meeting Skills The purpose of this document is to inform staff of accepted procedures for meetings held within the University.

GU News University Council Meeting (1998-2002)

Includes a summary of Council Meeting. Collected from 1998-2002.

Response to the Green Paper on Research Prepared by the Acting Vice-Chancellor, W. J. Lovegrove as the Griffith University response to changes in research funding.

“The capacity of public universities to meet Australia’s higher education needs”

Prepared by Prof. Roy Webb, Vice-Chancellor of Griffith University. The paper outlines the Vice-Chancellor’s personal views on the capacity of the public universities for meeting Australia’s higher education needs. Submitted to the Senate Employment, Workplace Relations, Small Business and Education References Committee Inquiry

Review of the status of the Gold Coast Campus Web document detailing the findings of a review as to whether the Gold Coast Campus should separate from Griffith University

Review of the Gold Coast Campus

Prepared by the Vice-Chancellor. Details include history and recommendations.

Report of the Review Committee: Review of the Status of the Gold Coast Campus of Griffith University

Prepared by a sub committee of Council. Details include history of the Gold Coast Campus, developments within the Australian Higher Education Sector, a case for the campus becoming a university in its own right, governance arrangements and a summary of recommendations.

Preparing for the Future: a History of Griffith University 1971-1996

Written by Noel Quirke as a historical reconstruction of the first 25 years of Griffith University.

Oral History of the University Transcribed by Ms Patience Thoms. Includes a narration of Griffith University history by Sir Theodore Bray, founder of the University.

Griffith University Symposia: Reflections in the second decade

This is a record of six symposia held between the 14th March and 23rd May 1984. The submissions analyse Griffith University’s achievements over the first decade. Discussions on the future of the University were a major focus of the symposium.

Links between the purpose and outcomes of planning: perceptions of Heads of School at Griffith University

Written by Gay Crebert (2000), this article was recently published in the Journal of Higher Education Policy and Management. The article discusses Griffith University approach to business planning.

449

GRIFFITH UNIVERSITY

BUSINESS PLAN 1998-2001

EXECUTIVE SUMMARY

KEY ISSUES AND STRATEGIES Summarise key issues raised in the SWOT analysis, and in the stated objectives and strategies, particularly any initiative that has resource or other implications for the School and/or other elements of the University. (Refer Tables 5.1, 6.1, 7.1, and Schedule 8) The School is in a strong position in terms of teaching load, RHD enrolments and current financial situation. With a highly qualified and experienced team of staff, the School is poised for a significant expansion of research output. The School is also well placed to explore initiatives in teaching and learning and to develop programs for offshore delivery. Significant initiatives in the planning period include proposals for the formation of a research centre and the development of a simulated finance trading room and accounting training facility in the proposed multi-media building.

SUMMARY OF RESOURCING BIDS Identify bids for additional resources with a brief description and proposed year(s) and sources of funding Description

Operating grant $000

Capital $000

Strategic Development Fund $000

Development Bank $000

External Funds $000

Other $000

Development of interactive package of 11 subjects with School of Accounting, Banking and Finance (Nathan) for offshore delivery.

$165,000

Appendix 6.1 – School Business Plan

Appendix 6.1: School Business Plan

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SCHOOL FINANCIAL SUMMARY 1997-2001

1997 1998 1999 2000 2001 $000 $000 $000 $000 $000 C/fwd 263 Teaching Income 1,441 1,597 1,739 1,669 1,731 Expenditure 1,332 1,544 1,734 1,793 1,914 Surplus/Deficit 109 53 5 -124 -183 Cumulative Surplus/Deficit

372 425 430 306 123

Research Income 53 120 185 194 191 Expenditure 48 119 182 191 188 Surplus/Deficit 5 1 3 3 3 Cumulative Surplus/Deficit

5 6 9 12 15

Other Activities Income 4 4 13 13 14 Expenditure 14 15 7 11 12 Surplus/Deficit -10 -11 6 2 2 Cumulative Surplus/Deficit

21 10 16 18 20

School Total Income 1,498 1,720 1,937 1,876 1,936 Expenditure 1,395 1,677 1,923 1,995 2,114 Surplus/Deficit 103 43 14 -119 -178 Cumulative School Surplus/Deficit

398 441 455 335 158


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SECTION ONE

SCHOOL PROFILE 1.0 SCHOOL OVERVIEW Provide a brief general overview of the current operations of your School. Include a description of current course profile, current research activity and consultancies, continuing education and commercial activities, community services. (250 words maximum) Factors to consider and incorporate in the overview, where relevant:

School characteristics Staff profile Research infrastructure Range of courses/research projects/other activities

External Environment Industry links General industry competition Other

The traditional strength of the School lies in strong growth of demand for accounting and finance undergraduate majors. Currentteaching load is 445 EFTSUs comprising undergraduate (BBus and BIF), and graduate (MBA and MPA) students. There are 13 academicstaff at present, two of whom hold half-time positions. This represents a very high student-staff ratio. Vacant positions remain difficult to fill in the current competitive academic labour market. The School incorporates a number of discipline groupings, each of which isdeveloping a distinct research profile. The management accounting group is the largest and has a national and international reputationfor a range of research activities. The strength of the finance groups lies in Asian financial markets, while the smaller staff groupings infinancial accounting and economics have diverse interests. During 1998 there has been significant growth in staff publications,conferences presentations, and research grant applications and a record number of PhD enrolments. Increasing links are being formedwith a number of professional accounting and finance bodies to promote the activities of the School and to benefit from the resourcesof these bodies. Industry links have been established with financial institutions and public sector bodies that enable our students toobserve the operations of these organisations. The School is also developing continuing education units and offshore teaching programsthat provide significant exposure to education markets outside the traditional campus based delivery mode.


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2.0 SCHOOL MISSION The Mission Statement is about the aims of your School, described so that staff, students, and stakeholders all have a view of what your School/element is all about. 3.0 VISION/GOALS Your vision/goals should relate to your School’s/element’s long term direction. They should be a tangible expression of what your School/element wants to achieve in the future.

The School will promote a scholarly environment by pursing excellence in research and teaching dedicated to: • Advancing knowledge in the academic disciplines of the School; and • Providing quality professional training and development for individuals involved in the professions linked to the School.

• Enhance our research strengths in the disciplines of the School.

• Strengthen our reputation with students by improving and promoting the quality of our subjects offered as well as our teaching practices.

• Extend our expertise into the professions served by the School by advising and assisting in development of relevant knowledge and skills.

• Improve the status of the School both nationally and internationally by promoting the quality of our teaching and research.


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4.0 SCHOOL SWOT ANALYSIS The SWOT analysis provides a summary of the School’s position in relation to factors that influence the School’s performance. Strengths and weaknesses arise from the current characteristics and profile of the School, and relate to the present. Opportunities and threats arise from the external environment and relate to the future. Some examples and factors which influence performance are included below, select those of relevance and insert others as appropriate.

ANALYSIS OF STRENGTHS AND WEAKNESSES

Factors which influence performance Strengths Weaknesses

Staff Profile - qualifications, academic levels, experience, appointment types,

·Highly qualified and experienced team ·Strong research profile ·Good gender mix ·Editorship of journal from the School.

·Lack of salary loadings impedes recruitment ·Poor gender mix at higher level ·Staff shortages in finance. ·Research output has not yet translated into Research Quantum

Organisational structure - establishment of allied centres, management processes and decision-making structures

·School Forum together with the School Committee provides a consultative process

·Physical location of offices inhibits cohesion.

Range of courses and subjects offered ·Broad range of courses ·Restrictive structure of Honours ·Slow uptake in Honours ·Slow uptake in MPA Unable to offer specialist streams in BIntFin. Limited range of electives


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Factors which influence performance Strengths Weaknesses

Range of activities - extent of involvement in non-core teaching activities

·Strong association with the Student Accounting Association and the Alumni – Gold Coast Chapter.

·Limited involvement with professional bodies and national and international academic groups.

Available resources and infrastructure - current operating budget and overall financial position, access to appropriate technology

·Current satisfactory financial position. ·Good quality computer technology

·Serious space problems ·Quality of rooms and furnishings

Level of development of School research strategies and plans.

·Well developed agenda Interdisciplinary research focus

·Lack of success in research grant applications.

Potential to establish research collaborations/partnerships with industry.

·Strong potential because of nature of academic discipline offered by the School.

·Lack of success in large-scale collaborations.

Quality of Students ·Excellent Honours, and PhD students. ·Students with Low OP scores create problems in undergraduate teaching.


455

ANALYSIS OF OPPORTUNITIES AND THREATS

Factors which influence performance Opportunity Threat

Government Policy - trends in higher education

·Market emphasis can generate additional resources

·West Committee poses threat to academic values.

International markets in education Diversification of intake Offering the School’s programs overseas.

Asian economic crisis Domestic political events

Domestic markets and level of demand for courses

·Demand for subjects offered continues to be strong.

·Competitors moving into local market. Possibility of Bond receiving public funding.

Reputation Opportunity to improve our reputation by greater networking with industry and academic associations.

·Low OP scores of undergraduate students can adversely affect our reputation with employers and hence our graduate placement rates.

Industry links Strengthening Public Sector linkages has great potential as few academic links exist. Staff pursuing PhD studies can further industry links through their research


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Factors which influence performance Opportunity Threat

Influence of technology and non-traditional teaching delivery methods.

·Broadens student base. ·Dynamic and enlivened provision of accounting and finance subjects.

·Inconsistent quality of technological support ·During the conversion phase to flexible delivery, quality of learning may suffer.

Industry competition Currently our course costs are below those of our local competitor.

Direct competitors in flexible delivery: USQ/UQ. Potential UQ move into the Gold Coast. Possibility of prestigious overseas or domestic university offering a quality and extensive program of distance education.


457

SECTION TWO

STRATEGY DEVELOPMENT In relation to the SWOT analysis (4.0), identify the School objectives and strategies. The Strategies are the actions required by the School/element to implement and achieve the stated objectives. 5.0 TEACHING & LEARNING Table 5.1 Objectives and Strategies Objectives Strategies 0.1 To offer quality undergraduate courses and subjects

S-1.1 Courses will be benchmarked against the best Australian and international universities S-1.2 A new subject will need to include an evaluation plan in addition to the subject outline and subject design documents S-1.3 The progress of School courses will be continually monitored by the Course Convenor and evaluation of progress will be provided to the Head of School as appropriate. S-1.4 The School will maintain a consultative process which supports dialogue between the University, industry and other relevant parties in relation to curriculum development. In particular, the School will work closely with the following professional bodies in accounting and finance. S-1.5 A sample of graduates will be followed up, as part of the regular course review exercise, to get their views on the worth or otherwise of their courses/subjects. S-1.6 Where appropriate, subjects should have an international component. After the year 1999, subject convenors of subjects without an international dimension will require specific approval from the School Committee.

0.2 To promote high quality post graduate courses S-2.1 Initiate information evenings for the Master of Professional Accounting. S-2.2 Initiate marketing activities (i.e. mailouts for prospective students) for the MPA and for PhD candidates S-2.3 Develop an accounting specialisation in the Master of Business Administration course at the Gold Coast Campus.


458

Objectives Strategies 0.3 To promote high quality teaching and learning activities

S-3.1 All staff will review their teaching in each subject on a continuing basis through the use of independent evaluation. S-3.2 Recognise and reward good teaching and innovation in teaching in conjunction with research performance through the confirmation and promotion processes. To increase the profile of teaching excellence in the School. S-3.3 Ensure that appropriate teaching objectives are included in individual staff development plans during the Academic Staff review process. S-3.4 Encourage staff to attend courses in teaching and learning run by GIHE, and the Faculty. In particular, sessional staff and new lecturers (before they commence teaching) will be requested to attend. S-3.5 All academic staff encouraged to apply for teaching/learning grants. S-3.6 Encourage regular student forums as a means to gain and to provide effective and timely feedback on progress of our subjects. S-3.7 To introduce a periodic “teaching forum” to be run by the School with the focus on improving teaching activities.

0.4 To increase the amount of flexible learning in the teaching profile.

S-4.1 Develop schedules for the appropriate conversion of subjects to flexible learning mode for the period 1998-2002. S-4.2 Hold regular seminars where expertise in flexible learning is shared. S-4.3 Apply for Strategic Development Grant to fast track our flexible offerings. S-4.4 The School is planning to set up a finance trading room and accounting training facility. Resources required: a computer lab, database and computer technician to be financed from teaching allocation and funds from selling courses.


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Table 5.2 Teaching Load Projections (July 1998) Teaching Load Type Target Actual Target Actual (*) Target as per

1997-1999 BudgetProposed Modification to target

Proposed Target

Proposed Target

1997 1997 1998 1998 1999 1999 2000 2001 Operating Grant Funded – UG

298 308 338 344.8 360 360 356 356

Operating Grant Funded – RHD

2 2 2 4 2 4 6 8

Fee Paying Postgraduate Load (FPPG)

N/A 17 20 17.0 17 17

17 18

Fee Paying Overseas Student Load (FPOS)

N/A 77 97 79 80 80 81 82

Miscellaneous N/A 7 7 7 7 7 7 7

Other N/A - - - - - -

TOTAL 300 411 457 444.6 362 463 467 471


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6.0 RESEARCH

Table 6.1 Research Objectives and Strategies Objectives Strategies Key Resource Implications/Needs RHD

O-1 The School endeavours to increase RHD enrolments to 10 by the year 2002

S-1.1 Build a strong research culture within the School S-1.2 Senior staff actively promote research with other staff within and outside the School and develop medium and longer term research programs with a potential to involve junior staff. S-1.3 Organise a regular and widely advertised series of research seminars. All staff and RHD students will be expected to present a paper, and to attend regularly S-1.4 Encourage staff and RHD students to present papers at other universities and invite staff from other universities to present papers at School seminars.

Qualified (PhD) staff to supervise RHD students. Office facilities for RHD students. Computers for RHD students Scholarships top ups and Associate lectureships for RHD students

External research funding

O-2 The School submits up to 2 large and 2 small ARC grant applications every year starting from 1998.

S-2.1 Form research teams within the School to work on grant applications. S-2.2 Provide seed funding for projects within the School. S-2.3 Encourage staff members to present research papers at national and international conferences.

Make research fund available within the School Provide adequate conference support.

University research support

O-3 The School submits at least one application for the University research grants every year starting from the year 1999.

S-3.1 Encourage staff members to work jointly on research projects and apply for the University infrastructure research grants.

Provide support for preparation of grant application.

Industry Collaboration

O-4 Take necessary steps in exploring the possibility of collaboration with industries.

S-4.1 Identify potential industry partners


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Table 6.2 Identification of School Research Operations

Operational Group Titles. (Centres, Institutes, Units, Research areas/concentrations)

Area Categorisation (excellence, strength, development, emerging, declining)

Number of Staff Involved Comments on Groupings and Categorisation

Strong 4 The School is planning to set up the research centre. Resources required: a secretary, office and a computer to be financed from self-generated funds following a period of seed funding.

Strong 2-3 The School has a unique strength in the area.

Emerging 2-3 The School is recruiting a senior staff member in the area.

Emerging 1-2 The School has appointed a senior staff member in the area.


462

Table 6.3 Internal And External Grant Applications Lodged Or In Preparation

Agency Reference Description Scheme 1999 $ 2000 $ 2001 $ ARC 110101 Large 60008 63008 31837 ARC 110101 Large 43823 51530 38008 ARC 110101 Large 47765 48342 34381 ARC 110107 Small 20000 ARC 110103 Small 15550 ARC 110103 Small 16702 GURG 110103 Infrastructure 20000 20000 ARC 110101 Small 16000

Note: $ refers to years of anticipated receipt of Grant

7.0 OTHER ACTIVITIES

Table 7.1 Other Activities – Objectives and Strategies

Activity Objective Strategies Continuing Education To develop reputations in this field. Run short courses through CBED. Consultancy The School will explore the possibility of

providing consultancy services to industry. Establish close connections with industries.

Conferences To attract major academic conference to the Gold Coast

Active involvement with academic bodies in accounting, finance and economics.

Commercial Operations The School to offer the facilities of the proposed Finance trading room for commercial purposes.

Develop a detailed feasibility study of the finance trading room.

Other Projects/Activities


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SECTION THREE

FINANCIAL AND STATISTICAL ANALYSIS 8.0 PERFORMANCE INFORMATION 8.1 Financial Management

Sources of funds 1997 (operating grant, student fees, RAGS, external research grants, other activities) # % Non-operating grant income to Total Income Operating budget surplus/deficit 1997 1997 Operating Budget expenditure(by budget lines and by objects of expenditure) Equipment Reserve funds Tenured salaries to operating grant

8.2 Teaching and Learning

Teaching Courses 1. TL3 Student /Staff ratios (EFTSU/EFT) * 6. TL2 EFTSU by course* 2. Teaching load - target, actual 7. TL6 Lowest Student Entry Score (OP entry cut-off) 1997-1998 * 3. EFTSU by course level - UG,PG, RHD # 8. Mode OP 1997-1998 4. EFTSU by funding source - HEFA/FP/other 9. TL14 Student progress rate 1997 to1998 * 5. EFTSU by enrolment type - FT/PT/Ext # 10. TL15 Program Completion Rate * 11. Graduate Destination data 12. TL7 to TL13 CEQ data - student and graduate satisfaction, perceived

teaching quality, perceived outcomes (students and employers) * 13. Last review date 14. TL4 Student Preference ratio - first preferences to comm enrolments * 15. TL5 Student Acceptance ratio - ratio of total commencing to offers * # Indicators used in “Characteristics and Performance of Higher Education Institutions (A Preliminary Investigation” produced by DEETYA, Jan 1998. * Indicators defined in the Academic Administration Policy and Procedures Manual 5/94


464

8.3 Research 1. RC1 Academic staff FTE RHD qualified and “active” in research work, and undertaking regular T&R duties # 2. RC2 Academic staff FTE not qualified and “active” in research work, and undertaking regular T&R duties # 3. RC3 Academic staff FTE RHD qualified and “active” in research work, undertaking full-time research duties # 4. RC4 RHD EFTSU (not included above) # 5. RG1 - RG5 No. and $ of NCG, Public Sector, and Industry and Other grants received in last calendar year # 6. RP1 - RP3 Publication output, books, journal articles, reference works, conference publications (or equivalent) published within last calendar year. # 7. RHD completions within last calendar year (weighted PhD/Research Masters as 2:1) 8. Merit Research Indices Academic Research Capacity External Research Grants Research Publications of Significance 9. Publications and other research output per FTE and total 10. Research postgraduate load per FTE and total # Griffith University Corporate Indicators of Research

8.4 Other Activities

1. Activities, by project for 1997 (Income, expenditure, balance of funds)

2. % contribution to School funds (surplus), by activity


465

9.0 FINANCIAL ANALYSIS SCHEDULE 1 – PROJECTED TEACHING INCOME 1997-2001

1997 1998 1999 2000 2001 Teaching Load EFTSU EFTSU EFTSU EFTSU EFTSU UG CPG RHD FPOS FPPG Other Total load Income $ $ $ $ $ HEFA – UG HEFA – CPG HEFA - RHD Fee Other Total income


466

SCHEDULE 2 - RESEARCH INCOME 1997-2001

$ 1997 actual

1998 projected

1999 projected

2000 projected

2001 projected

C/fwd RQ RIBG EXTERNAL NCG grants awarded NCG grant applications Table 6.3 Industry grants awarded Industry grant applications Table 6.3 Public Sector grants awarded Public Sector applications Table 6.3 UNIVERSITY SUPPORT Grants awarded Grant applications Table 6.3 Research Contracts and Research Consultancies

Total Income


467

SCHEDULE 3 - RESEARCH EXPENDITURE 1997

actual 1998 projected

1999 projected

2000 projected

2001 projected

Staff Salaries Academic Research staff Research Assistance General General - casual Total Salaries Operating expenses Equipment TOTAL

EXPENDITURE

Annual surplus/deficit (Total Income less Exp)


468

SCHEDULE 4 - OTHER ACTIVITIES OPERATING STATEMENT 1998-2001 (one schedule per year)

1998 Schedule 4.1 Schedule 4.2 Schedule 4.3

Continuing Education

Consultancy Conferences Commercial Operations

Other Projects/ Activities

TOTAL

Description/reference Table 7.2

INCOME Fees Grant funds Sales Other income TOTAL INCOME EXPENDITURE Staff Salaries Academic Academic sessional Research staff Research Assistance General General - casual Total Salaries Operating expenses Equipment TOTAL EXPENDITURE Annual surplus/deficit (Contribution) Schedule 4.# - where more than one, details of each activity/proposal


469

SCHEDULE 5 - STAFF/SALARY PROFILE

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Member-ship No.

Position No.

Position Title

Name Designation Pt Type of Appt

% End Date

Highest Qualif'n

Funding Source

TRO Staff type

Account Code

1998 $

1999 $

2000 $

2001 $

COMMENTS

TOTAL SALARIES


470

SCHEDULE 6 - OPERATING EXPENDITURE 1997-2001 1997 1998 1999 2000 2001

Appointment Expenses Running Expenses Conference/Research/Travel - Staff Postgraduate Research Support Promotional Expenses Other Operating Expenses Equipment/Leasing/Major Furniture Total Operating Expenditure

SCHEDULE 7 - SCHOOL OPERATING STATEMENT- 1997-2001 (one schedule per year) Teaching Research Other Total

INCOME DEETYA Operating Grant Schedule 1 Schedule 2

Student Fees

Schedule 1

Other Fees Schedule 4 Other Grant funds Schedule 4.2 Schedule 2 Schedule 4 Commercial Activities Schedule 4 Sales Schedule 4 Other income Schedule 4 TOTAL INCOME EXPENDITURE Staff Salaries Academic - specific Academic - discretionary General - specific General - discretionary Total Salaries Schedule 5 Schedule 5 Schedule 5 Operating expenses Schedule 6 Schedule 3 Schedule 4 Equipment Schedule 6 Schedule 3 Schedule 4 TOTAL EXPENDITURE Annual surplus/deficit Cumulative surplus/deficit


471

10.0 UNIVERSITY IMPLICATIONS SCHEDULE 8 – UNIVERSITY-WIDE RESOURCING AND MANAGEMENT IMPLICATIONS

Reference

Description Proposed resourcing/resolution

Capital requirements: teaching/office space, laboratories, infrastructure etc

4.0 6.0

Physical location and quality of rooms. Research Centre

Relocation of offices to be close together. Refurbishment costs to be borne by School Allocation of additional room. Computer and furnishing to be provided by School.

Human Resources

Corporate Services and University Administration

Corporate Overheads

University Marketing plans and activities

Implications for other Schools, groups or elements

Information Services/Information Technology

Finance trading room and accounting training facility

Allocation of space in new multimedia building. Equipment and maintenance to be funded by School and outside sources.

472

GRIFFITH UNIVERSITY ACADEMIC ACTIVITY LOG

The Academic Activity Log documents the activities of academic staff members in the previous year. It is used to inform consultations between academic staff members and their supervisor during the Academic Staff Review Procedures. This Activity Log will be used to record activities undertaken during the past year.

The data collected in this document will also be used for purposes of aggregating and reporting

research activity across the University as collated by the Office for Research. The Academic Activity Log is to be completed annually by all academic staff members. Reviews will

occur annually for all staff who have further salary increments available to them and biennially for staff at the top of the scale.

The Academic Activity Log consists of four portfolios:

1. Teaching 2. Research 3. Service 4. Other Activities

The Activity Log is a very comprehensive document. Each academic staff member will be required

to complete those sections of the document which are relevant to their work in the previous year. Not all sections may be relevant in any year, but it is important that all activities are recorded.

You may either complete the attached Activity Log manually or download a Microsoft Word

document via the WEB. A hard copy is to be submitted to your Group Human Resources Adviser by the last day in April.

In addition to the Activity Log there are four documents that may be attached depending on your

activities in the previous year. These are: 1. Statement of teaching allocation (refer to Folio 1). 2. A hard copy of the data collected by Office for Research for the Annual Research

Report (refer Folio 2). 3. A copy of Academic Studies Program (ASP), report where relevant.

4. Teaching Evaluations. If you require assistance, please contact the Office of Human Resource Management on the

following numbers: ARTS XXXX CAM (Nathan) IBO, GSM Ext XXXX EDN XXXX CAM (Gold Coast) QCA XXXX LAW/GUMURRII/Leisure Studies (MtG) XXXX QCGU XXXX HEALTH (Nathan & Logan) XXXX SCIENCE (Nathan) XXXX CIT (Nathan & Logan) XXXX SCIENCE (Gold Coast) XXXX Microelectronic Eng (Nathan) XXXX HEALTH (Gold Coast) XXXX Thank you for your cooperation

Appendix 9.1- Academic Activity Log

Appendix 8.1 – Activity Log

473

Folio 1 TEACHING

1 JANUARY - 31 DECEMBER

Emp No:

Name: School/Element:

Level: Campus:

A. FORMAL TEACHING CONTACT You may attach the official notification from your Head of School about your formal teaching allocation

for previous year. Where you do not have an official teaching notification, please indicate any formal teaching duties you have undertaken during previous year.

Course Teaching Load

(Indicate as EFTSU or Contact Hours) Student

Numbers

B. SUPERVISION (Honours, PhD, Higher Degree Coursework and Research)

Student Name

Degree

P/T or

F/T

Year of First Enrolment

Proposed Year of Submis-

sion

Date Awarded

(if applicable)

Supervisor

Assoc Supervisor

C. OTHER TEACHING DUTIES ADDITIONAL TO FORMAL CLASS CONTACT OR

SUPERVISION (eg. practical teaching, field supervision)

D. PROGRAM AND COURSE COORDINATION Indicate any programs you co-ordinate or courses you convene.

Semester (See Note)

Program and Course Name

Number of Sessional

Tutors

Credit Points

Number of Students

Note: Indicate - 1, 2, W(whole year), S(summer)


474

E. PROGRAM OR COURSE AND MATERIAL DEVELOPMENT (i) Describe or attach any teaching material developed (eg. curriculum development, audio-visual

material). (ii) Indicate your contribution to any programs or courses (eg. new teaching practices, assessment,

team teaching).

Program or Course Title

Contribution

F. ASSESSMENT OF STUDENTS' LEARNING OUTCOMES Comment on the methods of assessment, especially innovative approaches and ways of giving feedback to

students.

G. EVALUATING AND ENHANCING TEACHING AND COURSES Indicate the ways in which you are evaluating, developing, or enhancing your teaching and attach any

documentation of outcomes (e.g. peer reviews, student reviews, reflections on your own teaching, action to revise/re-develop).

H. COURSE AREA EXPERTISE Suggest how issues or developments in the field (or your own research) have been taken up in your

teaching.

I. SCHOLARSHIP AND LEADERSHIP IN TEACHING Supply information on any scholarship and leadership activities in teaching (i.e. in university programs and

courses) if not already mentioned in C, D or E; leadership in other institutions (e.g. invitations to lecture, examine theses) or regionally or nationally (e.g. teaching grants, textbooks, or conference presentations/articles related to teaching).


475

Folio 2

RESEARCH AND ORIGINAL ACHIEVEMENT 1 JANUARY - 31 DECEMBER

Folio 2 details your research activities. This data is also required by the Office for Research for the Annual Research Report. You may either attach a full copy of the data supplied to Office for Research for the previous year. Research Survey or complete the following table. If you complete this table you will still need to complete and submit the Research Survey. A. WORK PUBLISHED IN PREVIOUS YEAR This section is used to record any work published during previous year. DO NOT COMPLETE THIS TABLE IF ATTACHING OFFICE FOR RESEARCH DATA.

Type of Publication (see note 1)

Title Name(s) of Author(s) Date Published

NOTE 1: A = Book F = Audiovisual Recordings B = Book Chapter G = Computer Software C = Journal Articles H = Technical Drawing D = Major Reviews I = Patents E = Conference Publications J = Other Creative Works B. WORK SUBMITTED WAITING PUBLICATION This section is used to record any ADDITIONAL research information NOT recorded in Section A or for the Office for Research.

Type of Publication (see note 1)

Title Name(s) of Author(s) Date Submitted

Status (eg. In Press,

Under Review Under

Revision) NOTE 1: A = Book F = Audiovisual Recordings B = Book Chapter G = Computer Software C = Journal Articles H = Technical Drawing D = Major Reviews I = Patents E = Conference Publications J = Other Creative Works C. WORK IN PROGRESS Indicate any research projects currently being undertaken including artistic or creative endeavours.


476

D. CONSULTANCIES DURING PREVIOUS YEAR Indicate any consultancies/contract research undertaken during previous year. Length of Contract

Sponsor or Organisation

Project Title & Details Amt ($)

First Named Consultant (Yes/No)

Others in Project

E. GRANTS Indicate any research grants applied for during the previous year.

Date Applied

Type of

Grant

Value ($)

Title of

Project

First Named

Investigator

Other Researchers

Involved

Outcome Pending

(Successful/ Unsuccessful)

F. PROGRESS TOWARDS HIGHER DEGREE (if applicable): Indicate your progress towards a higher degree. Date enrolled (DD/MM/YYYY): Expected date of submission (DD/MM/YYYY):

Progress to date:

G. CONFERENCE and SEMINAR PRESENTATIONS: Indicate any conferences or seminars you have attended where you have made presentations.

Date

Conference

Title

H. RESEARCH DEVELOPMENT Describe how your ability to conduct research has evolved or improved over the review period (eg.

workshop attendance, use of research techniques).


477

Folio 3

SERVICE 1 JANUARY - 31 DECEMBER

In Folio 3, record your contribution to the University, the wider community and your profession. A. GRIFFITH UNIVERSITY COMMITTEES This section records service to the University and wider community and includes School/University

Committees, Working Parties, projects etc.

Title of Committee

Your Role

Period of

Involvement

Assessment of your

Contribution

B. COMMITTEES EXTERNAL TO GRIFFITH UNIVERSITY This includes representing the University on external bodies or projects. Indicate your participation in

external committees. (Do not include this information again in Section D.)

Title of Committee

Your Role

Period of

Involvement

Assessment of your

Contribution

C. OTHER ADMINISTRATIVE TASKS OR ROLES Indicate any administrative tasks or roles you have undertaken on behalf of your School/Faculty or the

University.

Period of Involvement

Role Major Tasks and Achievements

D. CONTRIBUTIONS OUTSIDE THE UNIVERSITY List any contributions outside the University, either in the relevant profession(s) or in the broader

community. Professional service may include refereeing journals or publications and continuing education activities.

Professional Activities Period of

Involvement Details of Involvement

Community Activities Period of Involvement

Details of Involvement

Appendix 8.1- Activity Log

478

E. UNFUNDED CONSULTANCY WORK

List any unfunded consultancy work, that has not been indicated in Folio 3 - Research and Original Achievement.

Consultancies and Related Outside

Activities Date Details of involvement

(include details of the client and project, others involved and outcome)

Appendix 8.1- Activity Log

479

Folio 4 OTHER STAFF ACTIVITIES 1 JANUARY - 31 DECEMBER

A. STAFF DEVELOPMENT ACTIVITIES Record any activities, programs, courses and other activities undertaken during the year.

Include any initiatives agreed to in the Development Plan from the previous review period.

Activity Development Plan (Yes/No)

B. ANY OTHER RELEVANT ACTIVITIES Include any other relevant activities not covered in any other section of the Activity

Log.

CHECKLIST OF ATTACHMENTS: To place a cross in the box, double click in the box - a check box will appear - select checked within default value and then select ok; otherwise pen these in when you sign. 1. Teaching Allocation (where applicable) 2. Copy of Office for Research data 3. Academic Studies Program Report (where applicable) 4. Outcomes from Teaching Evaluations (where applicable) Staff member’s signature: Date: Activity Log, updated 21 February 2001.

480

Appendix 9.2- Performance Documentary Evidence

GRIFFITH UNIVERSITY

LECTURER AND SUBJECT EVALUATION QUESTIONNAIRE

The following survey is being undertaken to obtain your feedback concerning this subject and the lecturer’s performance. The survey involves two parts. The first relates to evaluation of the lecturer’s performance, and the second relates to subject content and management. Answers to questions are to be provided on mark sensor answer sheets. In the subject box on the top right hand corner of the mark sensor answer sheet, please write the subject code and your lecturer’s name. DO NOT PROVIDE YOUR NAME OR ID NUMBER.

LECTURER EVALUATION Your lecturer would like to obtain feedback on the following issues. Please read each of the following statements carefully and decide the extent to which you feel your lecturer does not or does need improvement. Respond to each statement by selecting one of the following five letters and marking it in next to the appropriate question number on the mark sensor answer sheet.

A B C D E

No improvement needed (very good or

excellent performance)

Little improvement needed (generally

quite good performance)

Average performance Improvement needed (generally poor performance)

Considerable improvement needed (generally very poor

performance)

Please make your decisions about the need for improvement on the basis of what you think would be best for this particular subject and your personal learning style. Rather than letting your overall feelings for the lecturer determine all of your responses, please consider each statement separately. Now please evaluate the following questions and indicate your lecturer’s performance in….. 1) making clear the purposes of each lecture 2) making effective use of lecture time 3) demonstrating creativity in teaching methods 4) maintaining an atmosphere which actively encourages learning 5) exploring a variety of points of view 6) selecting materials and activities which are thought-provoking 7) inspiring enthusiasm or interest in the content of the subject 8) getting students to participate in class discussions as appropriate 9) clarifying relationships among the various topics covered in the subject 10) In comparison to other lecturers you have had (e.g., at secondary school, TAFE, or this University), how

would you rate the overall effectiveness of this lecturer?

A. one of the most effective (top 10%) B. more effective than most (top 30%) C. about average (middle 40%) D. not as effective as most (lower 30%) E. one of the least effective (lower 10%)

Appendix 9.2 Performance Documentary Evidence

481

SUBJECT EVALUATION

11) Compared to other subjects which you have taken at this institution, how much do you think you have

learned in this subject?

A. much more than in most subjects B. more than in most subjects C. about the same as in most subjects D. less than in most subjects E. much less than in most subjects

12) Compared to other subjects which you have taken at this institution, how well do you think this

subject has been managed (e.g. a clear subject outline, no undue cancellation of lectures, availability of lecturers, etc)?

A. of much higher quality than most subjects B. of higher quality than most subjects C. about average D. of lower quality than most subjects E. of much lower quality than most subjects

13) How would you rate the text and/or readings for this subject?

A. excellent B. good C. satisfactory D. fair E. poor

14) So far, how would you rate the overall value of this subject to you?


Any further comments which you would like to add about this subject, your lecturer, or this questionnaire would be much appreciated. Please write them in the space below. These comments will be typed before they are returned to your lecturer. COMMENTS (for example, what do you see as the lecturer’s main strengths/weaknesses): *Adapted from the Teaching Analysis by Students (TABS) of the Clinic to Improve University Teaching, University of Massachusetts at Amherst, 1974.

Printed - March 1999


482

Appendix 9.2- Performance Documentary Evidence

GRIFFITH UNIVERSITY

TUTOR AND TUTORIAL EVALUATION QUESTIONNAIRE

The following survey is being undertaken to obtain your feedback concerning this subject’s tutorials and your tutor’s performance. The survey involves two parts. The first relates to evaluation of the tutor’s performance, and the second relates to the subject’s tutorial content. Answers to questions are to be provided on mark sensor answer sheets. In the subject box on the top right hand corner of the mark sensor answer sheet, please write the subject code and your tutor’s name. DO NOT PROVIDE YOUR NAME OR ID NUMBER.

TUTOR EVALUATION

Your tutor would like to obtain feedback on the following issues. Please read each of the following statements carefully and decide the extent to which you feel your tutor does not or does need improvement. Respond to each statement by selecting one of the following five letters and marking it in next to the appropriate question number on the mark sensor answer sheet.

A B C D E

No improvement needed (very good or

excellent performance)

Little improvement needed (generally

good performance)

Average performance

Improvement needed (generally poor performance)

Considerable improvement needed (generally very poor

performance)

Please make your decisions about the need for improvement on the basis of what you think would be best for this particular subject’s tutorials and your personal learning style. Rather than letting your overall feelings for the tutor determine all of your responses, please consider each statement separately.

THE TUTOR’S PERFORMANCE IN…

1) getting students to participate in class discussions

2) making effective use of tutorial time

3) inspiring excitement or interest in the content of the subject

4) maintaining an atmosphere which actively encourages learning

5) exploring a variety of points of view

6) promoting student learning in a thought-provoking manner

7) demonstrating creativity in teaching methods

8) getting students to challenge points of view raised in the subject

9) clarifying material which needs explanation


483

Overall assessment of tutor

For questions 10 - 12, select your response and record the corresponding letter next to the appropriate question number on the mark sensor answer sheet.

10) In comparison to other tutors you have had at this institution, how would you rate the overall effectiveness of this tutor?

A. one of the most effective (top 10%) B. more effective than most (top 30%) C. about average (middle 40%) D. not as effective as most (lower 30%) E. one of the least effective (lower 10%)

______________________________________________________________________________

TUTORIAL EVALUATION

11) Compared to other tutorials which you have attended at this institution, how much do you think you

have learned in this subject’s tutorials?

A. much more than in most subjects’ tutorials B. more than in most subjects’ tutorials C. about the same as in most subjects’ tutorials D. less than in most subjects’ tutorials E. much less than in most subjects’ tutorials

12). So far, how would you rate the overall value of this subject’s tutorials to you?


Any further comments which you would like to add about this subject’s tutorials, your tutor, or this questionnaire would be much appreciated. Please write them in the space below. These comments will be typed before they are returned to your tutor. COMMENTS (for example, what do you see as the tutor’s main strengths/weaknesses): *Adapted from the Teaching Analysis by Students (TABS) of the Clinic to Improve University Teaching, University of Massachusetts at

Amherst, 1974.

Printed – March 1999

484

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