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Integrating Organisational and Individual Level Performance Management Systems Within the Indonesian Public Sector

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Whole thesis(2.24 MB)

Date

2018

Authors

Supervisor

Northcott, Deryl
Corner, Trish

Item type

Thesis

Degree name

Doctor of Philosophy

Journal Title

Journal ISSN

Volume Title

Publisher

Auckland University of Technology

Abstract

This PhD study aims to contribute to the literature on integrated performance management systems (PMSs) development. By examining comprehensively the elements of organisational and individual level PMSs and the linkages between the elements that make up those PMSs, this study responds to the call for management accounting research to pay more attention to management control aspects beyond accounting measures (Otley, 1999, 2001, 2008, 2016). To examine the elements and integration of PMSs, this study conducted a critical realist-based explanatory case study in a single, large government organisation in Indonesia. The design of the study and the data analysis drew on Ferreira and Otley’s (2009) PMSs theoretical framework. Data were captured from electronic and printed document archives, online written interviews with participants across the Indonesian public sector, and face-to-face interviews with organisational personnel at different hierarchical levels and within different functional areas of the case study organisation. The data from these various sources were triangulated and analysed thematically. There are several key contributions of this study. First, it reveals the process, outcomes, challenges, and benefits of integrating organisational and individual level PMSs in the studied organisation. These findings are a contribution because management accounting scholars have suggested a need to examine PMSs comprehensively and consider the integrated nature of PMSs, yet existing literature largely focuses on a single element of PMSs, such as organisational level performance evaluation. Moreover, these prior studies fail to consider the other PMS elements that surround the element being examined and tend not to consider the issue of how PMSs are integrated across hierarchical levels of the organisation. Also, these previous studies provide limited insight into how PMSs may end up being loosely coupled rather than integrated (Berry, Coad, Harris, Otley, & Stringer, 2009; Ferreira & Otley, 2009; Otley, 2008, 2016). The findings of this study show that the case organisation attempted to integrate its organisational and individual level PMSs by using technical and social mechanisms, formal and informal control systems, and management accounting (MA) and human resources management (HRM) control approaches. Yet, instead of achieving a single, well-integrated and coordinated PMS, the integration effort led to dual, loosely coupled PMSs. The key challenges that impeded the integration effort were that the two PMSs were managed by different taskforces, the studied organisation faced conflicting regulatory requirements, and there was inadequate support from information technology. Although the integration effort resulted in loosely coupled PMSs, the studied organisation gained several benefits from the integration process that in the long run may help the organisation and its members to achieve the organisational vision, missions, and key success factors. Second, this study shows the interconnections between MA and human resource management (HRM) control approaches. MA scholars have called for the cross-fertilisation of these approaches, but few researchers have examined empirically how these approaches might be combined (Chenhall, 2012; Chenhall & Langfield-Smith, 1998, 2007; Otley, 1999; Stringer, 2007). This study contributes to this research gap by revealing how the studied organisation used a combination of MA and HRM control approaches to integrate organisational and individual level PMSs. It used the MA control approach of cascading key performance measures and targets from the organisational level down to individuals, as recommended in the balanced scorecard approach (Kaplan & Norton, 1996b, 2001b). The aim of this MA control approach was to align individuals’ goals with organisational goals via an integrated approach to PMSs. The organisation also used the HRM control approach of assessing the behaviour of individuals against stated organisational values and evaluating the competency of individuals with the aim of strengthening organisational capacity (Hazucha, Hezlett, & Schneider, 1993; Silzer & Church, 2009). Third, this study provides further insight into Ferreira and Otley’s (2009) PMSs framework by exploring empirically two of its dimensions, i.e. culture and contextual factors. An explicit focus on these two dimensions is a contribution because previous studies largely focus on national culture and give little attention to its relationship with organisational culture. Also, previous studies do not always consider how contextual factors, such as political influences, may shape PMSs in the public sector of developing countries (Berry et al., 2009; Henri, 2006b; Merchant & Otley, 2007; Otley, 2016; Van Helden & Uddin, 2016). The findings of this study reveal a complex relationship between culture and PMSs integration. The organisational culture (Cameron & Quinn, 2011; Henri, 2006b) of the studied organisation, as shaped by the national culture (Hofstede, 2007; Rhodes, Walsh, & Lok, 2008; Wihantoro, Lowe, Cooper, & Manochin, 2015) of its employees, affected the integration of the organisational and individual level PMSs. Conversely, the integration of organisational and individual level PMSs also affected the organisational culture by reducing the influence of the employees’ national culture on organisational culture. In regard to how contextual factors shape PMSs, this study’s findings show that political factors directly influenced the organisational level PMS and indirectly influenced the integration of organisational and individual level PMSs. Further, the complex design of the organisational structure, which was not entirely controlled by the studied organisation, led to complexities in the integration of organisational and individual level PMSs. These complexities contributed to a lack of coherence between the organisational level key performance measures and targets and individual level key performance measures and targets. Finally, this study suggests that while organisations may face challenges in fully integrating organisational and individual level PMSs, which may instead end up as loosely coupled PMSs, the PMSs integration process can still provide benefits to organisations and their employees. Future studies could usefully investigate the integration of organisational and individual level PMSs in different contexts, address some limitations of this study, and further explore the impact of culture and contextual factors on PMSs integration. Further research may also draw on the findings of this study to help organisations and their management to do the following: align different or conflicted organisational and individual interests; inform the MA literature by drawing on HRM theory and research on individual level PMSs; address the gap between PMSs theory and practice; and allow MA researchers to make a stronger contribution to performance management practice.

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Keywords

Performance management systems, Public sector, Developing countries, Integration

Source

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Permanent link

https://hdl.handle.net/10292/11703

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Doctoral Theses