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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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Accounting and culture Initially, there was a dominant ‘‘railway’’ culture. The Business Managers brought a counter ‘‘business’’ culture. This cascaded across the senior management elite ´ to become dominant. The Business Managers had an abstract idea of a business railway. New accounts were crafted representing the railway as a series of businesses. The Business Managers gained contexts to interact with others. In these contexts, they recast dialogue and debate from a railway language of operations and engineering to their business language of markets and profit. Gradually the idea of a business railway became more specific. Moving from remote concerns to immediate issues, they persuaded others of their interpretations. There were contests over the definition of specific activities. The outcomes became symbols through which people attributed new meaning to railway operations. Momentum built up behind the business culture. People converted, others left. For senior managers, the abstract idea became a tangible, energizing reality, a source of pride. Now the railway culture is repudiated.

A broad range of theories can be brought to bear to interpret the pattern of these events. Fundamental to this account is the notion of culture as a system of ideas: beliefs, knowledges and values in which action and artifacts are vested with expressive qualities (Geertz, 1973, 1983); and the idea that organizations have distinctive cultures (Pettigrew, 1979). This is exemplified in the contrasting ‘‘railway’’ and ‘‘business’’ cultures described. Associated with this is the conceptualization of organizational change as a process of uncoupling and recoupling (cf. Greenwood & Hinings, 1988): exemplified in the railway by the uncoupling of activities from the railway culture and their recoupling to the business culture.20 We can also see This characterization, of course, emphasizes change; and there is also a sense in which there is continuity. The railway still runs trains, it still provides a transport infrastructure (of sorts), and


a theory of inertia in operation, change being precipitated by crisis (cf. Starbuck & Hedberg, 1977; Jonsson & Lundin, 1977; Mintzberg, 1978; Miller & Friesen, 1984).

The railway culture was remarkably resilient over many previous decades, despite several attacks; real threats only being perceived when the severity of the current onslaught on the public services became apparent. There are also traces of the ‘‘garbage can’’ (Cohen et al., 1972; March & Olsen, 1976): the Business Management idea was developed independently of the crisis, only subsequently coupled to the threats facing the organization.

Continuing, change was emergent (March & Olsen, 1976; Pettigrew, 1985). This was not a controlled process, relying on plans and rational analyses engineered by those standing outside, untainted as it were; the whole management group was bound up in the creation of the business culture. The process unfolded through tentative initiatives, buffeted by the timing of events, the ambition and (relative) political skills of the ‘‘champions’’ (Kanter, 1983) and other actors involved, and their failures and successes. Nor were the vagaries of chance unimportant21 (Pettigrew, 1985). Moreover, we see changes in systems (planning, capital investment, budgeting) interpenetrating the emergence and elaboration of the business culture.

It also is possible to appeal to the insights of institutional theory (Meyer & Rowan, 1977; DiMaggio & Powell, 1983; Scott, 1987; Zucker, 1988). Government, the railway’s key environmental constituency, was intolerant of (what it saw as) managerial incompetence. The Business Management initiative could be interpreted as a symbol of the railway becoming more modern and business-like: the ‘‘bottom line’’ idea standing for the railway adopting private sector practices.

Such solutions may have real and unintended internal consequences, however.

One was the Business Managers amassing power and influence at the expense of the General Managers. Although a theoretically impoverished theory in this context, there is some link here with the strategic contingencies’ perspective of intraorganizational power (Hickson et al., 1971; Hinings et al., 1974). Subsequent to the appointment of the Business Managers, the railway managed to persuade government to make funds available, on a one-off basis, for a major electrification project (giving rise to the signalling controversy discussed earlier). Apparently, approval was forthcoming as a result of the ‘‘rigorous business case’’ orchestrated by the relevant Business Manager.

The purpose here is not to discuss these theories further, however. It is to develop a cultural appreciation of accounting. The study shows that accounting was implicated differently in the two cultures described. At this point, it is appropriate to explicate its linkages to underlying knowledge, values and beliefs.

it is still a very mechanistic bureaucracy. Nevertheless, managers in the organization currently emphasize change, and there is a sense in which linkages with the past have been ruptured, for the railway, as I will explain, is interpreted quite differently.

In ER, subsequent to the events described, there was an unfortunate accident in which one crowded commuter train collided into the back of another. A formal inquiry found that basic supervision of electrical rewiring in a signalling scheme had been neglected, attributing blame, in part, to ER’s pursuit of profit. It is interesting to speculate how outcomes might have differed had this accident happened two years before.


A cultural system incorporates, among other things, knowledge about environments, and strategies for extracting subsistence from them. This knowledge is quite different in the two cultures. In the railway culture it revolved around the public service idea, later coupled to notions of thrift. Essentially, the knowledge was this: if the organization provided the nation with a transport infrastructure (without undue waste), then sustenance would be forthcoming from government.

This knowledge is not unique to the railway culture. The expectation that low-cost, generally available services will be rewarded by the state is common to many public service organizations in Europe, for example the health and education services.

Given this knowledge, accounting was incidental in the railway culture: it was necessary to ensure that revenues were accounted for and suppliers paid, and perhaps to contain waste, but that was the limit of its significance in the structures of meaning. The purpose of the railway was to run trains; operating the railway would be rewarded by government. In this knowledge, the train, therefore, was endowed with a special significance.

The business culture, revolving around the ‘‘bottom line’’, incorporates a quite different knowledge. Rather obviously, in view of events in ER, the bottom line constructs the notion of the railway as a profit-seeking enterprise. This is not just a matter of ‘‘cost efficiency’’, however, although that is important.

More importantly, in ER it constructs the idea of looking to product markets, rather than to government, for sustenance. There is nothing somehow uniquely ‘‘public service’’ about the railway network in this construction. Rail transport is a product (or service), to be bought and sold like any other; in fact it is a series of products: intercity travel, freight, suburban commuting, etc. Revenues from these products, rather than government support, must cover costs;

and, critically, revenues are earned in the market place. Survival depends on extracting resources from these markets, perhaps in competition with other firms.

Hence the new-found concern for competition with other means of transport (road, air, buses), expressed by railway managers early in the account above, a concern which in the railway culture would have been probably inconsequential.22 Given this knowledge, accounting activities become hugely significant. The search for profit opportunities, and the elimination of non-profit-making activities, is a quest for survival. It is now the customer, not the train, which has special importance.

No culture is completely coherent, of course. Each has ambiguities and contradictions. In ER, residues of the past create tensions. One is the partial incompatibility of the business culture with the restrictions placed on it by state ownership. ER is not allowed to borrow in financial markets to fund investment, for example, and as government funds are tight, this means investments necessary for competitive purposes cannot always be made. It also has statutory obligations to keep certain branch lines open, even if they are unprofitable. Here it still A Business Manager’s comment on market research is also interesting in this respect: ‘‘The single most important question we ask is: ‘Are you more likely or less likely to travel on the railway as a result of your most recent journey?’ ’’ This question would have been substantially irrelevant in the railway culture.


looks to government for support (although a government conceptualized as a customer). Nevertheless, the underlying knowledge systems are quite different, and constitute different realities.

This shift in knowledge which accounting helps to construct, the shift from looking to the state for subsistence to looking to markets, is fundamental, and it interpenetrates the operation and management of ER’s core technology with pervasive effects. For a start, it changes the appropriate form of organization. In the old knowledge, the prime task was the operation of trains. The meaningful management structure was one which facilitated operations. The physical facilities of the railway are geographically laid out along the radial routes of the old prenationalization companies. Thus the appropriate management organization was around these routes, i.e. the regional management structures. The regional General Managers and engineers, because of their acknowledged expertise in operating trains, were afforded substantial status and influence.

Now, in the new knowledge, this is ‘‘mere’’ production, subservient to markets.

The prime task is serving markets. The meaningful form of management organization is one which reflects and confronts markets. Since the long distance intercity travel market is not confined to one main line, for example, or the freight market confined to one region, the regional and business forms of organization do not map perfectly onto one another. Hence the reorientation of management structures and systems around the Business Managers, and their subsequent elaboration through the Business Manager’s subordinates located in the regions. Of course, there is still an operational task to be performed: trains, tracks, maintenance and so forth.

But in this new knowledge it is Business Managers, with supposed expertise in markets and extracting resources from them, who attract status and influence.

The changing knowledge also redefines the appropriate form of action. In the old knowledge, that of the celebration of the train, there were norms that made things intrinsically necessary. ‘‘Of course’’ professional railwaymen renewed signalling equipment when they electrified the track, for example; it was inconceivable not to do so. The train needs to be taken care of and nurtured. The interest in thrift, the avoidance of waste, also meant the elimination of activities not strictly necessary for the operation of trains: training staff to smile at customers, for example. In the new knowledge, activities are neither intrinsically necessary, nor intrinsically wasteful. Rather they are judged for their consequences in the market. Through the ‘‘bottom line’’, activities become desirable to the extent that they add more ‘‘value’’ than they cost. This is not simply cost minimization: the avoidance of unnecessary gold-plating. The ‘‘bottom line engineering specification’’, mentioned earlier, means designing for the market, as it were: adding comfort, reliability, speed, customer service where its returns outweigh its cost. Attractive concourse design is not wasteful extravagance, it is reinterpreted as a ‘‘good’’ thing which brings in custom.

Action is also judged against a different concept of time. In the old knowledge, time was practically infinite. The railways were built to last for decades, for centuries. The nation would always need a transport infrastructure. Professional


standards were oriented towards doing a long-lasting thorough job. Government would reward the railway for maintaining the viability of the network into the future. In the new knowledge, the concept of time is much shorter.

Survival is a day-to-day affair. Markets are ephemeral. Don’t spend money now on activities that you can put off until the future. Take ‘‘maintenance holidays’’ where you can: deterioration of the infrastructure can be remedied later.

The point being made here is that accounting can play a significant role in constructing specific knowledges. Accounting systems embody particular assumptions about rationality, organization, authority, time and so forth. If these permeate into underlying values, knowledges and beliefs they can have very real consequences. Above we see accounting coming in to the organization to construct a new theory of subsistence, which in turn implies particular modes of organizing, patterns of influence and authority, criteria for action and a new concept of time.

The cultural knowledge described here was not discovered completely formed.

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