Accounting change in the Scottish and Westminster central governments: A study of voice and legitimation
Abstract: Organisational voice processes are crucial during change. These will affect actors’ individual understanding of change and the way in which change is perceived and legitimated generally. Looking at accounting changes at two government levels (Westminster and Scotland), this paper explores relationships between organisational voice processes during change (exploring these in terms of horizontal/vertical and promotive/prohibitive dimensions) and legitimation strategies subsequently used by the actors involved. In Westminster, where promotive vertical voicing was particularly identifiable, interviewees predominantly legitimated change through rationalisation strategies. In Scotland, where prohibitive, horizontal voice processes were more evident, authorisation strategies tended to prevail. However, regardless of the content and direction of voice, ultimately, the vast majority of key accounting changes in both Westminster and Scotland were supported (legitimated) by actors.
Summary (5 min read)
- The authors claim that language and organisational dialogues have an important function in shaping the process of change at both the organisational and individual levels.
- Actors’ participation and voice, in particular, can capture crucial aspects of information transmission and exchange between the organisational members involved in and affected by change (Lines, 2005).
- Using a comparative approach, the study focuses on the arguments, voices and legitimation strategies that may be used by the organisational members to support or criticise these changes.
- Drawing on management literature seldom used in accounting studies, this paper brings together perceptions of how voice is exerted during processes of accounting change and individual legitimations and accounts of such changes.
2. VOICE PROCESSES AND LEGITIMATION STRATEGIES
- Change generates uncertainty, which is often responded to by organisational actors through discussions and possibly justification (or expressions of concern) for any proposed new course of action or structure.
- The relationship between the channels and processes through which organisational actors voice their opinions during change and the arguments they subsequently use to give sense to it has been little investigated in the past, especially in relation to accounting.
- This paper aims to contribute to fill this gap.
- The following subsections review the main literature and findings in relation to organisational voice processes and legitimation strategies during change.
2.1 Voice and Accounting Change
- During change, voicing processes have been shown to be crucial, for better or worse, within organisations (Detert et al., 2013).
- Many scholars have argued that expressing voice can have positive effects, in particular with respect to engagement in activities, focusing on the reduction of errors, improving organisational routines and producing innovations (Shapiro, 1993; Edmondson, 2003).
- On the basis of previous literature, two main dimensions of the voice process can be identified: its direction and its content.
- The classifications proposed in this paper are only a simplification of reality and aim to be a first step to reconcile and investigate the two dimensions together.
- Actors can contribute to the process of change not only by expressly voicing their concerns in the ways here reviewed, but also through the implicit legitimation or delegitimation of the change itself, which eventually is likely to affect the way changes are implemented and embed.
2.2 Legitimation and Delegitimation of Change
- In order to explain why the introduction of a new practice succeeds or fails in a certain institutional field, it is essential to understand how actors legitimate or delegitimate the change and the arguments they mobilise for it.
- How rhetoric and language shape the introduction and reproduction of change within organisations and at an individual level has been little investigated in the past and, especially, how legitimation (or delegitimation) strategies are used to achieve change is still unclear (Vaara et al., 2006; Green et al., 2008).
- Authorisation refers to (de)legitimation through authority of tradition, custom, law and persons upon whom institutional authority of some kind has been bestowed.
- Rationalisation is related to (de)legitimation by institutionalised social action and knowledge that society has constructed, giving the proposed change(s) cognitive validity.
- Legitimation and delegitimation strategies are not always intentional or conscious (Green, 2004), but they always play a role in creating organisational conditions that can help to restore or justify social status quos, or can even destroy them.
- This paper explores possible patterns and relationships between organisational voice processes (as recalled by the interviewees with respect to themselves and others, at the time changes were announced, discussed and implemented), and individual legitimation strategies subsequently employed by the actors (the interviewees) to understand and legitimate (or delegitimate) these changes.
- The UK, and especially the comparison of the cases of Westminster central government and the devolved administration of Scotland, as an example of a high-intensity adopter of new managerial ideas and tools, provides an interesting context to investigate how similar accounting changes can be implemented and legitimated differently at different organisational and jurisdictional levels.
- Interviewees were therefore aware of the pre- and post-change positions.
- Different processes were identified and classified through the accounts given in relation to how change happened and how the organisation reacted/voiced views relating to the proposals and any concerns/criticisms.
- As far as the legitimation and delegitimation strategies are concerned, these were elicited from the interviewees’ responses so as to identify the way they themselves thought about the changes and how they individually made sense of them subsequently (regardless of their recollections of the voice processes followed when the changes were initially announced, discussed and implemented).
4. DEVOLUTION WITHIN THE UK: THE SCOTTISH ARRANGEMENT
- Up until the late 1990s the UK operated as a very centralised state, with substantial powers exercised by the Westminster parliament in London.
- Latterly, these ideas have been challenged by the process of devolution, with, during the 1980s and 1990s, a significant increase in support for greater devolution in Northern Ireland, Scotland and Wales.
- In Scotland, the idea of an elected parliament emerged, and when a referendum on devolution was called in 1997, Scotland voted in favour with 74.3% of those voting being supportive.
- In the area of accounting, a Consultative Steering Group and a Financial Issues Advisory Group (FIAG)viii developed proposals for the practical operations of the new institution.
- The Scottish parliament has full legislative competence (that is to say it holds primary legislative powers) across a wide range of domestic policy areas.
4.1 Change in the UK and Scotland
- Over a period spanning approximately three decades, accounting systems in all parts of UK central government changed considerably.
- Since then, and on a UK-wide basis, it has progressively moved significantly along a continuum of modernisation with, subsequent to devolution in Scotland, particularly Scottish ‘nuances’ (largely relating to budgeting and performance management) on this path being developed .
- The move from cash budgeting to resource budgeting was announced in the mid-1990s and was ‘live’ by 2003.
- At this time, and with respect to budgeting and performance management in particular, modifications to systems and processes were made .
- Perhaps the most notable outworking of this was seen in the Scottish Spending Review of 2007 which introduced a National Performance Framework (NPF).
5. THE CASE OF WESTMINSTER
- One of the main sources of accounting change in Westminster was HMT, one of 24 ministerial departments within the UK central government.
- There was scepticism about the way it was actually happening; a bit of scepticism in parliament which would say “No, the authors don’t want to change the system”.
5.3 Legitimation and Delegitimation of Change by the Operationally-focussed
- At the operational level, the interviewees referenced financial accounting and budgeting changes almost equally.
- These were, therefore, more likely, when thinking of accounting issues, to have greater awareness of aspects traditionally related to the public sector that were beyond a business-like financial accounting focus.
- You weren’t ever thinking about any non-cash elements.’.
- The second most used strategy was authorisation (AUT, Table 3), where about 26.6% of the arguments were legitimated using AUT1 (often by reference to the role played by HMT and government, much less so to the EU), a higher level than in HMT.
I think. Parliament pushed CLOS through. They were fed up with getting three different reports... and every one of those is correct; and parliament, I think, just got fed up with all the smoke and mirrors and the
- Constant trying to reconcile between the three to get facts.’.
- Narrativisation to legitimate change was also widely used in WD, being the third most frequent strategy (Table 3).
- It is also interesting to note that NOR1 and RAT2 arguments were often used together (data not shown in tables), suggesting that even professionally-based and allegedly appropriate changes can be seen as irrational and criticised when their implementation appears imposed, unstructured and problematic.
- Differently from what was seen in HMT, finally, pathos arguments were almost totally absent in WD.
- This suggests that the further the actors implementing the changes were from the centre (where changes had been decided), the less committed and personally involved they appeared to be.
6. THE CASE OF SCOTLAND
- At the time of the interviews, the finance functions of the Scottish government (in this analysis referred to as SF) fell under the auspices of the Cabinet Secretary for Finance, Employment and Sustainable Growth and the Scottish Government Finance Directorate.
- Rural development activities were the responsibility of the Agriculture, Food and Rural Communities Directorate; with higher education being dealt with by the Employability, Skills and Lifelong Learning Directorate.
6.1 Voicing Processes in Scotland
- Perhaps unsurprisingly, given their perceived greater distance from the centre of decision making with respect to accounting changes, the Scottish interviewees perceived the process of change in Scotland was less shared and agreed upon when compared to the views from Westminster.
- It’s like people did completely separate jobs, it wasn’t part of the same thing.’.
- While the process of change in budgeting was perceived as displaying similar voice processes and characteristics as performance management, in Scotland changes in financial accounting were either voiced in prohibitive terms through horizontal channels, or through vertical channels and promotive voice.
- And it goes out to all sorts of people who don’t understand what they’re doing.
7. DISCUSSION AND COMPARISON OF THE CASES
- When comparing the two cases, both the Westminster and Scottish interviewees identified the existence of voice processes during the changes.
- As changes (such as RAB and EYF) were seen largely viewed as adjustments that were enforced by Westminster and could not be halted or prevented in Scotland, the dialogue took place mainly among peers or similar departments, in a ‘venting-like fashion’.
- While perceptions of the voice process during change appear connected to the type of strategy (rationalisation versus authorisation) used to legitimate it afterwards, this does not seem to affect strongly the way changes are criticised and, ultimately, delegitimated (delegitimation strategies being much less present).
- An explanation for this finding can also be found in the strong ‘compliance’ culture that characterises all groups of interviewees (and the UK as a country in general) (Hyndman et al., 2014).
- The research and case studies comparison presented in this paper makes a threefold contribution.
- The findings highlight that there is no right way to express one’s voice, as both vertical and horizontal processes of voice, as well as promotive and prohibitive voice, can be interwoven with a number of different interpretations and perceptions of change.
- The research presented in this paper is novel in terms of its investigation of accounting change, as it reflects an initial attempt to explore voice processes (i.e., their direction and content) and legitimation strategies used by actors involved in the change process.
- While this was acknowledged in this research, actors’ limited autonomy in relation to certain changes, and their ex-post rationalisation of changes that had taken place in the past (before 1999) may have influenced some of the results.
- Such categorisation is clearly not exhaustive and more nuanced studies might deepen understanding.
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"Accounting change in the Scottish a..." refers background or methods in this paper
...The paper is based on the comparative case studies (Patton, 2002; Yin, 2014) of theWestminster central government and the Scottish devolved administration....
...5 The selection of the two operational departments was aimed at strengthening variety in the activities and accounting tech- niques within, and across, each organisation (providing maximum variation as a sampling criterion; see Patton, 2002)....
...The intervieweeswere identified through snowball sampling (Patton, 2002)....
...The coding scheme, based on previous literature and theoretical coding (Patton, 2002), was applied to each of the interviews independently by the researchers, with all cases of disagreement being reviewed and resolved as a team (coding and analysis supported by the software ATLAS.ti 6)....
"Accounting change in the Scottish a..." refers background or result in this paper
...Voice about improvements or existing failures in the change process has been associated with positive organisational outcomes, such as team learning, improved work processes, innovation, and crisis prevention (Edmondson, 1999; Schwartz &Wald, 2003)....
...…have been expected from previous literature which suggests a clear link between content of organisational voice processes and individual reactions (Edmondson, 1999, 2003), the results in bothWestminster and Scotland highlight that, regardless of the content and direction of voice perceived at the…...
"Accounting change in the Scottish a..." refers background in this paper
...This contrasts with the extreme reaction of responding to current situations, or proposed changes, with silent loyalty or exit (Hirschman, 1970)....
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