طراحی صرف و استفاده از سیستم های کنترل مدیریت به عنوان الزامات مورد نیاز برای تناسب هدف

Management control systems (MCS) are designed to achieve the greatest possible goal congruence, such that people pursue personal goals that are conducive to the organizational goal. Both the use and the design of MCS are crucial for achieving goal congruence, but they are thought to be contingent to specific external situations. We analyze the basic concepts of justice and fairness, and argue that these two facets of justice, which we label “formal” and “informal” justice, need to be put in the context of MCS use and design. We argue that both formal and informal (in)justice are determinants for MCS to achieve specific levels of goal congruence, independently of the situation. We conclude that there are two stable types of goal congruence, labeled “maximum goal congruence” – where both MCS design and MCS use are just – and “minimum goal congruence” – where both design and use are unjust; and two unstable types of goal congruence, labeled “occasional goal congruence” – where the MCS design is unjust but its use is just – and “perverse goal congruence” – where the design is just and the use is unjust. This provides a framework for future empirical research on the subject.

Management control systems (MCS) are intended to motivate managers to ensure that organizational objectives are accomplished. They do this by acting as controlling and enabling devices (Simons, 1990, Simons, 1994, Simons, 1995a and Simons, 1995b), and by rewarding and promoting people according to certain criteria. Usually, they are designed to achieve the greatest possible goal congruence, i.e., a situation in which by pursuing personal goals, people also pursue organizational goals. The literature on management control has focused mainly on formalized MCS (e.g., see Chenhall, 2003, Davila and Foster, 2007 and Davila et al., 2009). In general, however, wherever a control process is implemented, formal and informal controls coexist (Anthony and Govindarajan, 2003, p. 98). In the MCS literature, the study of MCS design has evolved to capture intangibles by including more complex indicators, using what is called a balanced scorecard (Kaplan and Norton, 1992 and Kaplan and Norton, 1993). The balanced scorecard is thought to produce a greater alignment or congruence with organizational strategy (Epstein and Manzoni, 1997 and Kaplan and Norton, 1996). In a four-case study, Chapman (1998) suggests that MCS have a complementary role as devices for coping with uncertain environments. Contingency theoretical approaches to MCS situate them in a particular situation and moment in time (Chenhall, 2003), and have been the starting point of a literature that explains how MCS can be used to reduce uncertainty while promoting innovation (Bisbe and Otley, 2004, Davila et al., 2009 and Davila, 2000), as learning devices to help particular strategies (Abernethy and Brownell, 1999), and to allow for entrepreneurial activities (Davila, 2005). Recent literature in the field has expanded the concept of MCS, exploring interactive uses (Abernethy and Brownell, 1997, Bisbe and Malagueño, 2009, Bisbe and Otley, 2004, Simons, 1995b and Simons, 2000), and enabling uses, based on the concept of enabling bureaucracy (Ahrens and Chapman, 2004). Recent financial scandals have sparked debates on both MCS and the concepts of justice and fairness. Governments have been forced to intervene and inject public funds into some of the companies (mainly in the financial sector) that have been at the origin of the problems. Of course, the justification for the intervention has been to avoid worse consequences for the rest of society: if banks go bankrupt, savers lose their money; and if this were to happen on a large scale, it could become a national (and international) catastrophe. What governments have done, however, is unfair, because the consequences of the misbehavior of a few have been paid for by taxpayers who (as such) did not directly create the original problem. It is also unfair that those who created the financial problems at the social level (executives in the banking industry, mainly) have not directly suffered any consequence for their misbehavior. Rather, they have derived personal material benefits from their acts in the form of salaries and bonuses, which in the end they have not had to pay back. It can be argued that there is nothing illegal (hence, ‘unjust’), in this situation, but obtaining private benefits by intentionally breaking the system and provoking a socialization of losses can be legal and unfair at the same time. Interestingly, many problems have their origin in the incentive systems of the organizations involved. Incentive systems in particular and MCS in general have the power to generate such problems when they are used unjustly and when their design is unjust. For example, many mortgage salesmen had an incentive to sell mortgages. They were paid a commission based on the total amount of mortgages sold, no matter whether the people concerned could pay the mortgages back or not. This obviously created a short-term incentive for these mortgage salesmen that went against the long-term profitability of the bank they worked for. Also, many executives had an incentive to seek the short-term profitability of their bank, which was increased by selling those mortgages and accounting for them as a good asset. After a few years (or even months), when the crisis started and it became clear that the properties had a much lower value than the mortgage loans that had been granted, the further unfair consequence was that people lost their homes because they were unable to repay the loans. The possible dysfunctionalities of MCS have been well documented in the literature. They range from very specific variables (e.g., budgetary slack and short term orientation, Merchant, 1985 and Van der Stede, 2000) to much wider, dynamic frameworks, such as those of Gouldner (1954), Merton (1957), and Selznick (1949), as well as subsequent work by March and Simon (1958), Hopwood (1974), and Flamholtz et al. (1985). Hopper and Powell, in a paper that goes beyond these frameworks to examine their underlying assumptions (Hopper and Powell, 1985), provide many examples of dysfunctions found in the accounting literature, from the classical papers of Argyris (1953) and Ridgeway (1956) to, say, Ashton (1976), and Burrell and Morgan (1979). Dysfunctional here means inappropriate to the objectives of the organization, or to the people belonging to the organization. It follows that the results may be considered ‘unfair’ by someone else, inside or outside the organization. Thus, fairness towards someone is always an issue when dysfunctional behavior occurs (Cropanzano, 2001 and Folger and Cropanzano, 1998). For this reason, it is worth examining, on the one hand, the justice and, on the other, the use and design of MCS in order to see the role each may have played in permitting the abuses that may be the cause of the unfair consequences of MCS. In any company it is possible for a small group of managers to create and implement a MCS that pushes people in the wrong direction. By imposing ways of doing things, a MCS may benefit a small minority and create unfairness for the rest of the company. In this paper, we study a way to address this problem and propose some solutions that have their origin inside companies, specifically regarding MCS. We attempt to show that taking justice into account in the design and use of MCS will result in greater goal alignment of individuals and, ultimately, more just consequences. Specifically, we aim to show how the (in)justice of MCS design and the (in)justice of MCS use combine to create different levels of goal alignment. Different levels of goal alignment, in turn, lead to future states that are more or less stable and that feed back into the level of justice and fairness of MCS design and use. Just uses of justly designed MCS contribute to greater goal alignment, so that, in the long run, companies achieve better results and are less likely to generate unfair external consequences. Our main contribution is based on the distinction between formal and informal justice and on the fact that both types of ex ante justice are different from the fairness of the results. Then, as we will show, the combinations of formal and informal (in)justice lead to four states of goal congruence, of which we study the dynamics. Two of these states are stable: we label them maximum and minimum goal congruence. The other two are unstable: we label them perverse and occasional goal congruence. Each of the two unstable states evolves towards one of the two stable ones. We place importance on informal justice, as the presence of informal justice makes one of the unstable states evolve towards maximum goal congruence. MCS have been studied mainly in the organizational justice literature, especially in relation to Human Resource Management systems (Folger and Cropanzano, 1998 and Gilliland and Chan, 2001). It has been found that certain characteristics of HRM systems make people perceive them as being more or less just or fair, which makes people more or less motivated to contribute to the attainment of organizational goals. As Folger and Cropanzano point out, “when individuals perceive a lack of fairness, their morale declines, they become more likely to leave their jobs, and they may even retaliate against the organization. Fair treatment, by contrast, breeds commitment intentions to remain on the job and helpful citizenship behavior that go beyond the call of formal duties. In short, justice holds people together, whereas injustice can pull them apart” (preface xii, Folger and Cropanzano, 1998). It is important for our purposes to clarify the use of two concepts. In the organizational justice literature, ‘justice’ and ‘fairness’ have been used interchangeably and typically are linked to measures of ‘organizational justice perceptions’, which are shaped by relevant aspects of system design, outputs and use (Adams et al., 1966, Adams, 1965, Colquitt et al., 2005a, Colquitt et al., 2005b, Leventhal et al., 1980, Thibaut and Walker, 1975a, Thibaut and Walker, 1975b and Thibaut and Walker, 1978). This research is important in that it considers fairness perceptions in terms of the effects a system generates. The focus, however, is on testing specific hypotheses in different settings, with promising incursions into MCS, especially in relation to human resource management. In this paper we treat justice and fairness as separate concepts. In what follows we aim to clarify them. We use justice to refer to the ex-ante provisions of a system and the way the system is used. We consider two types of justice: formal justice, which refers to objective, rule-based aspects; and informal justice, which refers to the specific way in which a MCS is used. In contrast, fairness refers to perceptions of the ex-post consequences of a MCS and the way it is used. Thus, it is possible for a system to be designed in accordance with formal justice, and used in accordance with informal justice. Together, these two aspects will generate perceptions of fairness. From a legal perspective it can be argued that it is important to keep justice and fairness separate; to equate the two would be ethically or morally difficult to defend. There are many extreme examples of this, especially in unfair, authoritarian political regimes that apply the legal system strictly. While acting ‘justly’ (as defined by law), they are nevertheless ‘unfair’, from the point of view of an outsider, because of the consequences that enforcing their laws entail. In our view it is precisely the ability to stand back and consider the difference between justice and fairness that gives us room to critique. Indeed, this is a central point of our analytical model: a just use of the system can be sensitive to possible unfair consequences, thus allowing for future improvements to the system's design. This view is in line with studies by proponents of natural law, who argue that people have natural rights, beyond any legal system, and that once these natural rights have been detected, they must be included in the legal system and must be defended and implemented (Finnis, 1980). This, the proponents of this view argue, is the way to improve existing legal systems and achieve an ideal of justice closer to natural law. There are two main reasons why many social scientists treat justice and fairness as interchangeable concepts. First, they argue that a system which has been designed to be just cannot produce unfair results (e.g., Rawls, 2003). Second, they are interested in perceptions of justice/fairness, and so they measure how people perceive the justice or fairness of outcomes and following the existing procedures. Specifically, they make no distinction between perceptions of justice and perceptions of fairness. According to some current philosophical trends, justice and fairness have no meaning independent of human conceptions of justice and fairness. However, there are philosophical arguments for considering them as distinct and separate aspects. A concept such as justice or fairness can have no stability or depth if it is equal to an individual measure of justice or fairness, even if the perception is shared by several people. If we believe that what is just or fair is derived from what people perceive as being just or fair, we effectively exclude the possibility of misperception and cut short any discussion of what justice or fairness might be beyond an individual's first impressions. Of course, this also applies when a small group of managers implements a system (an internal rule in an organization) that is perceived as unfair: a majority shares the perceptions of unfairness, but what makes the perceptions real are the arguments behind them, not the fact that they are the perceptions of a majority. Here again, our approach is close to that of natural law scholars, who clearly separate natural rights from implemented rights. This separation allows room for improvement. Human beings are holders of certain rights and those rights need to be defended by legal systems, independently of circumstances. As humans, we can recognize when actual systems of law produce fair or unfair results. We do this through perceptions and through moral reasoning. We therefore need to constantly update the justness of our legal systems by questioning them in terms of fairness. To give an example, slavery was seen as just and fair by Aristotle, when he proposed his theory of justice; but our updated concepts of fairness have morally questioned slavery, as it conflicts with the natural right of human beings to equal freedom (Aristotle, 2000 and Finnis, 1980). Regarding perceptions, research on organizational justice has suggested that people perceive certain aspects of justice to be the same for everyone, regardless of personal circumstances and broader contextual embeddedness. In fact, all constructs of fairness perceptions rely on empirical evidence that shows them to be statistically significant, which means that we can falsify the hypothesis that they do not exist (Cohen and Greenberg, 1982). At the same time, people perceive the injustices of actual legal systems. This clearly shows that people can morally detect what is unfair and needs to be updated in legal systems in order to make them more just. It is precisely the fact that things can be perceived to be unjust and the arguments we can use to defend such perceptions that makes perceptions interesting; at the same time, it also makes it impossible for perceptions to stand on their own, without further consideration and deliberation. In our study we consider the concept of justice because we are interested in the ex-ante provisions of MCS and the use of such systems. We consider that justice in MCS design and justice in MCS use should be a set of minima that combine and conduce to different types of goal congruence. We aim to show that different levels of justice in MCS design and use can lead to different levels of goal congruence or goal alignment. There is empirical evidence that certain aspects of justice perceptions link to MCS (see for instance Coletti et al., 2005 and Hartmann and Slapnicar, 2009), but there has been no conceptual analysis (for evidence look at Cugueró-Escofet and Rosanas, 2011). Our research serves three purposes. First, it may start a constructive debate on the appropriateness of our proposal, which is badly needed after the recent financial scandals, as our opening example clearly shows. The current financial crisis has brought MCS design and use into question, and we propose ways in which MCS design and use can be improved. Second, it paves the way for empirical research into how close or far actual MCS are from our conceptual proposal, in order to see whether justice is a characteristic that escapes from the argument proposed by contingent theory, namely, that everything in MCS is contingent. Third, we can look at why actual MCS match, or fail to match, our proposal and consider how they could be improved. Apart from these general objectives, we also fill two important gaps. First, we reintroduce the concept of goal congruence into the study of MCS and show how justice of MCS design and justice of MCS use are necessary for achieving certain types of goal congruence. The main purpose of MCS has been to help achieve goal congruence. This general objective of goal congruence is complementary to the more recently identified objective of helping companies cope with strategic risks and uncertainties. Recent literature has concentrated on how MCS can be designed to favor particular strategies, such as promoting learning through budgeting processes (Abernethy and Brownell, 1999), promoting innovation (Davila, 2000), or enabling entrepreneurial success (Davila et al., 2009). This is not at odds with the ultimate objective of achieving congruence of individual and organizational goals, as even when a MCS is used to decrease uncertainty, it still needs to achieve some degree of alignment between the interests of individuals and the interests of the organization (Gottschalg and Zollo, 2007). Ultimately, management control systems need to make people behave in ways that lead to the achievement of organizational goals. Second, we introduce the discussion of how justice is a requirement of MCS in order to attain goal congruence. The organizational justice literature has investigated which aspects of fairness create the strongest perceptions of fairness and so elicit the best reactions, thus helping to achieve organizational goals (Colquitt et al., 2001, Cropanzano et al., 2007 and Greenberg, 1987). We know that perceptions of fairness can be achieved through specific measures, which may be motivated by a desire to create real justice but which can also be a mere impression management exercise aimed at managing perceptions, with no attempt to improve substantial justice (Ashford and Northcraft, 1992, Greenberg, 1988, Greenberg, 1990a, Greenberg et al., 1991 and Tedeschi and Reiss, 1981). We are not the first to suggest that fairness is an important requirement of MCS use. In the theoretical control literature, fairness and goal congruence are considered the main criteria for evaluating MCS use (Vancil, 1973). This provides a first starting point for our argument here because even though Vancil does not explain how fairness and goal congruence are linked, he attempts to bring the two concepts together and define them in more depth. We stress, however, that this is almost the only example we have found in the literature where fairness and goal congruence are linked (Cugueró-Escofet and Rosanas, 2011). In this paper we proceed as follows. First, we explore the concepts of MCS and justice. Second, we identify the requirements for a MCS design to be just and for the use of a MCS to be fair, and derive a set of propositions for just MCS design and use. Third, we propose a normative model of how justice needs to be taken into account in the design and use of MCS in order to produce four possible types of goal congruence. In doing this we show how the presence or absence of justice in design and use leads to different types of goal congruence.

To conclude, attempts have been made in MCS research to empirically show the importance of fairness. However, there is no theoretical work that deals in depth with the prescriptive role of justice in MCS design and MCS use. We have shown that every MCS has both design features and informal processes of use, or ways in which it can be managed. MCS management is subjective, as it involves managers’ making decisions and acting in relation to outcomes and procedures when the system is applied in a specific context. Justice requirements therefore need to be linked both to the design of a MCS and to subjective uses of the MCS. In our analysis we consider managerial action and MCS design in combination and shows which combination of the two is conducive to a maximum level of goal congruence over time. We have made an effort to bring together the literature on MCS, the recent literature on justice, prescriptive models and empirical evidence, and we have listed the requirements of a just MCS design and fair use of the MCS. This allows us to finally give a specific role to informal aspects of MCS use that previously have been studied in terms of users’ motives, but not in terms of the consequences they may have for goal congruence. Our work provides a theoretical grounding for future research, which is a necessary step before any progress can be made in this important stream of research into the role of justice in MCS. Furthermore, we have developed a model of goal congruence types, as an effect of the justice of the system's design and use. This leaves us with a range of possible goal congruence situations that lead to different learning dynamics over time. Occasional goal congruence deserves a special mention. When it happens, positive evaluative learning takes place and managers strive to be just, subjectively seeking immediate solutions to repair the unfairness caused by an unjustly designed MCS. In the end, the system itself improves in terms of justice design. This learning increases managers’ justice and eventually transforms the situation into one of maximum goal congruence. For this reason, we argue that subjective aspects of justice, manifested in the way the system is used, are capable of improving the organization and increasing people's identification with the organization's mission and their commitment to its goals. Over time, this leads to greater goal congruence. We think that our model allows a deeper understanding of why justice is important and why subjectivity is unavoidable, making the notion of a perfect mechanical design that needs no people and creates a stable situation of goal congruence unrealistic. In contrast, having people who are trained and willing to be fair is a starting point for creating better control systems and better organizations. We need to be cautious in dealing with intermediate situations that depart from our stereotyped four states. We have mentioned that systems can be partially just in terms of design. This can mean departing from our ideal situations. At the same time, we can have different levels of informal justice. For the same level of actual justice of the design, depending on the level of informal fairness, goal congruence can improve more or less quickly. Further research is needed to consider the differing capacity of different aspects of informal justice to improve formal systems, thus creating better goal congruence. We also need to increase our knowledge through empirical research that examines whether and to what extent these states and dynamics actually exist. Such future research will also help to refine the model and provide a clearer understanding of intermediate situations of formal fairness. However, we believe that the conceptual clarification that this paper provides is a necessary step before undertaking such empirical research.