Anthony’s planning and control framework and the conceptualisation of MC

an interconnected element in a variety of operations. It was concerned with the consequences of individuals for organisational goals.

The task now given to accounting was to produce a population of “calculable subjects” (Townley, 1995, p.558). Thus, MCS gave rise to “calculating selves and calculable spaces” (Miller, 1992, p.67). Townley (1995) suggests that this monetarisation reduced human actors, actions and objects to monetary prices. Her analysis is based on Foucault’s critical depiction of the organisation:

One must eliminate the effects of imprecise distributions, the uncontrolled disappearance of individuals, their diffuse circulation … [discipline’s] aim was to establish presence and absence, to know where and how to locate individuals, […] to be able at each moment to supervise the conduct of each individual, to assess it, to judge it, to calculate its qualities or merits […] Discipline organizes an analytical space (Foucault, 1977, cited in Townley, 1995, p.563).

In brief, in order to improve efficiency and achieve higher profits, vertically- integrated firms and multidivisional companies required responsible managers whose interests were aligned with the companies’ goals. Thus, the “what” appears to have become a pivotal element of the MC function, and senior managers appear to have popularised the use of MCS (Kaplan, 1984). Critical scholars (e.g. Miller and O’Leary, 1987, 1990, 1994; Miller, 1992; Townley, 1995) suggest that the MC technology “made up” the self-interested person capable of taking opportunities and maximising firms’ profits.

2.4 Anthony’s planning and control framework and the conceptualisation of MC

According to Kaplan (1984), the management practices mentioned in the previous sections (scientific management, vertically-integrated companies and M-form

structures) and related MCS were devised by engineers working in actual organisations, rather than by academic researchers. However, scholars from the 1950s to the 1970s, such as Anthony (1965) and Koontz and Bradspies (1972), attempted to solidify the groundwork of MC theory, conceptualising MC practices and developing frameworks for teaching and research purposes (Giglioni and Bedeian, 1974).

The seminal theoretical work of Robert Anthony (1965) is said to have laid the foundations for the theory of modern MC (Otley, 1994; Hewege, 2012) and is referred to as the “classic” model (Berry et al., 2005). Having observed large multidivisional and Anglo-American industrial organisations, Anthony developed a framework consisting of programming and budget preparation, analysis and reporting of financial performance, and executive incentive plans (Hopper and Powell, 1985; Otley et al., 1995; Chenhall, 2003). This framework connected the processes of strategic planning, MC and operational control with information and accounting systems (Anthony, 1965). According to Otley et al. (1995, p.S32), Anthony saw management control as “being sandwiched between the processes of strategic planning and operational control”. To address firms’ concerns at that time, Anthony focused on developing a system that would help organisations to secure managerial interest in organisational goals (the “what”). He was “a pioneer in emphasizing the importance of motivation issues in the design of management control systems” (Zeff, 2008, p.196). He used the term ‘‘goal congruence’’ to describe the use of MCS to align the interests of managers with those of the organisation (Zeff, 2008; Birnberg, 2011). Since the outputs of MCS were data that individuals’ superiors would use to evaluate them (the “what”), this MC process was expected to motivate managers, and thus achieve goal congruence (Birnberg, 2011).

Anthony was an early supporter of the behavioural dimension of MC (Zeff, 2008; Birnberg, 2011). He recognised the need to understand human behaviour in developing, implementing and using MCS. Anthony (1957) acknowledged that control and management issues were not strictly accounting or information problems. He found the role of behavioural science and the study of human reactions to be important at the managerial level, and claimed that control has to do with “the attempts of one person to direct or influence the actions of other persons. This personal, human element, in the process came to be the central focus of our thinking” (Anthony, 1957, p.229). He was aware of the unpredictability of human actions and that no person is motivated identically by the same incentive: “Human

beings […] do not behave so predictably; human reactions to a stimulus are much more complicated, and human control systems cannot be so easily or so precisely designed as mechanical or electrical ones” (Anthony, 1957, p.229). Moreover, since human interaction unavoidably raises communication problems, drawing attention to agreements on precise budget figures may clarify objectives and ease misinterpretations. Anthony also warned senior managers not to fool subordinates with the implicit assumption that there must be some objective way of defining costs or budgets: “any attempt to use costs to trick or mislead the organization is likely to be self-defeating, in that it will motivate people in quite a different direction from what is intended” (Anthony, 1957, p.233).

Anthony was interested in the human dimension of MC; however, as argued by Birnberg (2011, p.596), his early defence of the behavioural dimension of management accounting and control “has largely gone unnoticed and uncredited by more recent writers in the area”. Moreover, Hofstede (1978, p.460) accused him of defining MC according to a cybernetic philosophy that considered the people in the system “as if they were things – as means to be used”. Cybernetics is a clearly- defined system comprising input, process and output components. The process uses a feedback loop of setting goals, measuring achievement, comparing the achievement of goals, feeding back information about unfavourable deviations into the process to be controlled, and correcting the process. In their most simplified form, cybernetic MC processes are similar to technical control processes, such as controlling room heating with a thermostat (Hofstede, 1978). Hofstede (1978) argued that scholars and practitioners using cybernetic control systems were “more concerned with the method of measuring performance than with the content of what was measured” (Hofstede, 1978, p.453). Hence, people in a cybernetic system are considered as inputs to be used in order to fulfil goals (the “what”).

Otley et al. (1995) argue that Anthony’s work has restricted the subject of MC to an accounting-based framework that contains little or no discussion of social- psychological or behavioural issues. Although Anthony was concerned about the importance of people in MC, his attachment to the cybernetic approach appears to have caused this human concern to remain unnoticed by some scholars in the MC domain (Birnberg, 2011). Anthony’s accounting-based approach to MC was intertwined with the concept of cybernetic controls, with a strong emphasis on achieving the “what” (Hofstede, 1978; Hewege, 2012).