As the recession deepens, universities are cautious of pending redundancies which will unquestionably affect the organisational structures. AnÂ organizational structureÂ consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organisational aims (Pugh, 1990).Â It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment (Jacobides, 2007).
Universities are likely to struggle financially reducing their options. The cuts are also to take effect in the current academic year, and this is likely to affect the controlling and allocation of resources (Exquisite Life Research, 2011). Can universities adapt to these changes in time with immediate effect? Or will these cause perplexities. I believe this is dependent on many factors such as the universities current capabilities and culture as well as the environmental circumstances where I believe will impact more teaching led over research driven universities. The procedures for planning and controlling resources can be found in the universities strategy for that particular year. This includes their key strategic aims, sustainability, challenges, cost allocation, growth of finance and many more. However not all universities will disclose this, only a selected few.
Patterns of organisational control (Hopwood, 1974)
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Hopwood (1974) stated three important controls in order to organise an enterprise. Although a university is considered an 'institution', the ruling and running of some institutions can be classified in a business manner. Further support can be taken from Jones (1994) who asserted that universities can benefit from a more industrial model of management. There is pressure to maximise the efficiency with limited resources available in universities, but where should this efficiency be gained?
I believe this is dependent on the universities philosophy and tradition and where they maximise their establishment. In other words, this is the culture in the university.
CultureÂ describes the psychology, attitudes, experiences, beliefs and values in a university. It has been defined as the specific collection of values and norms that are shared by people and groups in an organisation and that control the way they interact with each other and withÂ stakeholdersÂ outside the organisation.[
'Research-led and 'Teaching-led' Universities
In constructing links between research and teaching the discipline (university) is an important mediator (Healey and Jenkins 2003). This is because the conduct of research and the teaching approaches tend to differ between universities in the UK. This often leads universities to act as distinct 'academic tribes' (Becher and Trowler 2001) or 'communities of practice' (Wenger 1998). These strong views in part reflect the importance of linking research and teaching in the identity of many academics (Henkel 2000), all which will be impacted by the budget cuts. But which ideology will be affected more?
The nature of the universities philosophy in associated with the environment of different cultures in which research and teaching take place. Hundreds of years of discipline are unlikely to change, and therefore the budget cuts will impact in diverse ways. Additionally, I believe there is the nature of accountability and the internal political factors that will impinge on the impact in controlling and planning of resources. But where does the accountability lie? This depends in who is in control of the finances. I believe fulfilling public accountability obligations is important for universities. Further support can be taken from Coy (2001) who states that with more overt commercial, administrative or political objectives; public accountability can be minimised.
Sinclair (1995) produced "The chameleon of accountability forms and discourse in public sector" which is all particularly relevant in this case study. Accountability can be distinguished as a relationship involving the "giving and demanding of reasons for conduct" (Roberts and Scapens, 1985, page 447; Robinson, 2003, page 172). It is this aspect of accountability which has been a focus in the accounting literature (Jacobs and Walker, 2004).
Accountability may be dictated or implied by law, regulation, or agreement or expectation in the university; the people in the organisation have to bear the consequences for failures for these controls (Hoskin, 1996). As Emmanuel (1990) states, there are different ways in which control in an organisation can be accomplished. Once again, I believe culture has a central impact in all of this.
The universities will argue that their reform is a continuous and dynamic process. Therefore it is difficult to draw a uniform picture of the impact of the changes. However it is commonly accepted that Universities have to change what they do, but traditional university structures, reporting mechanisms and control processes are facing difficulties in coping with these changes. Is this a control system?
Always on Time
Marked to Standard
Charles HandyÂ (1985) popularized the 1972 work of Roger Harrison of looking at culture which some scholars have used to linkÂ organisational structureÂ to organizational culture. He describes aÂ Power CultureÂ which concentratesÂ powerÂ among a few. Control radiates from the center like a web. Power and influence spread out from a central figure or group. Power desires from the top person and personal relationships with that individual matters more than any formal title of position. Power Cultures have few rules and littleÂ bureaucracy; swift decisions can ensue. In aÂ Role Culture, people have clearly delegated authorities within a highly defined structure. Typically, these organizations form hierarchical bureaucracies. Power derives from a person's position and little scope exists for expert power. Controlled by procedures, roles descriptions and authority definitions. Predictable and consistent systems and procedures are highly valued.
I believe internal changes in the organisational structure is difficult; institutions are trying to cope simultaneously with increased workloads and reduced levels of resources (Ackroyd and Ackroyd, 1999) whilst changing the ways things are done in the university. Universities have also been described as bureaucratic organisations (Blau 1973; Holdaway et al. 1975) relying on formalised roles and procedures for control. Becker and Gordon (1966) proposed that university structures combined both collegial and bureaucratic characteristics.
The primary benefits for the University that would be realised is the increased ability to stimulate inter-disciplinary activities that currently straddle Faculty boundaries, reducing transaction and co-ordination costs and delays. In addition it is expected that the changes will lead to a secondary benefits such as the facilitation of a change in culture towards greater agility, less bureaucracy, enhanced
interdisciplinary working and improved innovation.
It is imperative for British universities to deal with these cuts as efficiently as possibly due to its attachment to the civic role for Higher Education and strong traditional academic values (Paterson, 2003). The universities are socially embedded such as educating, maintaining and developing the nation's cultures, preparing students to contribute to community and economic development (Jarzabkowsky, 2002), however not all universities will share this philosophy. These budget cuts can become linked to performance indicators such as graduation rates job placement statistics (Vestrich 2006). Lord Mandelson, the universities secretary broadcasted that £135 million would be cut in the vice-chancellors budgets next year, on top of £180 million of efficiency savings (Times Online, 2011). But how is this is likely to affect the organisation? I believe this is dependent on its hierarchy of communication and decision making.
There are different approaches by universities to deliver, and how to be organised and how accountability and control should be run. A typical explanation can be derived from my current university. Aston University's mode of coordination can be classed as bureaucratic; the counsellor/senate responds to what to do and the schools report back which is also the case in universities such as Cambridge University who hold collegial schools that want to want to make the decisions which feeds up to the counsellor and senate. Oxford University like to bring all knowledge under one institution and not necessarily making any hierarchy. The hierarchy and structures can be impacted in many ways; one which I believe is important is in decision making. Universities such as Aston University, it is very much research-led within its faculties such as the Business School and School of Engineering. Outside of these schools, the vice-chancellors and dean make the top decisions. Will these budget cuts affect the decision making Aston University as a whole? Or will there still be some kind of segregation? It is difficult to conclude this implication but it is understood that Aston University, and Aston Business School run their own finances seeing that the Business School has a major influence in its cash generation. It is unlikely that they will have much say in decisions such as developing strategies in Aston services which is provided centrally, as they have their own service to be accountable in their research based faculties. Therefore it is evident universities have different ideologies.
Several theories have been used to explain differences in the rationalized, formal structures of organizations that are used to coordinate and control their members. Two of the most prominent theories, contingency theory and institutional theory, take almost opposite approaches to understanding the factors that lead to the development of different formal structures. Contingency theory suggests that the demands imposed by technical tasks in the organization encourage the development of strategies to coordinate and control internal activities, and institutional theory (discussed later) suggests that the expectations regarding appropriate organizational forms and behaviour that are expressed in the wider social environment promote the development of an organization's formal structure.
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Contingency theory has two basic underlying assumptions; firstly, that there is no one best way to organise. Secondly, any way of organising is not equally effective (Galbraith, 1973). This is saying that the best way to organise depends on the nature of the environment to which the university relates (Scott, 1992).
Depending on if the university is 'research-led' or 'teaching-led', the budget cuts will have different implications on organisational structures and the planning and controlling of resources. I believe cuts of this magnitude will undoubtedly impact on the sustainability or universities which are 'teaching-led'.
This is supported by the fact that there will £27.6 million reduction in the research budget and a £162 million, cut in funding for teaching (Exquisite Life Research, 2011).
Contingency theory suggests that the demands imposed by the budget cuts in the university encourage the development of strategies to coordinate and control internal activities whereas Institutional theory suggests that the expectations regarding appropriate institutions behavior that are expressed in the wider social environment promote the development of a universities formal structure.
According to the contingency perspective, a university focuses on its technical activities and shapes its work processes to promote those activities while protecting them from disturbances in the external environment. As with the environment being an important variable in the contingency theory, institutions also operate at different levels of jurisdiction, from the world system to localised interpersonal relationships.
Education officials are turning the attention to accountability in higher education as the tax payer's money is pumped in. These cuts are likely to affect the academic success through enrolment figures and graduation rates; these changes are likely to hold different impacts, at different universities with diverse standardised accountability policies introduced. Universities in the UK are very diverse in their philosophy and culture and whilst we look at this through the contingency theory; it is clear that universities do not easily adapt to a one size fits all kind of environment.
Scott and Richard (2001) mentioned that there is no single and universally agreed definition of an 'institution' in the institutional school of thought. He stated that Institutions are composed of cultural-cognitive, normative, and regulative elements that, together with associated activities and resources, provide stability and meaning to social life. Just as the contingency concludes that there is no one best fit approach, institutions are transmitted by various types of carriers, including symbolic systems, relational systems, routines, and artefacts.
As I mentioned earlier, the culture of a university is an important aspect of its reaction to such budget cuts, and we can view this through the theoretical lenses of Institutional theory. Here it attends to the deeper and more resilient aspects of social structure. It considers the processes by which structures, including schemas; rules, norms, and routines, become established as authoritative guidelines for social behaviour (Scott & Richard, 2004). Institutional theory inquires into how these cultural elements are created, diffused, adopted, and adapted over space and time; and how they fall into decline and disuse (Scott & Richard, 2004). Although the ostensible subject is stability and order in social life, universities must perforce not just to consensus and conformity but to conflict and changes in social structures.
Van de Ven (1976) suggested three modes of coordination and control that are used to manage: the bureaucratic mode, the personal mode, and the group mode. The bureaucratic mode relies on standardised tasks to constrain. The integrating mechanisms include pre-established plans, schedules, and forecasts; formalized rules, policies, and procedures; and standardized information and communication systems.
Universities are likely to be fined for recruiting too many students in the UK consequently many students will miss out in enrolling to higher education. This is not to say that managing the process will not be difficult, but it may be premature to declare this a disaster as some have done; indeed, even warning over the possibility of poorer teaching resources may be counter-productive in the international student market on which so many universities now depend. The finances raised can combat the budget cuts which would provide universities with limited resources.
Scott (1995) indicated in his pillars of institutions that, in order to survive, universities must conform to the rules and belief systems prevailing in the environment (DiMaggio and Powell, 1983; Meyer and Rowan, 1977), because institutional isomorphism, both structural and procedural, will earn the universities legitimacy.
Three pillars of institutions (Scott, 1995);
Basis of compliance
Taken for granted
Rules, laws, sanctions
Basis of legitimacy
Culturally supported, conceptually correct
I believe universities operating in different regions with varying institutional environments will face diverse pressures. Some of those pressures in host and home institutional environments are testified to exert fundamental influences on competitive strategy and planning and controlling of resources.
Institutional theorists assert that the institutional environment can strongly influence the development of formal structures in a university, often more profoundly than market pressures. Innovative structures that improve technical efficiency in early-adopting universities are legitimised in the environment. At this point new and existing universities will adopt the structural form even if the form doesn't improve efficiency. Legitimacy in the institutional environment helps ensure the universities survival. However, these formal structures of legitimacy can reduce efficiency and hinder its competitive position in their environment.
In contrast to the contingency theory, according to the institutional perspective, a university, gains legitimacy by conforming to external expectations of acceptable practice while separating its internal activities from externally directed symbolic displays. A university thus may ceremonially adopt elements of formal structures, such as standardised coordination and control practices, to demonstrate the rationality of its operations to external constituents, rather than to control its members (Meyer and Rowan, 1977; DiMaggio and Powell, 1983). I find that there is a high level of consensus and cooperation within the institutional environment, and the diffusion of innovative structures is steady and long-lasting. However, when the institutional environment is contentious and unfocused, adoption of innovative structures is likely to be slow and tentative.
Nevertheless, there have been few systematic efforts to test the isomorphism-legitimacy link because of continuing difficulties in defining and measuring legitimacy (Bozeman, 1993; Galaskiewicz, 1985; Suchman, 1995; Terreberry, 1968).
The budget cuts require specific forms of information to monitor the activities of the organization. This will represent a change in the rules, i.e. the form of the management accounting system. As these rules are introduced and implemented, new routines will emerge, i.e. actual procedures will be developed and reproduced by the various people involved. These procedures must work alongside the many other organisational routines already in place, and they will be shaped by the existing institutions. Gittel (2003) argues that the coordination of highly interdependent work is more effectively carried out through high-quality communication and relationships, particularly through relationships of shared goals, shared knowledge, and mutual respect.
Comparison of the two theoretical perspectives
Despite the apparent inconsistency between these two perspectives, theorists working within each recognise its interrelation with the other. Drazin and Van de Ven (1985: 516-517) who used contingency theory, recognised that many internal coordination and control practices may become institutionalised over time and thus may be unresponsive to the task technology the organisation uses. Similarly, Gresov (1989: 439) observed that certain coordination and control practices may serve a symbolic role while others may serve an instrumental role in achieving control and improving performance.
The impact of external and internal contingencies has also been recognized in institutional theory. Meyer and Rowan (1977) theorized that organizations may use relatively formalized control practices for symbolic purposes while actually exercising control over their members via more idiosyncratic and social means. Scott (1987: 507-509) has observed that contingency and institutional theory explanations, when applied separately, offer only an incomplete understanding of the different roles played by various coordination and control practices that are used in contemporary organizations but that both theories together could be used to understand better the instrumental and symbolic roles fulfilled by coordination and control practices.
Institutional theorists generally reason that because an organization depends for survival on the support of external constituents, it must conform to accepted social norms; this reasoning applies especially in the case of government organizations (Meyer and Rowan, 1977; Meyer et al., 1978; DiMaggio and Powell, 1991; Scott, 1987). These institutionalized expectations are expressed in a broad class of elements that includes rules, blueprints for action, standard operating procedures, impersonal prescriptions, rationalizing techniques, formalization, and documentation (Meyer and Rowan, 1977: 341-343; Scott, 1987: 497-499).
Although critics recognise the benefits of fitting these principles to individual situations, they also argue that contingency theory provides no useful generalizations for organisations to apply. On a research level, contingency theory has been disparaged for being 'atheoretical' (Argyris and Silverman 1985). One requisite of theory is the skill to test the legitimacy of assumptions by showing that opposing assumptions do not invalidate the theory. In a contingency framework, if opposing results are attained, the contingency reply would be that the circumstances are unique or that imperative dimensions affecting the circumstances were not weathered. Thus, showing that contradictory assumptions disprove the theory would be difficult at best.
However, Institutional theorists disagree about how an institutional environment should be conceptualized and which of its features are most salient (Scott, 1992). Because an institutional environment "cannot be defined a priori, but must be defined on the basis of empirical investigation" (DiMaggio and Powell, 1983: 148). A major disadvantage with contingency theory, is that it is static; a snapshot. However institutional theory by definition connotes stability but is subject to change processes, both incremental and discontinuous (Powell & DiMaggio, 1991).
No such thing as a perfect theory; need theory to understand practice and the complexity. We use theories to think in abstract ways and to simplify things.
Role of Accountants
In my vision, accounting is one of the strongest methods of control in the organisation as it is the most easiest to implement. Anthony (1965) stated that Management Control Systems (MCS) is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organisations objectives; implying that managers are accountable for the accomplishments of the businesses aims. Seeing that this is a motive for the execution of MCS, it can be assumed that in the broadest sense, an accountant's role is to utilise and put into operation the MCS in controlling and planning resources efficiently.
With old universities' they are run by academics to think about the costs. The problem with this is universities are run by academics who are not best to control costs. Therefore accountants are needed to control budgeting. For e.g health professor will want finance for to find a cure for cancer. University does not know if this will deliver. Finance people will say 'it's about the money' but professors will say 'it's about the health'. This is a dilemma in itself but the accountants recognise that outcomes have to be delivered. Further support can be taken from Schuh (2000) who stated it is not easy to be a budget officer or financial manager in an institution of higher education
A typical example is of the NHS; they are run by doctors, they don't get enough money to control costs - money shouldn't be the issue. The role of accountants in organisations is not to turn into academic but medics, but to find ways to save money. There will always be shortages of resources, this need to be controlled. You have to always think about resources - but not to make the academics think that their research is not valuable. A balance needs to be found. The finance people will have to convince, that these numbers are important, not just to make people feel squeezed - how they should spend on resources. The money needs to be invested in infrastructure - the value is not necessarily numbers but the experience.
In conclusion, finance directors and accountants should always deal with costs otherwise there will always be issues with planning and controlling resources. Accountants will ask the question at such universities; is it worth funding? This is very political and once again we can say that this is dependent on the universities tradition and specialisation. Institutions such as the University of Edinburgh will decrease its allocation through the budget cut, however other universities such as BCU will control its resources ensuring that the planning after the budget cuts ensures enough is financed for its teaching-led philosophy.
With major cuts, it is clear that universities will have to focus on costs in controlling and planning their resources which subsequently is likely to have an immediate effect on the organisational structure. It may be that the structure will need to adopt the industrial model and become centralised and in effect the relationships very much 'managerialised'. If the industrial model is replicated in an institution, the chancellor of a university can be recognised as the chief executive. Additionally; post 92' the executive decisions were made through just like a business through boards of directors. Therefore this replication can be very easily managed. This is also supported by the Jarrott report. If universities become more centralised, the centrality of administration can result in increased overhead costs and inflexible bureaucracy. Universities will need to develop devolved authority structures that will help to cope with large size and diverse activities; make the best use of 'local' and expert knowledge; speedier decision taking; encourage innovation and accountability; and gain greater cost and revenue consciousness (Bourn, 1994).
My research has led me to believe that the budget cuts are likely to impact on 'teaching led' universities over 'research led' over the universities organisational structures and the controlling of their resources. Much current practice as to ways of linking research and teaching reflects tradition, but there is considerable variability in approaches within subjects. This is mainly due to the universities culture of their institution where these resources are affected.
The argument is that contingency fit produces internal effectiveness, whereas institutional fit produces external legitimacy and support. Contingency and institutional theories tend to conflict by prescribing different structures as their fits. The task for universities, and their local stakeholders, is to ensure that they manage the kind of efficiencies and develop the type of provision that will enable them to ride out the current budget cuts.