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«Paul M. Collier Aston Business School, Aston University Accounting for Managers Accounting for Managers: Interpreting accounting information for ...»

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Committee structures were continually revised and amended during the post-nationalization period. My terminology anticipates the structure in place in the early 1980s, at the start of this research. Broadly speaking, this structure is not unrepresentative of early patterns, for the representation of interests in railway management committees was constant throughout this period. The railway companies were also diversified into related businesses, however, e.g. engineering, shipping, harbours, property and hotels, which were also represented in the management structure. These other businesses are not discussed here. They only accounted for about 25% of headcount and turnover, and the railway operations remained the dominant managerial concern. For the record, they were gradually privatized during and after the period of this research.

ACCOUNTING FOR MANAGERS

This was the reality of the dominant ‘‘railway culture’’. The railway was a public service. The purpose of the railway was to run trains. In so doing profitability was secondary. The accepted professional concerns were to do with railway engineering and the logistical problems of operating trains. And although the ‘‘golden age’’ of steam had passed, new electrical and electronic technologies still offered scope for railway people to further their engineering heritage.15 The emergence of the economic perspective In a profound sense, nationalization thirty years before had created a relationship of dependence for the railways, a dependence on government for sustenance.

In the early 1980s the implications of this became clear. Government policy became stringent. Social aims ceased to be a legitimate criterion for support.

Government sought to impose harsh economic disciplines in all areas of public and private endeavour. Declaring a determination to ‘‘take on’’ the public services in particular, it orchestrated a campaign challenging the competence of publicsector management. For the railway, government ‘‘expectations’’ were translated into more specific financial ‘‘objectives’’. These were progressively tightened.

Investment funds were withheld. Reporting escalating losses, ER found itself in a malign, resource constrained environment.

We need, for a moment, to backtrack. Apparently, in the late 1970s, the Chief Executive of the railway had set up a strategy think-tank to improve long-term planning.16 Embryonic ideas developed there, and subsequently nurtured by a small group of executives, were now rolled out for more general consideration.

Senior managers, by this time fully appreciative of the real hostility of government and the precarious position of the railway, fastened onto the ideas as a solution to the current problems. The organization, through the Executive Committee, created new management positions. For the first time, ‘‘Business Managers’’ were appointed. For analytical purposes (only), railway operations were broken down into market sectors: for example, long distance passenger traffic, short distance passenger traffic, freight, parcels and postal traffic. Business Managers were assigned responsibility for developing strategies to enhance financial performance in each sector – in effect to manage the ‘‘bottom line(s)’’.

These people were appointed outside the main line-management hierarchy of the railway. They were long-range planning people in staff positions at the Head Office, with no formal control or authority over railway operations. In fact, their initial responsibilities were thought to be confined to the identification of market-related initiatives. The Business Managers reported to the Chief Executive A notorious example of this was the development of an advanced passenger train in the late 1970s. Powered by a gas turbine, it employed a revolutionary suspension technology, the whole train tilting as it went round corners. In trials, the prototypes proved unreliable, and made passengers sick. The project was shelved in the subsequent ‘‘business regime’’ of the 1980s. A prototype was sent to a railway museum.

I am indebted to independent archival research for this information. In the railway folklore

these events are shrouded in the mystery of (recent) time. This pattern of events is not unique:

see Gourvish (1990) for comparable accounts.

ACCOUNTING AND ORGANIZATIONAL CULTURES 345

and joined the Executive Committee. But the regional management hierarchies remained intact. Regional General Managers, carrying on the old traditions, continued to run the railway.

The appointment of Business Managers was to have far reaching consequences, however, for it introduced a new ‘‘business’’ culture, a counter-culture. They brought a different interpretation of reality. For them the railway was a business, its purpose was to make profit. Engineering and logistical operations were essentially a means for extracting revenues from customers. Professional management was about making the railway profitable.

Business Managers were appointed without staff or support at the margins of the organization. But during the course of the study, they gained influence at the expense of the regional General Managers. They persuaded many around them of their idea of a business railway. Gradually, people converted to the ‘‘business culture’’. Others left the organization. The nature of dialogue and debate changed. Appeals to the old traditions of railway excellence and public service were repudiated. New kinds of policy decisions emerged, motivated by the business logic. Operational activities out in the regions began to be informed by the new rationale.





Now, the old world view, the preoccupation with engineering and logistics, the belief in the railway as a social service, the railway culture, has been substantially displaced by the business perspective, the belief that railways should be instrumental in making profit and managed to that end. The counter-culture has emerged to become the dominant-culture among the senior management.

Traditions established over longer than a century were quickly overthrown.

Tracing the dynamics of change

The story is one of evolving interpretations, meanings and perceived possibilities.

No one in the organization foresaw the outcome at the start, not even the Business Managers. At first, their ‘‘business culture’’ was vague and indistinct, a kind of abstract generality. But as events unfolded, it became more specific.

Possibilities for coupling their business reality to organizational action were perceived. Gradually, as people elaborated the new logic for organized activity, momentum was created. Capturing the emergent nature of these developments, one senior manager described the experience as ‘‘a voyage of discovery and development’’.

This section traces the dynamics of change. Firstly, it considers the context surrounding the appointment of Business Managers. Then it outlines the crafting of new accounting systems. Subsequently, it traces the process through which the new accounting was coupled to organizational activities and endowed with meaning. Finally, it gives an account of the regional General Managers’ perspective in these events. The section is interspersed with representative comments from managers in the organization.

ACCOUNTING FOR MANAGERS

People and context The context of the Business Managers’ appointments in ER is important in appreciating the trajectory of events. The railway was under acute threat. The competence of public-sector management was openly under challenge. The railway was charged with being ‘‘old fashioned’’. Governmental pressures for profitability were onerous, and sanctions were being applied.

These threats were clearly appreciated by senior management. The railway has always prided itself on being modern in its technological activities. The charge of being ‘‘old-fashioned’’ in its management practice was deeply challenging. Moreover, there was some recognition that the old traditions were not, in themselves, proving sufficient to manage the threats away, and needed to be supplemented in some way. The skills the Business Managers brought, marketing, long-term planning, ‘‘bottom line’’ management, had an image of modernity, enabling the railway to throw off the charge of being ‘‘old-fashioned’’, and were thought to be a useful supplementation of the railway traditions. Moreover, they were thought to be unintrusive, a ‘‘grafting-on’’ to the old traditions. The Business Managers had no operational authority. They were ‘‘back office’’ planning people. Their roles were defined through a remote accounting construct, the ‘‘bottom line’’, outside the prevailing mainstream understanding of railway activities. In bringing new knowledge to bear to cope with environmental pressures, they were not expected to

disrupt the railway or existing patterns of authority. Senior managers commented:

Everything has its time. You’ve got to realize the environment of the (transport) industry. We’re now in the most competitive environment the railway has ever faced. And there were clear objectives emerging from the Government. These things made people think differently.... It’s all in the market place in the end, and how to exploit the market place. The traditional railway wasn’t sensitive to the market place (Senior Executive).

We were weak in marketing and business issues generally. The government targets were stiff. We needed those skills (General Manager).

Equally important are the personalities and backgrounds of the Business Managers. While they had all at some time worked in or with the railway, practically all had also worked outside. Thus, while they understood the railway culture and could talk railway talk, they also appreciated what they saw as wider business practice: ‘‘managing for profit’’. Furthermore, these men became evangelists, hungry people with a mission. They developed a zeal to convert the railway from a social service to a business enterprise.

In addition, the nature of their appointments was rather unusual (at least for a mechanistic organization). There were no briefs or manuals. Ultimate intentions were not articulated. Business Managers were just told to see what they could do.

We introduced it in an evolutionary way. We said: ‘‘Let’s appoint Business Managers and then let it evolve. Be patient and let it evolve’’ (Senior Executive).

ACCOUNTING AND ORGANIZATIONAL CULTURES 347

When the Chief Executive introduced the Business Managers he didn’t have any idea how to take the concept forward. I think he deliberately chose people who would win the day, and left them to get on with it. It was up to each of us to build our influence. The regional General Managers had great centres of power: buildings and armies of people. They were the Gods on high, the last remnants of the Railway Companies. He wanted to stand back from it all, and see what would happen (Business Manager).

They had, at best, a vague job description, one which they could legitimately expand.

Subsequent events were not independent of changes in the social and political climate during the decade. It was one dominated by economic liberalism: deregulation in many spheres of activity, privatization of state owned enterprises, and a sea change in attitudes towards the public services and the Welfare State. These substantive effects were to come later, but there was already a clear ‘‘idealization’’ by government of private sector management practices, and a belief that they could be introduced in the public sector. (Industrialists were rationalizing ‘‘old fashioned’’ work routines in the Civil Service, for example.) There was also a stated political agenda to subject the public services to ‘‘market disciplines’’ wherever possible.

Evolutionary change and organizational acclimatization The railway has long traditions and consensually accepted preoccupations. At first, the Business Managers could only see limited opportunities for coupling their concept to day-to-day activities. But as events unfolded, tentative new possibilities were perceived. Stage-by-stage, as if in episodes, their abstract notion of the business railway became more concrete.

The railway is a very formal organization. People in it describe the management process in bureaucratic analogies, talking of ‘‘chains-of-command’’ and ‘‘good old soldiers falling into line’’. In meetings, people are often referred to through their official titles. There is much deference to authority. The Business Managers recognized the significance of this formal management style in their quest to convert the railway. In fact they worked through it. As their ideas evolved, in each episode they sought first to persuade the Chief Executive and his advisors. These people were likely to be the most sympathetic to their economic rhetoric, for they interfaced with government and felt the external pressures most immediately.

Carefully negotiating in principle a course of action, often after much private and closed debate, then, sure of their support, the Business Managers set out to convert a wider group.

Each episode involved a fairly small incremental step. None, in isolation, was especially threatening or difficult to accommodate in the old railway culture.

Indeed, at first, even those who ultimately stood to lose influence and status appreciated the blending of the business perspective into the railway culture. As the organization became acclimatized to each change, however, as each episode had a chance to ‘‘soak’’, so new possibilities were perceived. Repeatedly, new episodes were enacted.

ACCOUNTING FOR MANAGERS

Commenting on the way in which they operated, a Business Manager reflected:

In the early days, there was nothing in writing, except that we had a responsibility for improving the bottom line. There were no organization charts. This made life difficult. It was all about relationships. We had to persuade everyone around us... As we did so, our ideas evolved. We became increasingly aware of the potential of the Businesses.

Senior Executives recalled:



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