Preface
We would like to thank all the respondents who have provided us with both their time and knowledge to make this thesis possible. Further, we would also like to direct a special thank you to our supervisor Jenny Gustafson Backman for her guidance, knowledge, and
availability during the process of writing this thesis. Finally, a big thank you to our objectors for their valuable effort to provide helpful feedback and criticism to this thesis.
Abstract
This study aims to examine how the shift from analog to remote work, as a result of digitalization, has affected performance monitoring in organizations and impacted
management control systems. Earlier studies within the subject show that a shift results in a reduction in performance monitoring or that classical performance monitoring are replaced with electronic performance monitoring (EPM).
In order to examine how performance monitoring changes as a result of the shift and if management control has gotten tighter or looser, this thesis has been based on four semi-structured interviews that were held with managers from three different Swedish organizations. The shift to remote work shows tendencies of a loosening of control in the organizations and to compensate for the loss, managers have implemented different Electronic Performance Monitoring (EPM) systems. The most common EPM systems implemented were video meetings, but other EPM systems were also implemented such as online monitoring. But managers still experience an overall loosening of control as a result of the shift to remote work. Trust seems to be a factor that becomes more important as a result of the shift and seems to have a mitigating effect on the degree of EPM systems the managers choose to implement.
Keywords: Management control, Remote work, Digitalisation, Performance Monitoring, EPM, Tight and loose control.
Table of Content
1. Introduction 4
1.1 Background & Problem Discussion 4
1.2 Purpose and Research Question 6
1.3 Outline 7
2. Literature Review 8
2.1 Management Control 8
2.1.1 Performance Monitoring 10
2.2 Tight and Loose Control 13
3. Research Design 15
3.1 Choice of Method 15
3.2 Selection Process 16
3.3 Operationalization 17
3.4 Data Collection 18
3.5 Model for Analysis 19
3.6 Reflections 19
3.7 Ethics 21
4. Empirical Result 22
4.1 The Insurance Company 23
4.2 The Consulting Firm 25
4.3 The Automotive Company 28
4.4 Summary 30
5. Discussion and Critical Reflection 32
6. Conclusion 38
6.1 Suggestions for Future Research 39
7. References 40
7.1 Articles and Books 40
7.2 Websites 43
8. Appendix 45
8.1 Interview Questions 45
1. Introduction
1.1 Background & Problem Discussion
Management can be said to be the process of using organizational resources to achieve organizational goals (DuBrin, 2000). One very important function of management is control.
All organizations need at least some form of control to keep things on track (Merchant, 1985). Control is a highly ambiguous term and means different things to different people (Otley et al., 1996). Anthony et al. (1989) defined control as “the process of guiding a set of variables to attain a preconceived goal or objective. It is a broad concept applicable to people, things, situations, and organizations. In organizations, it includes various planning and
controlling processes”. Control can be achieved in many different ways, for example through direct surveillance and feedback systems which are a major part of cybernetic control
(Simons, 1995; Argyris, 1977). Such management control systems might however need to be adapted in the future since work is changing (Warhurst & Hunt, 2019).
The progression of technology is one factor that has the potential to transform work (OECD, 2017), and a “digital revolution” defined as “a general acceleration in the pace of technical change in the economy” is said to be under progress (Eurofound, 2018). Digitalization has already, in many ways, started to transform work. Many work categories are today no longer tied to their offices the same way as they were before and now work more remotely (Sewell
& Taskin, 2015). The trend of working remotely has been going on since the ’80s and has only become more common in recent years (Gupta, 2020; Toptal, 2020; WWR, 2021). This process of working remotely has seen a massive jump since the Covid-19 pandemic in 2020.
In Sweden, there was an increase of close to 400% within workgroups with prerequisites to work remotely and in October 2020 a third of the Swedes worked from home at least one day a week (SCB, 2020; Tele2, 2020a). These numbers are, however, predicted to recede at the end of the pandemic. Tele2 (2020b) predicts, based on their research, that after the pandemic, remote work will have made a massive jump and increased by 250% in Sweden compared to before.
An analysis by the management consultant firm Mckinsey (Lund et al, 2021) estimates that 20 to 25% of the workforce in advanced global economies potentially can work from home, without a loss of productivity, three to five days a week. That would be an increase of 300 to
400% compared to before the Covid-19 pandemic and might give an indication of what the future of remote work potentially might look like.
As presented above, the digitalization of work has enabled the workforce in advanced economies to work remotely to a larger extent than previously. This course, which has been accelerated by the Covid-19 pandemic, is predicted to be here to stay and result in remote work being more common in the future. When employees start working remotely, they move away from the company office. At the same time, they also move away from the physical presence and surveillance of their managers. This will further affect the management control in the organizations since it makes it harder for managers to monitor their employees'
performance and it leads to a loosening of the control within the organization. Performance monitoring is a critical part of the management theory of cybernetic control which is a way for the organization to receive feedback from the operations and adjust necessary parts that do not perform as desired. Performance monitoring can occur in different ways, through visual surveillance, meetings, and regular checkups. This could also occur through digital software that logs the employees’ activity for example by conducting time reports, screening their email and phone calls, and tracking their login activity.
The research on how management control and explicitly performance monitoring changes as a result of remote work is limited and contradictory. Where authors Wiesenfeld et al (1999) and Bogdanski & Seliff (2000) argue that it is critical that the organization changes their supervision when the work becomes more remote. Dimitrova (2003), however, argues that the organization should not change its management behavior since it creates tensions in the organization between those that are working at the office and those that are working remotely.
Lautsch, Kossek, and Eaton (2009) argue for a mix of the previous two where a change in management is necessary to maximize efficiency but at the same time, the organization needs to balance it by treating everyone equally. Sewell and Taskin (2015) concluded from their case study that management tends to shift their control systems to be more dependent on electronic performance monitoring (EPM) systems rather than visual surveillance when work is performed remotely.
However, all of these studies have only analyzed how performance monitoring in
organizations changes when a limited number of the employees begin working remotely and not when a majority or all of them work outside of the office. There seems to be a lack of
research in this area, one reason for that might be a scarcity of organizations where the majority of all of the employees are working remotely. Remote work has previously been limited. In some industries, remote work became a new experience when the Covid-19 pandemic forced them to change and adapt to their new work situation. For those
organizations that have had some degree of remote work, it has usually been limited to apply to a small number of people that have worked remotely on a few separate occasions per month.
The Covid-19 pandemic has, however, resulted in a major transition on a global scale where, as previously mentioned, industries and organizations have been forced to switch to work as much as possible remotely. This shift is as earlier discussed predicted to at least partly remain after the pandemic and motivates further studies within the area (Lund et al, 2021).
1.2 Purpose and Research Question
The purpose of this study is to contribute to the understanding of how changes in
organizations, as work shifts away from the offices and is performed remotely, may impact performance monitoring in these organizations. Further, the thesis aims to deepen the understanding of how these eventual changes in performance monitoring might affect management control systems.
Hence the research questions of this thesis are as followed:
What potential impacts does remote work have on performance monitoring?
1.3 Outline
The remainder of this thesis is structured in the following chronological way:
Chapter 2 introduces the theoretical framework that will be used for the study. The chapter will introduce the reader to the areas of management control, cybernetic control, performance monitoring, tight and loose control, and previous research within the topic of this thesis.
Chapter 3 describes the method that has been used in the research including presenting the selection process, operationalization, data collection, method of analysis, reflections of the method, and finally the ethical standpoint. Chapter 4 presents the empirical results from the conducted interviews. The data from each firm is presented individually and will present the most relevant information for the thesis. This chapter ends with a summary of the whole data collection. Chapter 5 includes the analysis and critical reflections of the results. Finally, chapter 6 provides the conclusion of the thesis as well as suggestions for further research.
2. Literature Review
The literature review is constructed in the following chronological structure:
First, we present the concept of management control, its origins, and its importance for organizational strategies. We further present cybernetic control which is a specific area of management control and focus on feedback within organizations as a tool to adapt and change critical parts in the management. After that, the reader will be introduced to
performance monitoring which is a key part of cybernetic control and will be the focus area of this thesis. Lastly, the reader will be introduced to the theory of tight and loose control, which will be used as an analyzing tool for the data collected.
2.1 Management Control
“Control, control systems, organizational control, management control, and management control systems are terms that are often used interchangeably in management literature to describe the difference between planned and actual performance along with identifying eventual corrections” (Herath, 2007). Robert Anthony is often called the man behind the classical theory and model of management control (Berry, Broadbent & Otley, 2005). His work laid the foundation for modern management control, where he defined management control as “the process by which managers ensure that resources are obtained and used effectively and efficiently in the accomplishment of the organizations’ objectives” (Otley, 1994).
There are several ways to categorize control. One such example is “formal” and “informal”
controls (Anthony et al., 1989). Formal management control mechanisms can for example be budget systems, reward systems, strategic planning systems, and operational controls. While informal mechanisms include for example leadership, culture, values, and norms. The control mechanisms aim to achieve management control and help the management mobilize the organization and its members to adapt to the strategies and work towards organizational goals (Langfield-Smith, 1997; Macintosh, Norman & Quattrone, 2010).
Smaller organizations can often be controlled with more focus on informal controls and more personally-oriented controls such as supervision and communications. Contrary to smaller organizations, larger organizations need more formal information channels to be able to coordinate. More diverse organizations do also face difficulties with communication due to
greater differences in management structures (Merchant, 1981). Due to this, the bigger and diverse an organization becomes, the more decentralized it tends to be and instead, they need control systems that are more administratively oriented. As a result of all of this, Merchant (1981) found that the managers felt much greater importance of reaching budget goals in larger, more diverse, and decentralized organizations than the managers in the smaller ones who preferred to rely on direct supervision and interactions with the employees.
Cybernetic controls is a relatively new focus area that has its roots in MIT mathematician Norbet Wiener’s work from 1940 which built upon the process of how organizations develop based on feedback from their actions (Morgan, 2006). To successfully monitor changes and send the feedback to the management so that they can initiate appropriate actions, the cybernetic system has, according to Morgan (2006), to perform four key principles:
1) Have the capacity to sense, monitor, and scan for significant aspects of the environment.
2) The system has to be able to relate the information to the organization’s operational norms that guide system behavior.
3) Detect significant deviations from these norms and,
4) Must be able to provide corrective action when it detects errors
Cybernetic control was described and illustrated by Argyris (1977) as “single-loop learning”
where the process of cybernetic control could be illustrated as in Figure 1. The process begins in 1) Perform work which is the core business of an organization. It is in this phase where the operational activity takes place and where employees perform their predefined tasks and follow the communicated strategies set by the management. This further leads to the second phase in the process 2) Performance monitoring where the management measures the performance to ensure that the organizational activities proceed according to the strategy.
They do this by using different techniques such as meetings, measurement systems,
communication systems, and well-defined work tasks. The information gathered here is used as the decision base for phase 3) Corrective actions where the managers, based on the result from performance monitoring, take actions and convey the new strategy and adjustments to the employees (Morgan, 2006; Argyris 1977).
Figure 1. Cybernetic Control - Based on Chris Argyris model (1977)
2.1.1 Performance Monitoring
Performance monitoring is, as previously mentioned, one of the key parts of cybernetic control and will be the main focus of this thesis. Performance monitoring systems are used by the management to regularly measure the quality and quantity of the organization's output.
But performance monitoring is not limited to only measuring financial data. Since units could have different goals that are valued differently, an effective performance monitoring system should be able to monitor all types of performances (Wholey & Hatry, 1992). Figure 1 illustrates performance monitoring and how this phase occurs as a response to the previous phase Perform work and where the information gathered here affects the next one Corrective action. This phase is critical to the management. As previously mentioned, it enables the management of the organization to adapt to trends, errors and respond to deviations among the employees that occur in the previous phase Perform work (Argyris, 1977).
One example of performance monitoring systems is visual surveillance where employers have direct surveillance over the employees at the office. Other examples include electronic performance monitoring (EPM) systems such as accounting programs that are used to monitor the organization's financial outcomes and systems that log time reports and the
employees' log-in activity. Furthermore, some organizations use voice recordings with customers and e-mail screening to monitor the quality outcome the organization delivers to its customers (Ravid et al, 2020). One very common way to monitor the organization's activity is through meetings. Meetings are used by the management to communicate goals, strategies, and information about changes to the employees at the same time it is a tool to receive feedback on the ongoing activities from the employees, what they are doing, how far they have gotten, and what is the result (Niehoff & Moorman, 1993).
When it comes to previous research regarding performance monitoring of remote workers, the literature is contradictory. Researchers such as Wiesenfeld et al (1999) and Bogdanski and Setliff (2000) claim through their research and practices that new types of supervision are required when the work shifts away from the office to be remote. As the daily face-to-face interactions and check-ups disappear, they argue that managers need to change the
supervision methods when employees begin working more remotely. To compensate for this, more frequent feedback and more performance monitoring are required to measure results and ensure that the employees do what they are hired to do. Further, they argue that managers must encourage the employees more by giving more specific responsibilities and be more available as support to guide the employees right.
On the other hand, researcher Dimitrova (2003) argues that the supervision should not differ between non-remote and remote-workers with tighter controls for the latter part. These articles have, however, had more focus on the employees well being and how it is affected by remote work. According to the research, there does not exist any support that more frequent check-ins increase the effectiveness, instead, the research showed that this undermines employees’ autonomy and signals distrust from the managers that the employees are unable to fulfill their duties.
When it comes to more recent research, Lautsch, Kossek, and Eaton (2009) investigated changes in management and supervision of employees working at the office and employees working remotely. Their results showed that to fulfill the maximum performance potential, the managers in the organization had to adapt and change their supervision to be a mix of traditional and alternative strategies. The managers had to adopt a more active supervisory behavior to fully support the employees, be available and assist them in order to make them fully perform. They found that relying only on traditional monitoring techniques affected the
employees' helping behavior negatively and made it hard for the managers to motivate the employees. So, to compensate for that, managers had more frequent check-ins with the employees working remotely, but not for monitor purposes but to show support and to make them feel integrated and not isolated at home. This was something the managers that were interviewed in the study felt was highly important since it affects the employees’
performance. The authors concluded that these check-ins should only be used for support and integration purposes only and not for more close monitoring which is in line with Dimitrova’s (2003) conclusion. She argued that it undermines employees' autonomy and that managers at the same time signal distrust of the employees’ ability to take responsibility.
Sewell and Taskin (2015) found in their case study at a biotech company how managers shifted their management control to be more performance-focused. The organization shifted from using visual surveillance, and face-to-face interactions to be more dependent on EPM systems. Through the EPM systems, the remote workers were monitored by performance systems that logged the individuals. Attendance was registered with help of logins, access restrictions, and more frequent check-ins through video meetings that forced the employees to be present at the computer at all times. Further were their performances registered through computer software that told the management how every team and individual had performed.
Despite this, the management still felt that they partly lost control when the employees moved to more remote work and that trust towards them became an important aspect to account for when it came to the shift in control.
These studies are considered somewhat limited due to several reasons. Wiesenfeld et al (1999), Bogdanski and Setliff (2000) and Dimitrova’s (2003) studies are all close to or over 20 years old. Further, they have had a major focus on the employees' experience and not the management perspective of performance monitoring on remote work. When it comes to Lautsch, Kossek, and Eaton’s (2009) study, the data selection was not randomly chosen and the response rate only reached 52% of the supervisors and therefore the total sample size only contained 90 supervisors. Sewell and Taskin’s (2015) field study was only limited to one organization and by that limits the possibility to draw general conclusions. Further, all the studies have only analyzed organizations where remote work has been limited and not been applied to the majority of the workforce. Since the Covid-19 pandemic has forced the majority of the employees of today’s organizations to work remotely it will have a bigger
impact on the data than in the previously mentioned studies and potentially provide different conclusions.
2.2 Tight and Loose Control
“The labels ‘tight control’ and ‘loose control’ are often used to describe the level of decentralization in organizations in terms of the management control systems applied”
(Anthony et al, 2014). Organizations that apply tight control are often short-term focused on achieving specific goals and where performance is measured and compared with predefined frequency as per week, per month, per quarter, and per year. Tight control tends to increase the efficiency among the management who continuously are looking for new ways to meet the budget. Applying tight control may however result in too much short-term thinking where changes that are implemented are not sustainable in long-term planning (Anthony et al, 2014). Lose control, however, is characterized by that the financial goals are more used as a
“communication and planning tool” and the employees are getting more freedom and flexibility (Anthony et al, 2014).
Merchant (1981) concluded in his work how budgeting was used as a part of short-range planning and control systems of an organization. He further discusses how these budgeting systems are used differently in different organizations. Some reasons for the differences are explained by factors such as the organization's size, diversity, and the degree of
decentralization the organization has applied. Merchant (1981) says that, as a consequence of an organization’s growth, it tends to become more diverse. This further tends to decentralize the organization which requires another organizational structure where communications become more formal, activities more structured, and where standardized information is used for performance evaluation. Smaller organizations on the other hand have, according to Merchant (1981), less need for formal control systems compared to bigger organizations.
This is due to the fact that the management usually is working more closely with the employees in smaller organizations than they do in larger ones. This implies that the budgeting system in the organizations has to differ since smaller businesses usually can afford to apply informal structures and rely on direct supervision and communication to a greater extent compared to bigger organizations. The degree of budgeting controls can be
measured by analyzing an organization based on their degree of tight and loose control according to Merchant (1981).
Merchant would later extend this research, Merchant explains in his and Van der Stede’s work (2007) how a tight control system can be applied broadly to define the degree of control in other areas than budgeting. For example, did Campbell, Epstein, and Martinez-Jerez (2011) use tight and loose control as a measurement tool to determine the degree of tightness of monitoring in employees' decision making. Merchant and Van der Stede (2007) concluded that the measurements that are used to define the degree of control can be done in four different ways:
1) Definition of goals. Tightening control means defining goals such that they are more complete, more specific, and/or more congruent with organizational objectives.
2) Communication of goals. Tightening control means changing communication patterns in such a way that employees will better understand and accept organizational
objectives. This may include communicating more effectively, timely, frequently, and convincingly.
3) Monitoring. Tightening control involves more frequent, more detailed, and/or more timely monitoring of actions and/or results.
4) Rewarding. Tightening control means enhancing the value of rewards to the
employees evaluated and the definition of stricter relationships between rewards and performance.
One factor that also could be measured through tight control is the degree of trust. Merchant (1981) concluded that trust is a major factor when it comes to tight and loose control and that the control system is in fact dependent on that variable. Trust itself is defined as the
confidence of a person or a thing in an uncertain environment and reflects an expectation and predictability. Trust is something that can change over time and can be valued by strength and importance (Bhattacharya, Devinney & Pillutla, 1998). If the organization has a higher
degree of trust towards the employees, the organization tends to apply a loosening of the control since they trust the employees to take responsibility on their own. The opposite results in a tightening of the control as a result of lower trust towards the employees to take the responsibility and do the work they are supposed to do (Costa & Bijlsma-Frankema, 2007).
3. Research Design
This chapter will begin to describe the choice of method that has been chosen for this thesis.
This is followed by a description of the selection process, operationalization, and data collection that describes the data that has been collected and is presented in chapter 4. After that, the analysis method is presented followed by reflections of the research approach and how this affects the thesis reliability and validity are presented. Lastly, the ethical approach is stated.
3.1 Choice of Method
The purpose of this study is to contribute to the understanding of how changes in
organizations, as work shifts away from the offices and is performed remotely, may impact performance monitoring in these organizations. Further, the thesis aims to deepen the understanding of how these eventual changes in performance monitoring might affect management control systems.In order to get the best and most effective insight in a broad and complex area, the thesis has taken a qualitative approach where semi-constructed
interviews have been held with managers from different types of Swedish organizations. The reason for the choice of interviewing managers is that they possess a broader knowledge of the organizations and have a direct impact on the organizations’ actions (Bryman & Bell, 2019). Semi-constructed interviews are considered an efficient way to compare data at the same time it allows the interviewer to ask more specific follow-up questions.
Semi-constructed interviews allow for comparison of the interviews since the questions are structured the same way. But since the interviews were held with managers from different organizations it is unlikely that their experiences, and directly their answers, will be the same.
Therefore, follow-up questions are asked to gather more in-depth information about that specific organization and the managers' thought processes behind decisions (Bryman & Bell, 2019).
The semi-constructed interviews enhance the ability to address specific research questions.
Further, semi-constructed interviews enable the interviewee to illustrate more in-depth by reconstructing events and speak from the experiences from that event (Bryman & Bell, 2019).
With the Covid-19 pandemic in the center as a major reason for the shift to remote work, the
interviewees will be able to illustrate what methods and performance monitoring systems the organization applied before. Further, they will be able to explain how these have changed or have been affected as a result of more remote work. The possibility to illustrate and refer back will further give a greater coverage since the possibility to interview a manager is higher than the possibility to gather the same data from observations of the managers in his/her daily work (Bryman & Bell, 2019).
3.2 Selection Process
To ensure the empirical analysis relevance and thereby the thesis contribution value, the thesis has had a selection process of where to collect the data. The organizations and the interviewees have gone through a judgment selection where they had to meet some predefined criteria to be included in the sample. To avoid industry-specific results,
organizations from different fields were selected. This, however, might affect the possibility to do comparisons between the different organizations.
As Merchant (1981) stated in his research, control systems are more substantial and important in larger organizations since more information channels are needed to enable the management to coordinate the organization. Otley (1994) further states that almost all management control literature is focused on larger organizations. We have therefore included size criteria for the organizations. To consider an organization as a valid candidate to collect data and draw conclusions from, the firm had to meet predefined size criteria that were based on both revenue and numbers of employees. To avoid incorrect and skewed visualization of the managers' experience by including smaller organizations, our predefined criteria were based on the European Commission's definition of organizational size. The European Commission defines small companies as companies with less than 50 employees and less than 10 million € in revenue. Mid-size companies are defined as companies with less than 250 employees and less than 50 million € in revenue. Companies with more than 250 employees and over 50 million € in revenue are considered large companies (European Commission, 2003).
Further, we had to ensure that the organization, at the date the interview took place, had employees that currently worked remotely. We did that by asking the manager when he/she was approached. In that way, a sample error could be avoided that might have affected the data negatively. To ensure that the organizations are relevant, it contributes to strengthening
the data, the thesis result, and the conclusion. Based on this, the criteria for the organizations that have been approached have been the following:
● Has to employ more than 50 people
● The revenue has to exceed 10 million €
● Has to have employees that to some extent work remotely
When it comes to the managers, to ensure that the data was relevant we needed to get in contact with managers higher up in the hierarchy of the organization. Only managers that were a part of the management group were selected to be able to get as much in-depth information and a better oversight perspective on the organization itself and its methods. By interviewing a manager from the management group, rather than managers from every department within the organization, we can get the same information from one interview at the same time we get a better oversight as well (Bryman & Bell, 2019). Further, the managers had to have responsibility for the employees as well since the purpose of the thesis is to investigate how performance monitoring towards the employees has changed. This made us exclude people that did not have the desired amount of interactions with employees on a daily basis such as marketing managers. With this in mind, the criteria for the managers that have been approached have been:
● They have to be a part of the management group
● Their daily work includes employee responsibility
From these previously mentioned criteria, a judgment selection process was made of candidates in the authors’ local network. When selected, the candidates were contacted via phone/email and Linkedin where the thesis purpose was presented. When accepting, a date for the interview via Microsoft Teams was booked. Beforehand, an email was sent out to each candidate with more information about the topic of the interview, how the data would be collected, stored, and for what purpose it would be used.
3.3 Operationalization
We conducted four interviews with managers from three different Swedish organizations. The interviews were between 21 and 65 minutes long with an average length of 46 minutes. The interviews were recorded and later transcribed as accurately as possible; some laughs and sounds might however have been omitted. One of the interviews was quite a bit shorter than the others since it was the second interview at the same organization and the purpose of the interview was to serve as a complement to the first interview. A few questions concerning the organization were therefore omitted from this interview. In the other three interviews, all of the questions found in appendix 1 were asked. However, the follow-up questions asked during the interviews differentiated between the interviews since the answers from the respondents were not all the same. The questions for the interviews were designed largely based on Merchant and Van der Stede’s (2007) four measurements of tight and loose control:
Definition of goals, communication of goals, monitoring, and reward. As well as questions concerning the interviewee's role in their respective organizations as well as information concerning the organizations themselves. The questions were formulated so that no previous knowledge of the theoretical literature was needed to answer the questions
3.4 Data Collection
The primary sources for this paper consisted of qualitative semi-constructed interviews with managers in three Swedish mid to large-size organizations. With interviews made with more than one company, a comparative design is possible and it is easier to discover connections through the differences within the companies by making comparisons between the managers' answers (Bryman & Bell, 2019).
In semi-constructed interviews, beforehand written questions are asked to the interviewed while giving them a great deal of freedom to formulate their own more detailed answers. Due to the Covid-19 restrictions, 3 of the interviews were conducted over Microsoft Teams, a video communications site, and one over the telephone. Technologies for online audio and video calls, make online interviews similar to telephone interviews with added face-to-face interactions via webcam. There is little evidence that the ability to secure rapport is
significantly reduced (Bryman & Bell, 2019). Asking questions in person means that if certain questions are unclear to the one being interviewed the questions can be clarified and therefore reduce the risk of miscommunication and misunderstandings.
The interviewees were informed about the topic of the interview ahead of time, but not of the specific questions, the reason for that is to not allow them to prepare, potentially, less genuine answers ahead of time. The interviews started with a short introduction and a recount of the information already sent by mail before opening with a few simple closed questions to get the interviewees comfortable before more complex open questions were asked.
3.5 Model for Analysis
As mentioned in the operationalization, the questions asked were structured and based on Merchant and Van der Stede’s (2007) four measurements of tight and loose control:
Definition of goals, communication of goals, monitoring, and reward.
The data from the interviews are presented in the empirical, based on the source it was obtained. The relevant data was then selected from the empirical and analyzed based on the same four measurements that served as the foundation for the design of the questions. The data was then put in a larger context using an extended model based on the cybernetic model illustrated in Figure 1.
3.6 Reflections
Reflections concerning Choice of Method
For this paper, a qualitative research method has been chosen, consisting of semi-structured interviews. The drawbacks of this type of method are that the results can be subjective and rely on what the authors determine to be important and by that, other important aspects might have been overlooked. There is also a risk of the authors influencing the interviewees even if the interviews were not conducted in person. The results of the study might also be hard to replicate since qualitative studies have less structure than quantitative research.
Misunderstandings and interpretation errors between the interviewers and the interviewee are also a risk when conducting interviews. To mitigate this particular risk, follow-up and
clarification questions were asked, but it is hard to completely rule out the possibility of errors in this regard.
Reflections of the Selection Process
To gain access to the entire population of managers is extremely difficult and
resource-consuming or impossible, making a random selection of the participants not an option for this study. A judgment selection from a very limited part of the population of managers has therefore been made. The sampling was done from within the authors’ contact network that was also limited to a certain geographical area (Stockholm, Sweden). The risk for sampling error is therefore very high and results in low external validity (Bryman & Bell, 2019). The organizations all operate in different fields and drawing comparisons between them is therefore harder.
With interviews, there is always a risk of the interviewees giving answers to present either themselves or their organization in a better light and each respondent was therefore offered anonymity to allow them to give more critical information.
The transition to remote work, that occurred in the organizations included in the sample size, was a result of external environmental changes and governmental regulations and not as a planned organizational change. This means that the way they operate concerning remote work today might not be an accurate representation of how they would have chosen to operate if they would have made the decision themself or with the ability to plan long term.
Reflections of Choice of Interview Method
Three of the interviews were conducted over the video call service Microsoft Teams and one interview over the telephone. When conducting interviews this way certain information such as body language is omitted and in the telephone interview facial expressions were omitted as well. As a result, the chance of misinterpretation increases (Bryman & Bell, 2019). There were also some small interruptions to the interviews caused by internet connectivity problems that can have disturbed the flow of the interview. There is, however, as mentioned previously, little evidence that the ability to secure the report is significantly reduced (Bryman & Bell, 2019)
The fact that the interviewees did not receive the questions ahead of time means that certain answers might not have been as thought out as they could have been. Open questions were also asked during the interviews which lead to an increased variation in answers which makes comparisons between the different interviews harder (Bryman & Bell, 2019).
3.7 Ethics
All respondents were ahead of the interview, contacted via email, and informed of the general topic of the interview and for what purpose they were being interviewed. The participants all agreed voluntarily to participate in the study and could at any point discontinue their
participation. They were also all offered anonymity and all information from the interviews was handled with the greatest possible confidentiality. The information gathered is only to be used for this thesis only and is not to be used for other purposes. All participants have been offered to read the transcribed material ahead of publication. The intention in this study is to reproduce and present the respondents' answers as truthfully as possible and to not
mischaracterize the respondents.
4. Empirical Result
The interviews were held with people from the management of different Swedish companies.
The companies themself were active in different types of markets, insurance, consulting, and the automotive industry. This gave the thesis a wider spread of industries and made it possible to analyze differences among the industries about how performance monitoring has changed as a result of more remote work.
From the previously presented criteria, the thesis has applied a judgmentapproach by reaching out to the authors’ local network for organizations and managers that meet our predefined criteria. By doing that, these people were contacted and interviewed:
Respondents Title Years in the organization
Years of experience with a similar role
Industry
Respondent 1
HR Manager 7 20 Insurances
Respondent 2
CCO 4 X Insurances
Respondent 3
CEO 18 23 Consulting
Respondent 4
Sales manager
3 23 Automotive
industry Table 1. Respondent information
4.1 The Insurance Company
Two interviews at the insurance company were held with two persons from the management group of an insurance company separately. One of the interviews was held with the HR manager and the other with the company’s CCO. The company is mid-size and operates in the Nordic market with two local offices, one located in Sweden and one in Finland.
The Covid-19 pandemic has forced a huge change in the operational part of the company where the employees have switched from working at the office to work almost entirely from home because of government regulations. Respondent 1 explains further that remote work was something that was quite rare at the company and only happened on rare occasions. Now respondent 1 estimated that about 98% of work is done remotely. The company had some small experiences with digital meetings with the members of the Finnish office, but it was more common for them to fly into the Swedish office for meetings. So although digital meetings were not something completely new and they had the capabilities for remote work, the experience was lacking and not tried on a large scale in practice. It took the IT department about 48 hours before they were “up and running”, says respondent 1, so the larger challenge was according to respondent 1 more “way of working” instead of the technology itself. In the future, respondents 1 and 2 think that the company will need to adapt further to be able to provide increased flexibility from where to work compared to before the Covid-19 pandemic, but the company still aims to return to the offices when it is possible to do so. The
respondents say that they are not worried about the amount of work employees perform when they work remotely. They are instead more worried if employees perform the “right work”.
As a result of the remote work, respondent 2 describes that they think they have become better in general at defining goals but that is something that might have happened regardless of the work shifted to remote work or not, “it is a constant process to improve”. However, respondent 2 continues by saying that they have seen a greater need for the processes leading up to the goals and that they have become significantly better at applying processes and following up on goals.
The company’s budget is determined during fall and somewhere in January or February the company’s goals are set for the year. The organization's goals for the year are then
communicated during the monthly meeting referred to as “Town Hall”. The individual goals
for the employees are set between the responsible manager and the individual employee during performance development talks that are held three times a year. These talks are to set long-term goals and goals focused on the next coming three quarters. Then there are team goals for either specific teams or a specific department. So goals in the organization are divided into three levels, “organizational”, “team”, and “individual”. Respondent 2 says that they may talk more about goals now and have more follow-up meetings since it is harder to
“get the same gut feeling” if goals are being reached or not. The goals themself do not seem to have seen any major changes in the general organization other than being communicated online instead of in person. So in the insurance company, it is more the processes behind the goals and how they are communicated that has changed as a result of remote work.
Since the managers can no longer observe their employees directly when they work it has been harder for the managers to monitor their employees. Respondent 1 says that apart from implementing morning meetings and meetings towards the end of the day, no special actions have been applied to direct how the employees should work from home. Respondent 1 further explains that these meetings are what have been the difference in terms of feedback compared to before and that they have been crucial for certain teams that have a greater need to be in sync. Not all meetings are, however, strictly work-related and some meetings are more focused on the social aspect. The company has also implemented something they call
“meeting values” that have brought more structure to the regular meetings and made them more detailed. The values include for example who needs to actually attend the meetings, what is the agenda for the meeting, is there a need for the attendants to prepare something for the meeting, what decisions should have been made at the end of the meeting. Along with some small talk aimed to replace the “coffee talk” are some examples of what the values aim to incorporate in the meetings. It is the “coffee talk” that respondent 1 experience has
suffered the most and there is a greater need to incorporate communication between members that do not officially have any interaction by for example trying to include members from different departments in meetings.
Respondents 1 and 2 say that even before the shift to remote work, the company worked a lot more trust-based than controlling. The shift has, however, according to respondent 1, made trust become even more important. Managers in the organization can no longer observe employees in the office and find it overall harder to keep track of the organization than previously. Respondent 1 says that the leaders in the organization work more with creating
the right conditions for the employees to reach their goals rather than how they should reach the goals. In that process, the managers are more of a sounding board for the employees than acting as controllers.
Something that has not changed as a result of the shift to remote work is, according to respondents 1 and 2, the company’s reward model. The reward model for the sales department is based on the amount, volume, and quality. The construction of the reward systems in the insurance industry is however limited due to laws that regulate sales. By the law of insurance distribution, the commissions must be based 50% on quantity and 50% on quality, and the firms must have a quality department that gives a score on the quality of sales respondent 2 explains.
4.2 The Consulting Firm
Respondent 3 is one of the co-founders and is acting as CEO at a consulting firm that serves clients all over the Nordics, China, Netherlands, and Ireland. It is a mid-size company with offices, located in Sweden, Norway, and Finland. Respondent 3 describes the firm as a hierarchical organization on paper that is managed by four persons in the management group, with division managers that serve underneath them. However, respondent 3 explains that it is not that hierarchical in practice. The organization is instead rather flat and decisions are made fast across the organization where discussions are made between the different project leaders directly. The firm has been forced to switch to work from home and stopped traveling to clients. The firm was according to respondent 3 “IT-ready” and has previously invested heavily in developing a digital infrastructure within the firm and say that it has helped them in the transition.
As a result of the transition to remote work respondent 3 experiences that communication of the goals towards the employees has become even more important than before. The reason for that is largely due to the lack of, what respondent 3 refers to as, “indirect meetings”.
Indirect meetings are those minutes where you meet someone in the kitchen, in the hallway, in the printer room, or next to the coffee machine. These “indirect meetings” respondent 3 sees as critical to exchange information about how the different projects are going and to ask for small things.
Due to the lack of indirect meetings, the management has implemented more meetings than they had before when they were working at the office. Respondent 3 approximates that the amount of meetings has increased by approximately 20%. The meetings are nowadays held through Microsoft Teams and are a way to communicate the goals, strategies, deadlines, etc.
It is further explained that the meetings are more formally structured now to ensure that the communication is clear and that no miscommunication happens. This, however, does not compensate for the indirect meetings entirely according to respondent 3, who continues by saying it is overall really difficult to achieve.
The structure of the meetings could also slightly differ among the different departments within the company. Respondent 3 explains how the organization could be split into three different parts: Management and Sales is one, followed by the consults and finally the technicians and programmers. All these departments are working with different tools, setups, and tasks. Due to this, the goals differ as well. The technicians and programmers work with regular tasks and have more of an overview of their work compared to the consults, the sales department, and the management who work more with deadlines and are more
performance-based. These differences do also affect the structure and the agenda of the meetings. Some departments have a different structure than the others since they work with different tasks and have different goals, the frequency differs as well among the departments.
The Covid-19 pandemic, and the government regulations that followed, forced a transition to remote work. This caused respondent 3 to experience some difficulties when it came to performance monitoring. Respondent 3 experienced that the quantitative work among the employees remained the same, that they did what they were supposed to do. However, respondent 3 experienced a loosening in control of the quality of the work. As a result of the transition to remote work, the management experienced that, due to the lack of visual surveillance, they find it hard to ensure that they reach the desired quality of the projects as they did before. Another reason for the loosening of the control respondent 3 meant is the lack of those indirect meetings. These indirect meetings respondent 3 argues are highly important as a way to exchange information about the ongoing projects but also as a way to have smaller discussions. “That you do not do with Teams”. “You do not book a
Teams-meeting for 2 minutes” respondent 3 explained.
As respondent 3 explained earlier, the difficulties are not to track the quantitative work, but the qualitative. However, respondent 3 experienced how the monitoring of the quantitative in fact has changed as a result of the remote work. Previously the management relied on visual surveillance at the office. At the same time, respondent 3 experienced they had control over who was out on the field meeting clients. But with the transition to remote work, the
management experienced how performance monitoring has begun to rely more on EPM systems than visual surveillance. With remote work, the management has begun to rely more on Microsoft Office 365 that shows who is online or not. But contrary to what they did before at the office, they have not assigned someone the task to actively make sure that everyone is online during working hours. They do, however, use time reports every week to analyze if they can see negative trends in the employee working hours. Respondent 3 further discussed how they maybe would have implemented time reporting twice a week instead of only once if they would have known that the remote work was going to be permanent for such a long period, but at the time the interview was held they only reported once and had no plans to increase the frequency.
Respondent 3 explains that they have other controls to ensure the quantity as well but also discusses the importance of integrity. The employees’ integrity is the reason why the
management has not implemented more controls. ”...You do not want to expose your private life….”, ”Now we have a meeting and we let the cameras stay on while we work, it simply does not work”. Even if it would increase the performance monitoring and ensure that the employees are not away from the computer, integrity is an important thing that the
management wants to respect. At the same time, respondent 3 speaks of trust towards employees and that trust is something that was incorporated into the business’ foundation back in 2003. When people are working in the field and not visual at the office, trust becomes a major key for the organization to work.
From this, it becomes clear that the performance monitoring has in fact changed, but
respondent 3 points out that their employees are driven people that are used to taking a lot of responsibility and deliver. This is also one of the reasons why the management feels
comfortable with the employees' efforts, motivation, and ability to do the work. Further, respondent 3 also explains that due to all the deadlines and goals the organization has, the employees cannot afford to be away from work too much since the final result is evaluated.
Respondent 3 is, however, aware that the efficiency among specific individuals does
decrease, especially as a result of the company's growth, and in those cases, the management has a little more supervision, one example is new recruiters that do not know the routines and therefore are trained and instructed by a supervisor. But overall the management feels
confidence and trust towards its employees and has, as a result of the remote work, trusted them with more flexibility and responsibility and not instructed them how to work when they are working from home.
The employees’ performances are something the management evaluates, partly weekly with
“project evaluation-meetings” and partly yearly with development meetings. Further, the management has incorporated a reward system that is connected to performance. Currently, all employees are very busy which has resulted in the performance-based part of the salary being at the max for all employees. The reward system accounts for a smaller part of the total salary but still has the purpose to motivate the employees. However, respondent 3 explains that this is something that has not been affected by the transition to remote work.
4.3 The Automotive Company
Respondent 4 works as Sales manager at an automotive company that sells spare parts to car repair shops all across the Nordics. It is a large size company based in Sweden and Norway.
Respondent 4 explains how the company did a restructuring of the organization a couple of years back and how the company follows a hierarchical structure with several different management levels.
Respondent 4 explained how they, in contrast to the other respondents, experiences that the transition to remote work has been limited at the organization. Respondent 4 explains that the reason for that is due to several things. The organization's core business is the repair shops which are physical places. In order to maintain the business, they have taken action and secured the workplace in every possible way to protect both the employees and the customers and kept delivering to shops. The delivery routines have been implemented with restrictions to keep everyone safe to make sure that the operative part of the company runs as smoothly as possible without any setbacks. However, all the administrative personnel, who are usually working at the office, are working from home to follow the recommendations from the
government. We are further told how they have also had a lot of help from EPM systems such as Microsoft Teams to have safe communications and meetings. No matter where the
employees work the number of digital meetings has exploded and become a very important part of the daily operation explains respondent 4.
Respondent 4 explained how the company before the pandemic created very defined work routines, working methods, and structures in the company. This has led to that the employees know what to do and how to do it and if they need help they know where to get it. Meetings are an important tool where the majority of this is communicated and discussed. Despite that the core business has not been affected the same way as other businesses, the meeting format has been forced to change as a result of the remote work. The company uses, just like the other companies, Microsoft Teams, and this new tool has led to a change of structure of the company’s meetings as well. Respondent 4 explained that it has been even more important to follow an agenda where you discuss what to talk about, what they have previously talked about, what to do, who should do that etc.
These meetings have, even though the format has changed, not increased in frequency. The frequency is the same and respondent 4 explained that it is important to have a structure. The reason for this is, according to respondent 4, that Microsoft Teams increase efficiency by making it possible to have video meetings wherever you are and this has changed the view on availability. “People expect that you should be available and answer directly”. “These
Teams-meetings create a high efficiency, but I think there are some cons to it. I think it creates stress among the employees”. So, to avoid that, they have chosen to have the same frequency as before the transition to remote work but with another structure to ensure that they discuss everything necessary, as respondent 4 previously explained.
Respondent 4, as sales manager, told us how the daily job is more related to the operative part of the organization with deliveries and client meetings. This is a part of the organization that has not been forced to adapt to remote work the same way. This is mainly due to the
previously mentioned changes they have implemented to protect their employees and their customers. Due to this, respondent 4 made the choice early to continue to work on the field and not from the office or from home. Respondent 4 motivates this by explaining this is their management style and that it is important as a manager to be close to the employees and the reality. This has led to that their performance monitoring has not changed and remains the same as it did before the pandemic. They further explained that the management in general
advocates “freedom under responsibility” where the employees are free to work and do as they like as long as they perform and meet the expectations from the management.
The employees know what is expected from them, what they are supposed to do, and how to do it. This is a result of the previously mentioned work routines, work methods, and
structures that the company has developed and it has made the management trust that
employees are able to take the responsibility for their own tasks and perform. Trust combined with motivation are two things that respondent 4 thinks are highly important and are reasons why they do not think it is necessary with more performance monitoring systems than they already have. ”The right person in the right place with the right drive and the right
motivation, it leads to success”. ”You should not need as a manager to have 100% control over what each employee does all the time. It is completely impossible”.
The company does have a reward system that is connected to the employees' overall performance which purpose is to increase motivation and give them the incentive to work hard. This, however, is nothing that has been changed or affected as a result of more remote work according to respondent 4.
4.4 Summary
Based on the result we can see how every respondent experiences greater importance of the structure of the meetings than before. All respondents tell us how the transition to remote work has forced them to use virtual meetings through software such as Microsoft Teams as an important tool to compensate for the physical meetings at the office. Due to the loss of
face-to-face interactions and indirect meetings the respondents experience a need for more formal meetings to ensure that they cover everything and that nothing important is left out.
Further, the management of companies 1 and 2 both experience difficulties in keeping track of the employees as a result of the loss of visual surveillance. To compensate for that they have increased the frequency of the meetings to be able to receive feedback from the employees about ongoing projects and ensure that everyone is on the same track and is heading towards the same direction. This is, however, something that is not the case in the automotive company as the management experienced that the amount of remote work is only limited majorly to the administrative group of employees and not to those working on the
operative business. The management has chosen not to increase the frequency of meetings with the motivation it is important to apply the same structure as before.
However, all the respondents argue that they do not feel the need to implement more controls than they already have and instead speak of the importance of “trust”. All the management groups experience that trust towards the employees and colleagues is by far one of the most critical factors. The respondents explain that the people they hire have previously proven to be responsible and that combined with the constructed work ethics, routines and methods makes the management feel trust towards its employees. Respondent 4 extended this discussion by mentioning “motivation” as another key variable among the employees. “A person who is motivated, that has the right mindset, right attitude toward their job is very valuable. Who has the drive and who pushes forward all the time, such a person is more valuable than a person who possesses high knowledge”.
Finally, when it comes to reward systems, all respondents explained that the implemented reward systems in the organizations have not been affected by the transition to remote work and remain the same in structure and implementation.
5. Discussion and Critical Reflection
This chapter utilizes Merchant and Van der Stede’s (2007) measurements to discuss the empirical data collected from a perspective of tight and loose control. The chapter ends with a discussion, based on the cybernetic loop illustrated in Figure 1, of the effects of performance monitoring on the organizations as a whole.
Definition and Communication of goals
None of the respondents experienced any change of the organizational goals themself as a result of the transition to remote work. They did, however, experience greater importance of structure when it comes to defining and communicating the goals towards the employees. An important reason for this is the lack of indirect meetings where managers and employees previously were able to get quick feedback on projects and tasks from a counterpart when walking in the hallways at the office. All the respondents said that they experience that one way to compensate for this has been to organize and structure the meetings to be more formal and have a much more clear agenda. Another reason for the need for more formal meetings according to the respondents is the transition from physical to virtual meetings and is a way to avoid miscommunication. Meetings are, as previously discussed, an important tool for managers to communicate both goals and strategies, and therefore it is critical that the meetings are able to fulfill their purpose. Further, all respondents, except respondent 4, experienced that they have increased the frequency of meetings substantially as well.
Bogdanski and Setcliff (2000) and Wiesenfeld et al (1999) argued in their research that managers, as a result of more remote work, have to give more specific responsibilities to the employees and be more available to support them. The managers we have spoken to did not experience that the employees' tasks have been more specific. However, the definition and communication of the goals have been more specific according to the respondents. What the respondent describes, with more formal, structured, and sometimes more frequent
communication of goals and a more clear definition of them indicates what Merchant (1981) would argue as a tightening of control. This indicates tendencies of a tightening of control in the organizations’ Performance monitoring which is illustrated in Figure 1 in the cybernetic control model.
Performance Monitoring
The respondents of companies 1 and 2 witnessed major changes in performance monitoring as a result of the transition to remote work. They all experienced how the loss of direct visual surveillance and face-to-face interactions have resulted in a loss of control. To compensate for this, the companies started to rely on EPM systems to a much larger extent than
previously. The biggest adaptation has been the transition to video meeting software such as Microsoft Teams and it applies to all companies we have interviewed.
As previously discussed, all the respondents experienced that the meetings themself have been more formal and restructured to ensure that the communication gets through. The meetings have also been even more important as a tool to monitor organizational activities and as a tool to provide and receive feedback. However, it needs to be noted that not all meetings are for monitoring purposes as Lautsch, Kossek, and Eaton (2009) stated in their research. Due to the previously discussed loss of face-to-face interactions and indirect meetings, this had led to an increase in the frequency of the meetings as well to compensate for that. Respondent 3 mentions that they also use other types of EPM systems. By using programs such as Office 365, the management has been able to keep track of the employees by enabling them to see who is online and create weekly time reports. Respondent 3 stated however that they have not actively looked that everyone is in fact online and that they have no hard set specific time they need to spend online every week. But, the respondent said that the time reports could serve as a good way to detect abnormalities for example if someone had fewer hours than usual. Then they could look into why the person had fewer hours and if it was part of a trend that needed to be addressed.
However, despite the transition from visual surveillance to EPM systems, the management of both companies 1 and 2 experienced that the EPM systems could not entirely compensate for the loss of visual surveillance and indirect meetings. Despite that, the management has not chosen to extend the implementation of EPM systems to fully cover that loss. This is
explained by the respondents' experiences with trust. As could be noted in the result, trust is an important factor towards control where the managers experienced no further need for more control than they already applied due to the trust they have towards their employees. They mean that they feel secure with the work ethics, routines and methods they have implemented in the organizations combined with the employees' ability to take responsibility. Respondent
3 also mentions the importance of integrity as another important aspect, since the employees work from home and the boundary between work and private becomes very narrow. This is another reason why the implementation of EPM systems is limited in the consulting firm.
Respondent 4 experiences regarding trust were similar to the others and mentioned
“motivation” as another key factor. Respondent 4 argues that motivation also has an effect on management behavior and the implementation of more performance monitoring controls into the organization.
The respondents' experience tends to be in line with Bogdanski and Setcliff’s (2000) and Wiesenfeld et al’s (1999) research. They concluded that managers have to change their supervision methods as a result of more remote work. They also saw that managers tend to use more frequent feedback to ensure that the employees do what they are supposed to do.
What further is in line with their research is that managers tend to increase performance monitoring when employees work remotely. We did see a significant transition from
traditional performance monitoring systems to EPM systems, but based on the result, it could not be determined if the amount of controls had increased or decreased. The only
performance monitoring system we could see an increase in was the meetings.
The transition to EPM systems is instead something that is in line with Sewell & Taskin’s (2015) research where the managers shifted from visual surveillance and face-to-face interactions to rely more on EPM to log the employees’ actions. Their research also
concluded that the management still felt that they could not compensate for all loss of control and that trust became a key factor instead. This is similar to the respondents' experience, that despite the implementation of EPM systems, they still experienced some loss of control and that trust instead becomes a factor that fills the gap. This is in line with what Merchant (1981) concluded about trust being a major factor when it comes to tight and loose control. Costa and Bijlsma-Frankema (2007) clarified this by concluding that a higher degree of trust tends to result in a looser control and the opposite for low trust. If the management would have decided to implement more EPM systems to compensate for the lost control it might, according to the research of Dimitrova (2003), signal distrust towards the employees.
From the respondents' experiences, we can based on Merchant's (1981) theory, see tendencies of a tightening of the Performance monitoring illustrated in Figure 1. The transition to more structured, formal, and more frequent meetings is in line with what Merchant (1981) argues tends to tighten the control in an organization. However, the result also indicates tendencies
