STOCKHOLM SCHOOL OF ECONOMICS Examination for a MSc in Business and Economics Specialization in Management Master Thesis 30 ECTS
Operational challenges of marketization
A case study of the Swedish municipal elderly care sector
Eke Brandt Forsius (20912) Monika Molander (21340)
December 9, 2013
Department of Management and Organization
Tutor: Staffan Furusten
Challenges of marketization Brandt Forsius & Molander, 2013
Abstract
The ageing population has led to a growing demand for elderly care services. To tackle the need for more care, the Swedish elderly care sector has undergone multiple reforms, the most notable being marketization. Reports show that this reform has been challenging for the municipalities to handle (Anell et al, 2011).
Marketization has implied that the municipalities have received multiple roles; they are both market actors and welfare producers. The purpose of this thesis is to study why the municipal providers of elderly care face operative challenges in carrying out their multiple roles. We study the operative function of the municipal providers by examining the management control systems (MCSs) used. A qualitative methodology is applied and interviews are conducted in five different municipal providers of elderly care.
We find that the municipal elderly care providers generally have a weak and unbalanced use of MCSs. Moreover, we find that the control systems do not fully support the strategies of the municipalities. These findings can be explained by weak boundaries and resulting institutional confusion of the municipal providing organizations. The challenge of handling the multiple roles of marketization is thus related to institutional confusion. As a result, we suggest that the discussion for the future should focus on how to increase autonomy of the providers, in order to improve the use of welfare resources. Our study contributes to the public management literature by exploring the MCSs applied in municipal providers of elderly care in the light of marketization and institutional confusion.
Keywords
Elderly care, Management Control Systems, Levers of Control, Marketization, Institutional confusion, Municipal providers
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Acknowledgements
We would like to express our gratitude towards everyone who has helped us during the process of writing this thesis.
First of all, we would like to thank our supervisor, Staffan Furusten, for the valuable support and help he has given us during the work process.
Furthermore, we would like to thank Nordic Health Care Group and the expert team for sharing their invaluable experience and knowledge with us.
Finally, would like to thank the five municipalities that have been subject of our study. This thesis would not have been possible without their engagement and cooperation. We would especially like to send our gratitude to the participating respondents who have taken the time to talk to us. Thank you!
Stockholm, December 9, 2013
Eke Brandt Forsius Monika Molander
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Table of Contents
Abstract ...... i
Acknowledgements ...... ii Table of Contents ...... iii
List of tables and figures ...... v
Abbreviations & Definitions ...... vi
1. Introduction ...... 1
1.1 Problem………...... 2
1.2 Purpose………...... 4 1.3 Research question ...... 4
1.4 Expected contribution ...... 4
1.5. Delimitation…...... 5
2. Background ...... 6
2.1 Elderly care in Sweden ...... 6
2.2 Marketization of elderly care ...... 7 3. Theoretical foundation ...... 9
3.1 Market creation...... 9
3.2 Link to the analytical framework ...... 11
3.3 Analytical framework ...... 12
3.4 Summary of theoretical foundation ...... 21
4. Methodology ...... 22 4.1 Qualitative research ...... 22
4.2 Research approach ...... 23
4.3 Case study……...... 23
4.4 Presentations of case example organizations ...... 25
4.5 Data collection… ...... 27
4.6 Outline of analysis ...... 30 4.7 Quality aspects… ...... 33
5. Empirics ...... 35
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5.1 Nacka………… ...... 35
5.2 Österåker………...... 37
5.3 Sundbyberg…… ...... 40
5.4 Sundsvall……… ...... 42 5.5 Östersund……...... 45
6. Analysis ...... 48
6.1 Within-case organization analysis ...... 48
6.2 Cross-case organization analysis ...... 55
6.3 Summary of analysis ...... 61
7. Discussion ...... 63 7.1 The importance of market actor creation ...... 63
7.2 Handling the multiple roles ...... 65
7.3. Alternatives for solving the problem ...... 68
7.4 Discussion for the future ...... 69
8. Conclusion ...... 70
8.1 Theoretical implications ...... 72 8.2 Practical implications ...... 72
8.3 Limitations……...... 72
8.4 Outlook………...... 73
9. References ...... 75
10. Appendices ...... 83
Appendix 1 – Interview protocol ...... 83 Appendix 2 – Interview participants ...... 86
Appendix 3 – Expert team ...... 87
Appendix 4 – Description of municipalities ...... 88
Appendix 5 – Municipal organizational structures ...... 93
Appendix 6 – Summary of Simons’ Levers of Control ...... 96
Appendix 7 – Relationship between customer satisfaction and compensation . 97
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List of tables and figures
Table 1 Overview of the municipal organizations part of the study ...... 26 Table 2 Example diagram of the analytical interpretation ...... 33 Table 3 Level of strategy and LOC in Nacka ...... 50 Table 4 Level of strategy and LOC in Österåker ...... 51 Table 5 Level of strategy and LOC in Sundbyberg ...... 52 Table 6 Level of strategy and LOC in Sundsvall ...... 53 Table 7 Level of strategy and LOC in Östersund ...... 55 Table 8 Summary of the level of strategy and LOCs ...... 55 Table 9 Level of strategy in the case organizations...... 56 Table 10 Balance between diagnostic and interactive control systems ...... 57 Table 11 Balance between belief and boundary systems ...... 60
Figure 1 Definition of marketization (Anttonen & Meagher, 2013) ...... vi Figure 2 Multiple roles of elderly care providers (own model) ...... 3 Figure 3 The average cost structure of Swedish municipalities ...... 6 Figure 4 The interplay between the municipality, the user and the provider ...... 8 Figure 5 Opportunity space for action (Simons, 1995a) ...... 21 Figure 6 The paradox of multiple roles explained (own model) ...... 67
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Abbreviations & Definitions
LOV The Act on System of Choice in the Public Sector (Lag (2008:962) om valfrihetssystem)
LOU The Swedish Public Procurement Act (Lag (2007:1091) om offentlig upphandling)
LOC Levers of Control
MCS Management Control System
SCSI Swedish Customer Satisfaction index
NPM New Public Management
Marketization
In this thesis we define marketization of the elderly care sector using the two- dimensional definitional framework presented by Anttonen & Meagher (2013, pp. 16):
Marketisation is defined by the presence of market rationalities and practices. (…) Whether or not market practices and logics (most notably competition) are used in organising services and whether or not private actors, particularly for-profit companies, are involved in providing service.
Using the table below, we identify the marketization as a welfare market where private actors are involved and where competition is present: “Outsourcing with competition; customer choice models”.
Private actors involved Private actors not involved
1. Outsourcing with 2. Importation of private sector Market practices/ competition; customer practices into the public sector competition choice models 3. Outsourcing without 4. ‘Traditional’ public sector Non market practices competition provision
Figure 1 Definition of marketization (Anttonen & Meagher, 2013)
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1. Introduction
The ageing population in the Western world has lead to growing demand for elderly care services; a growth which is expected to increase as the share of the population aged 65 years and older increases (SKL, 2011a). To tackle the need for more and better care, the Swedish elderly care sector has during the last decades undergone multiple reforms. The most notable of these is marketization, introduced in the early 1990s inspired by the New Public Management (NPM) movements of the 1980s (Hjalmarson & Wånell, 2013). Marketization and NPM was believed to lead to more cost efficient and more productive care, which in turn would increase the quality of care (Christensen et al, 2001). During the last decades, private actors have gained a strong foothold on the Swedish elderly care sector: In 2012, 21 per cent of the beds in elderly care homes and 23 per cent of home care hours were provided by private providers (Erlandssson et al., 2013). As a result of marketization, the role of the municipality as a producer of elderly care has changed. The municipal production has been separated from the administrative authority. The producing organization is responsible for providing qualitative elderly care that attracts users. The administrative authority is in turn responsible for allocating resources and creating the market, including assuring fair competition and conducting quality controls (SKL, 2010a).
The demographic pressure along with the reforms of the elderly care sector has resulted in an intense societal debate regarding how elderly care in Sweden should be organized and produced. Some voices claim that marketization has merely resulted in micromanagement of the care units and poorer service quality. The solution according to this line does not lie in marketization, but to allocate more resources to the sector (Löfvén, DN Debatt, 2013). Others claim that while there still are problems in the sector, such as quality assurance, marketization has at least increased productivity and the freedom of choice for the users (Eklund & Kelman, DN Debatt, 2013). However, the debate has to a large extent focused on the “be or not to be” of marketization, and how to control the private actors (Erlandsson et al., 2013). Less focus has been on how to carry out the actual production of elderly care services to meet the cumulative demand. For instance, in a report commissioned by SKL (2011b), it was noted that the municipalities as a result of marketization need to develop new skills in their role as purchaser, “while
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continuing as one of the providers of eldercare services” (Erlandssson et al., 2013, pp. 57). This reflects the focus of the debate, the municipality’s additional role of being a purchaser of privately provided elderly care services. However, how the municipal provider should adjust to its role of being both market actor and welfare producer has to our knowledge received limited attention.
Taken together, the municipal elderly care providers in Sweden are faced with two mounting issues. First, the municipal providers need to fulfill their role as welfare actors and produce qualitative care, with increased pressure to meet higher demands. Second, they need to take on the role of being a competitive market actor against the private actors. Combining these two paradoxical roles has shown to be a challenge, reflected for instance by the financial losses that the providers are reporting1 (SKL, 2013b). What is more, the municipal providers struggle to generate value with the monetary compensation they receive: In a presentation by SKL (2013a) it was highlighted that increased compensation for home care providers does not necessarily lead to higher quality, illustrated in Appendix 7. This suggests that the providers are not using care resources optimally, which further highlight the paradox they are faced with as a result of marketization. The paradox of the municipal providers is a problem that we will excavate further.
1.1 Problem
Many researchers have studied marketization of the elderly care sector (c.f. Hjalmarsson & Wånell 2013; Anell et al. 2011 and Rombach, 1991). However, research on how the municipal providing organization has handled marketization has thus far been limited (Anjou, 2008; Kastberg & Siverbo, 2007 and Norén, 1997). We lack specific research on why the municipal providers of elderly care continue to face challenges, although marketization has been in place for over a decade. We do not know how the providers managed their organizations to fulfill the obligations of both roles. Therefore we believe that it is relevant to study why marketization has been challenging for the municipal providers of elderly care, and how the providers of elderly care operatively combine their multiple roles to produce care services. Greater understanding of the consequences of
1 In 2012, 40 out of the 60 municipalities that had introduced the Model of Choice and that were able to specifically present their elderly care results reported a deficit (SKL, 2013). 2
Challenges of marketization Brandt Forsius & Molander, 2013
marketization on the operative function of the municipal providers of elderly care would complement existing research on the field Swedish municipal elderly care.
The problem we are faced with is illustrated in Figure 2 below. As a result of marketization, the municipality’s role has been split into a purchasing function and a providing function. The providing function includes being a welfare producer responsible for providing citizens with elderly care. In addition, the providers are market actors on a competitive public market. The municipality’s responsibility is to manage both these roles, which has shown to be challenging to do successfully (SKL, 2013a). To understand the problem, it is relevant to ask the question of how the municipal providers manage their operations to produce elderly care services. Therefore, to understand why challenges are present it is relevant to study the operative function of municipal elderly care.
Figure 2 Multiple roles of elderly care providers (own model)
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1.2 Purpose
The purpose of this thesis is to study why the municipal providers of elderly care face challenges in combining their multiple roles of being both welfare producers and market actors. In the absence of prior research to determine the municipal providers’ operational challenges of marketization, this thesis attempts to contribute to our understanding of why challenges occur, and how the management handles the believed confusion of having multiple roles. In order to gain this understanding, we will study the operations of the municipal elderly care providers. Specifically, we will examine the management control systems (MCSs) of the elderly care providers. By studying how the municipal providers operationally control their organizations, we will be able to discuss how management handles the believed confusion in the production of elderly care.
In this study we aim at studying management control from an institutional perspective. We examine management control in the light of the believed institutional confusion that the elderly care providers are faced with, and aim at providing a theoretical link between marketization and management control.
1.3 Research question
To fulfill our purpose will answer the following research questions:
Why do the municipal elderly care providers face operative challenges as a result of marketization?
What management control systems do municipal providers of elderly care exposed to marketization use?
1.4 Expected contribution
This study contributes to the research on elderly care services as it provides an increased understanding of how municipal welfare providers act on a competitive market. Specifically, this thesis provides insight into how municipal elderly care providers internally manage and control their organizations to carry out elderly care and to be competitive. Further, we aim at providing a theoretical link between marketization and management control.
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We hope that this study will create a foundation for further research on how municipal providers can develop their operations in order to increase operational efficiency and assure that qualitative care is produced. Furthermore, this study can function as a basis for discussion among practitioners. We hope that the specific characteristics of the different municipalities that are part of the study can encourage an exchange of experiences among practitioners on how to successfully operate municipal elderly care in a competitive environment.
1.5. Delimitation
In this study we examine the operations of the municipal providers. There may have been other aspects related to our problem, such as the impact of the municipal purchaser on the municipal provider. Aspects such as this would have been interesting to study as well. However, in order to be able to answer our research questions and fulfill our purpose we chose to delimit our empirical study to the management control of the elderly care providers.
In this thesis we only study municipal providers that act on a competitive elderly care market. In order to get a more comprehensive picture of the Swedish elderly care sector, we could have included municipalities that have not yet introduced marketization. However, since we merely make observations at one point in time and do not conduct a longitudinal study of the elderly care sector, we decided to limit the amount of observations. What is more, an increasing number of municipals in Sweden have introduced marketization or will do so in the near future. Thus we find it most relevant to look at municipalities exposed to competition when studying the Swedish elderly care sector.
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2. Background
This section aims at providing the reader with a background to the Swedish elderly care sector. A brief introduction to the Swedish public sector will first be presented, along with the public reforms that have been conducted. Second, an overview of the marketization of the elderly care sector will be provided.
2.1 Elderly care in Sweden
The public sector in Sweden accounts for approximately 20 per cent of the Swedish GDP. Out of the 20 per cent, 13 per cent is produced in the municipalities (Knutsson et al., 2008). The responsibility of many of the public services in Sweden lies in other words on the municipalities. In the 1980s the decentralization of public services in Sweden intensified, and today the Swedish municipalities are fairly autonomous compared to equivalent countries. The municipalities are for instance able to decide how to allocate their resources according to local circumstances (Siverbo & Johansson, 2006; Mattison et al. 2003). The constitutional law prescribes the municipal autonomy since local authorities are considered best equipped to decide over local services (SKL, 2013b). The Social services of each municipality is the authority responsible for elderly care, including control of the private providers. The figure below displays the average cost distribution in municipalities; elderly care accounts for 19 per cent of the total costs of 529 billion (SKL, 2013b).
Cost strcuture of Swedish municipalities, 2012
Business acitivities Other Preschool 5% 16% and childcare Individual- and 14% family care Elementary 4% school Economic aid 16% 3% Disabled 11% Upper secondary Elderly care school 8% 19% Other education 4%
Figure 3 The average cost structure of Swedish municipalities
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Due to the autonomy of the Swedish municipalities, they differ in terms of structure. However, all municipalities have a municipal council, municipal board, committees and departments. The municipal council is the highest decision- making body and consists of politicians that are elected every fourth year. The municipal council sets the municipality’s budget, decides on the municipal tax rate, what committees are needed as well as elects the municipal board. The municipal board in turn leads and coordinates the work of the municipality and is responsible for the municipality’s financials. The committees are responsible for the municipality’s daily work, including operationalization of the decisions made in the council. However, since the committees are formed locally, their structure and responsibilities vary across the country. Under each committee, there is typically a department that executes the responsibilities of the committee.
2.2 Marketization of elderly care
2.2.1 Public Sector reforms in Sweden
Influenced by marketization ideas and NPM the Swedish public sector, including elderly care, was opened up for private actors in the early 1990s (Kastberg, 2005; Almqvist, 2004). NPM can be described as the public sector’s adoption of management practices from the private sector and includes for example; decentralization, cost responsibility to units, increased competition both internally and externally, increased use of management models and increased focus on budget limits (Hood, 1991; Pollitt, 2011 and Christensen, 2005). The introduction of private actors implies that the welfare services are financed by the government but carried out by any provider that meets the set requirements (Anell et al., 2011).
The elderly care market’s current competitive structure has developed since marketization was first introduced. During the 1990s, private actors entered the market through Contract procurement, regulated by the Public Procurement Act2. During the last decade an alternative to the Contracting model has emerged, the Model of Choice, regulated through the Act on System of Choice3 (Socialstyrelsen, 2012). In this model all private actors that meet the municipality’s pre-defined demands can enter the market. The choice of provider is left to the user, and the actors compete on getting the user as a customer, rather than winning a contract
2 The Act on System of Choice in the Public Sector (LOU), 2007:1091 3 The Swedish Public Procurement Act (LOV), 2008:962 7
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(Kommunal, 2102). Due to the autonomy of the municipalities, they can choose themselves if they want to introduce marketization on the different welfare sectors. As of today, more than half of the Swedish municipalities have chosen to introduce the Model of Choice on the elderly care sector (Hjalmarson & Wånell 2013). However, the municipal providers still account for 75 to 80 per cent of the total Swedish elderly care market (SKL, 2013b).
2.2.2 The new role of the municipality
The elderly care market concists of three key palyers: The municipality, the user and the provider. For the Model of Choice to function well, the interaction between these players need to funtion smoothly (Swedish Competition Authority, 2012a). The municipality is principal agent for the public services and carries the full responsibility for the services to reach the users. The municipality also sets the requirements that need to be fulfilled by the provider and conducts quality controls. The user and the providers correspond to the market’s actors “consumer” and “producer”. In this case however, the principal pays the producers according to a reimbursement model. The municipality decides the users that are entitled to receive elderly care or home help, and the user then chooses their provider. The provider has a contract with the municipality, the principal, to deliver elderly care to the user that fulfills the set demands (Swedish Competition Authority, 2012a). Figure 4 below illustrates the interplay between the different actors.
Figure 4 The interplay between the municipality, the user and the provider (Swedish Competition Authority, 2012b)
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As the model illustrates, the introduction of private actors on the elderly care sector implies that the municipality has received multiple roles; the municipality is both the principal agent that assures that the market functions, as well as a provider on the market, producing the service that the principal controls. In order to assure fair competition on the elderly care market it is according to the Swedish Competition Authority (2012) necessary to clearly separate between the different roles in order for the provider to be autonomous from the principal. However, this has shown to be challenging for the municipalities, and the providing organization in many municipalities is not independent from the principal (Kastberg, 2005). As a result, the municipal providers are faced with the challenge of both providing qualitative care and handle their new role as a market actor.
3. Theoretical foundation
In this chapter we present our theoretical foundation. First, we will give an overview of the research in the field of public sector market creation. Specifically, we draw attention to marketization and the concept of institutional confusion. These theories form the theoretical foundation of the study. Second, we will bridge over to outline theories on management control. We provide a brief literature review on MCSs and describe the analytical framework we apply to analyze the empirical data.
3.1 Market creation
3.1.1 Marketization
We apply theories on marketization to discuss the institutional challenges that the municipal providers are faced with as a result of market creation and market actor creation.
The term quasi-market is used in research to refer to the introduction of the market idea on the public sector. Le Grand and Bartlett (1993) highlight three factors that distinguish quasi-markets from normal markets. First, some of the actors on the quasi-market are not profit maximizing. Second, demand is determined by a public budget rather than by the customers’ needs. Third, the choice of supplier is not made by the customer, but by a regulating actor.4 Quasi-
4 In the Model of Choice system (LOV) the users can to some extent choose provider. However, since the first choice is made by the regulator rather than the users, the providers that act on a LOV regulated market can be said to act on a quasi-market. 9
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markets are created through regulation (Kastberg & Siverbo, 2007). Researchers who have studied this regulation have suggested that price, quality, actors’ access and information are factors relevant to regulate (for example Propper, 1993; Potter, 1988). The creation of distinguishable market actors is another necessary aspect for a well-functioning quasi-market (Kastberg & Siverbo, 2007).
Purchaser- provider model
The purchaser-provider model is a way to organize public organizations on a quasi-market. In this model the municipal welfare purchaser controls the welfare provider with contracts rather than with a hierarchical relationship (Kastberg & Siverbo, 2007). The model implies that the municipality’s role of being both purchaser and provider of elderly care services is split into separate organizations. The structural arrangement between the different organizations is defined by boundaries, in order to facilitate the exchange of services (Kastberg & Siverbo, 2007). The boundaries are formed through framing, a concept originally introduced by Callon (1998). The framing process is however complicated by the inherent problem of public markets of the purchaser and the provider belonging to the same organization, being dependent on the same principal. This problem leads to externalities, or overflows (Callon, 1998). An example of overflow is the increasing total costs of the municipality that the purchaser and provider split leads to, as a result of increasing administration. Overflows threaten the autonomy of the purchaser and provider (Kastberg & Siverbo, 2007).
Complete organizations
In order to understand the organizational prerequisites of the municipal providers subject to marketization, we apply Brunsson & Sahlin-Andersson’s (2000) concept of complete organizations. Brunsson & Sahlin-Andersson (2000) discuss the creation of market actors in public sector reforms. In line with Kastberg & Siverbo (2007), they highlight the importance of having an identity and being an autonomous actor with defined boundaries. Brunsson & Sahlin-Andersson (2000) argue that in addition to identity, hierarchy and rationality are key aspects to create organizations. Without these, organizations can be viewed as incomplete organizations. Identity implies being autonomous with defined boundaries and collective resources. Hierarchy refers to control, coordination and management of
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the organization. Rationality implies defining goals and measurement objectives for the organization (Brunsson & Sahlin-Andersson, 2000). Brunsson & Sahlin- Andersson’s (2000) work highlights that aspects such as boundaries and autonomy are not only relevant in the specific purchaser-provider model, but in general when constructing organizations and markets as a result of public sector reforms.
3.1.2 Institutional confusion
Brunsson (1994) differentiates between two types of organizational institutions: the company and the political organization. The challenges that municipalities face when entering a quasi-market can be understood by company-ization, the tendency of the public sector to adopt features from the company organization (Brunsson & Sahlin-Andersson, 2000). One notable difference between the two organizational institutions is that the political organizations’ environment consists of citizens, whereas the company’s environment constitutes of customers. Moreover, the company is profit-driven, competitive and strives for efficiency. In contrast, the political organization focuses on the task given, is democratic and is allocated resources through a budget (Brunsson, 1994). In reality however, the company and the political organization are not as clearly distinguishable as they are in theory. Rather, the different institutions adopt features form each other, often as a result of external pressures. Companies are to some extent politicized whereas political organizations are company-ized (Brunsson, 1994).
Company-zation and politization lead to institutional confusion, which can be understood as “a process in which organizations pick out attractive individual bits from different institutions” (Brunsson, 1994, pp. 331). When institutional actors pick out individual features of another institution, without considering the consistency of the organization, problematic institutional confusion may arise. This is specifically likely to happen as a result of external pressures to change, such as institutional pressure in the form of public sector reforms (Brunsson, 1994).
3.2 Link to the analytical framework
Many researchers have studied institutional change, such as marketization, and the responses that organizations enact as a result of the institutional change (c.f. Norén, 1997 and Oliver, 1991). In this study we aim at understanding why it has been challenging for the municipal providers to handle the multiple roles they
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have as a result of the institutional changes that marketization represents. We want to understand to what extent the municipal providers have been able to become market actors, without losing focus of their welfare responsibilities. In order to gain this understanding we apply the above presented theories on market creation on our empirical findings.
To study the operations of the municipal providers we have chosen to focus on MCSs. By examining how the organizations are controlled, we will be able to understand how resources are used to produce elderly care. The results if this empirical study will in turn provide us with a foundation for discussing the institutional confusion of the municipal providers. Thus we study management control in the light of institutional confusion. To analyze the MCSs we will apply an analytical framework, presented below. This framework will help us answer our second research question- What MCSs municipal providers of elderly care exposed to marketization use. Answering this question will give us understanding of the care providers’ operations. This will in turn give insights on how the providers manage their multiple roles, which in turn will enable us to discuss why the municipal providers face challenges as a result of marketization. This discussion leads us to answering our first research question- Why do the municipal elderly care providers face challenges as a result of marketization?
3.3 Analytical framework
In this sub-section we will first present a brief review on MCSs to provide a background and motivate our specific choice of analytical framework, Simon’s Levers of Control. We will use this analytical framework to analyze what MCSs the municipal elderly care providers exposed to marketization use, which will give us insights in how they manage their operations. We examine management control from an institutional perspective. We look at management control in the light of institutional confusion, and aim at contributing with a theoretical link between marketization theories and management control theories.
3.2.1 The Development of Management Control
The literature within the field of management control has been criticized for being somewhat categorized (Tessiera et al., 2012) and of lacking a clear definition of the concept of management control (Chenhall, 2003; Otely, 1980). The different
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concepts have easily been mixed and at times even used interchangeably, such as management accounting, MCSs and organizational control (Chenhall, 2003). However, regardless of label, the common ground of the different definitions is that MCSs are systems that managers use when controlling and planning their organizations (Armesh et al. 2010).
Originally, the information that managers used in controlling and planning was merely accounting based, and management control was to a large extent synonymous with accounting control (Otley, 1999). With the aim of broadening the information source used in controlling, and bringing behavioral issues into light, Anthony (1965) developed an early framework of management control. In his framework, management control is defined as “the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organization’s objectives” (Anthony, 1965). This definition distinguishes management control from strategic planning, the task of setting long-term objectives, and operational control, the task of carrying out immediate activities (Otley et al., 1995). Moreover, Anthony places the concepts of planning and control in an order, where strategic planning precedes management control and operational control (Kloot, 1997).
Anthony’s hierarchical view of management control has however been criticized of being too restrictive. Since Anthony (1965), various authors have provided broadened and developed definitions of management control (for example Lowe, 1971; Machin, 1983). Later research suggests that even though control is a vital part of MCSs, effective control cannot be carried out without individuals working productively and capturing opportunities to reach the set objectives (Simons, 1995a; Hofstede, 1986). In addition to attaining control over the organization, MCSs must simultaneously empower employees to be creative and innovative (Mundy 2010, Simons 1995a).
In contrast to Anthony (1965), Otely (1999) presented a holistic and integrated view on management control by giving greater attention to strategic and operational elements. Otley’s framework is a descriptive one, rather than a normative or a prescriptive one (Otley, 1999), and focuses on the structure of MCSs (what they are) rather than on the process (what they do) (Anthony & Herzlinger, 1980). From the holistic perspective, the aim of management control
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in an organization is, in its simplest form, to get organizational members to work towards a set goal (Brorström, Haglund & Solli, 1999). Hope & Fraser (2003) further suggest that control systems in knowledge-based organizations should be holistic and integrated in order to be effective. Building on Otley (1999), Simons (1995a) developed an integrated and prescriptive approach on MCSs. Simons’ (1995a) framework addresses the inherent tension between control and achievement of objectives on the one hand, and autonomy and innovation on the other hand.
In order to answer our research question, What management control systems do municipal providers of elderly care exposed to marketization use?, we apply Simons’ Levers of Control (LOC) since we want to understand MCSs from a prescriptive view rather than a descriptive view.
3.2.2 Analytical framework: Simons’ Levers of Control
In order to study the operations of the municipal providers of elderly care and what MCSs they use we find Simons’ (1995a) normative framework applicable, as it provides a holistic view on control. Simon’s framework was developed based on experience in decentralized private sector organizations (Simons, 1995a, 2000; Norman, 2001). However, it is still a suitable to analyze the operations of the municipal providers with a private sector model (Norman, 2001). First, the municipal providers of elderly care in this study act on a competitive market and compete with private actors. Second, the control systems implemented in the Swedish public sector in the late 1980s were heavily inspired by the private sector (Kastberg, 2005). Furthermore, Norman (2001, pp. 67) states that Simons’ framework “tackles a concern common to both private and public sectors- the effective implementation of strategic intentions.” Previous research moreover demonstrates that Simons’ definition of control systems is equally applicable to public sector systems as private sector systems (Norman, 2001; Kominisa & Dudau, 2012).
Simons (1995a) developed a framework called Levers of Control (LOC) that is based on business strategy implementation and control. The framework addresses how organizations can meet the simultaneous demands of freedom and constraint, empowerment and accountability, top-down direction and bottom-up creativity and experimentation and efficiency. Simons defines MCSs as, “the formal,
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information-based routines and procedures managers use to maintain or alter patterns in organizational activities” (Simons, 1995a, pp. 5).
The starting point of Simons’ framework is that MCSs have two complementary and interdependent roles: constraining attention and encourage opportunity- seeking behavior. If managers are able to balance these tensions, return-on- management will be maximized and outputs of value will be created (Simons, 1995a). Simons’ viewpoint has further been supported by Broadbent & Laughlin (2009).
3.2.2.1 Levers of Control
To handle the tension between empowerment and accountability Simons (1995a) has developed four LOC: (1) belief systems, which aim at inspiring and motivating, (2) boundary systems, which aim at drawing boundaries, (3) diagnostic control systems, which aim at evaluating and overseeing and (4) interactive control systems, which aim at stimulating interactivity and learning. At the center of these LOC is the organization’s strategy, the core of the analytical framework. In the following sub- sections these four levers of control including strategy will be presented in detail. A brief overview of the LOC can be found in Appendix 6.
3.2.2.1.1 Strategy at the center of the analytical framework
The concept of strategy is not straightforward (Mintzberg & Waters, 1986). However, one common view of strategy is that it can be seen as a pattern of committed and coordinated activities undertaken in order to gain a specific position on the market (c.f. Minztberg, et al., 1986; Hitt and Ireland & Hoskisson, 2009). Strategy is in other words about making choices. Strategy has a central role in Simons’ LOC framework as it coordinates the different levers towards a common direction. In other words, the LOC need to support the intended strategy. Simons (1995a) defines strategy as the way the organization position itself in relation to its competitors. According to Simons:
Strategic control is not achieved through new and unique systems but through beliefs systems, boundary systems, diagnostic systems and interactive systems working in concert to control both the implementation of intended strategies and the formation of emergent strategies. (Simons, 1995a, pp. 156)
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In other words, the organization’s strategy needs to be adopted according to the opportunities found, and according to the environment the organization acts in. This view is in line with Mintzberg & Waters (1985) who claim that “strategy formulation walks on two feet, one deliberate, the other emergent” (Minztberg & Waters, 1985, pp. 271). Similarly to Simons, Minztberg & Waters (1985) oppose the view of strategy as a straightforward analytical process of formulation followed by implementation.
Poister & Streib (2005) studied strategic planning in municipalities and state in their study that several authors debate how municipalities should approach strategic planning in terms of scope (Kaplan & Norton, 1996), content (Hatry, 2002), involvement and participation (Gabris 1989) and approach (Roberts, 2000). Poister & Streib (2005) further mention that municipal governments often fail in implementing strategic plans since public managers often “fail to link their strategic planning efforts to other critical decision-making processes” (Poister & Streib, 2005, pp 46). In line with the discussion above, Mintzberg (1994) criticizes strategic planning as it tends to be too separated from performance measurement and resource allocation. Poister & Van Slyke (2002) address this issue and explain that organizations may demand subunits and divisions to develop own strategic plans that support the enterprise level strategy, as a response to the challenges of implementing strategic plans in organizations. Johansson (2003) in turn provides an explanation to why strategic plans fail by linking it to corporate communication, and that it often follows a top-down strategy. According to Johansson (2003) strategy communication and implementation often fails since those implementing them realize the visions formulated by management differently. Employees do not have the same insights about the strategy as the management has, and seldom receive an opportunity to gain an insight into the strategy (Johansson, 2003). The notion that there is discrepancy between decision-makers and conductors of strategic plans is reoccurring. For example, Henriksen (2003) concludes in his study on municipal elderly care that politicians and managers often have contrasting views regarding what vision and strategy that elderly care should have in order to best serve the users.
The highlighted challenges of implementing defined strategies, and especially the critique of top-down communication of plans, underlines the importance of
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effectively taking advantage of emergent strategies. MCSs that effectively succeed in catching opportunities and bottom-up initiatives are therefore vital for organizations to have in place.
3.2.2.1.2 Diagnostic Control Systems
Diagnostic control systems aim at monitoring the organization’s outcome as well as correcting deviating behavior from the set goals of the organization. These systems are especially suitable when performance standards can be set, output can be measured and feedback information can be used to correct deviations from standards (Simons, 1995a). A crucial part of diagnostic control systems are their role in analyzing and determining critical performance variables, monitoring goals and profitability as well as measuring progress towards targets. The main purpose of diagnostic control system is to be a tool that allows managers to get an overview of the performance of the organization, without having to monitor it constantly (Simons, 1995b).
A common tool within diagnostic control system is the budget. Traditionally, the purpose of the budget is threefold: To plan, to coordinate and to control the organization (Andersson, 1995). In public organizations, planning and resource allocation is a specifically important function of the budget, since public organizations do not act on a market with inherent allocating mechanisms. By setting a purpose and allocating resources to an organization, control can be achieved through the budget (Broström, Haglund & Solli, 1999).
Previous studies have shown that there is a tendency for managers to put too much focus on diagnostic control, such as goal setting and financial control (Lorain, 2010; Hope & Fraser, 2003 and Kraus & Lind, 2008). Traditional budgeting, for example, is still central in the MCSs of companies (Lorain, 2010), despite the critique of it being too rigid and unfair as a performance evaluator (Wittbom, 2009; Hope & Fraser, 2003; Jensen, 2001 and Hope & Fraser, 2000). Others have criticized the budget process of being too time-consuming and resource constraining and involving only a few individuals in the organization (Hope & Fraser, 2001 and Wallander, 1999). What is more, the budget encourages an allowance mindset, which implies that the unit subject of the budget should spend what has been allocated, regardless (Wallander, 1999). Hope & Fraser
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(2009) moreover note that “in extreme cases, use of the budget to force performance improvements may lead to a breakdown in corporate ethics” (Hope & Fraser, 2009, pp. 108). Instead of budgets, researchers suggest that companies adopt alternatives goals and measures, such as cost-to-income ratios, rolling forecasts and time to market (Lorain, 2010 and Hope & Fraser, 2009).
Despite the critique, budgeting can still be useful in management accounting if not treated as an isolated function (Raghunandan, Ramgulam & Raghunandan- Mohammed, 2012 and Hansen & Van der Stede, 2004). However, this demands that the behavioral aspects of budgeting are taken into account. For example, lower level management should be involved in the budget setting process (Raghunandan, Ramgulam & Raghunandan-Mohammed, 2012 and Hansen & Van der Stede, 2004). When individuals receive responsibility and voice in the budgeting process, it is easier for them to understand the purpose of it (Raghunandan, Ramgulam & Raghunandan-Mohammed, 2012).
In line with Hansen & Van der Stede (2004), Kraus & Lind (2008) argue for balance between different control processes. Kraus & Lind (2008) study control in municipal elderly care providers in Sweden. They distinguish between vertical control processes between owners, management and staff on the one hand, and horizontal control processes between staff and users on the other hand. The vertical process has it basis on financial rationality and implies that organizations are viewed as separate units. The horizontal process has its basis in operational rationality and focuses on the service execution. The vertical processes assure financial stability and efficiency, whereas the horizontal processes focuses on the user needs and quality. Efficient control implies that there is a balance between these two processes. Only then can the user needs be satisfied efficiently within the financial limits (Kraus & Lind, 2008).
3.2.2.1.3 Interactive Control Systems
As discussed above, horizontal control processes need to be balanced with vertical control processes. Focus on the one or the other will lead to either quality failures or financial deficits (Kraus & Lind, 2008). In line with this, Simons (1995a) highlights the need to balance diagnostic control systems with control systems that enable managers to get insight into the operation. In Simons’ LOC framework
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these systems are called interactive control systems and defined as “formal information systems that managers use to involve themselves regularly and personally in the decisions of subordinates” (Simons, 1995b, pp. 86). Interactive control systems differ from diagnostic control systems on four parameters. First, they focus on strategic and changing information. Second, the information is significant and demands attention from operating managers at all levels of the organization. Third, the data interpreted by the interactive control system are best discussed in face-to-face meetings between managers, subordinates and peers. Fourth, the interactive control system provides a starting point for an ongoing discussion about data, assumptions and plans. Interactive control systems can thus be seen as a formalized way of empowering employees and nurturing innovation (Simons, 1995a).
The importance of interactive control systems and the empowerment of employees can be linked to motivation end employee satisfaction, as suggested by the Beyond Budgeting Model proposed by Hope & Fraser (2008). Research shows that individual incentives based on fixed performance targets are likely to lead to dysfunctional behavior in organizations (Hope & Fraser, 2003). Today’s knowledge-based organizations rely on innovation, quality and customer service, and thus individual targets will not benefit the organization as a whole, but merely function as an extrinsic motivator (Hope & Fraser, 2003). As it is difficult to distinguish individuals’ marginal contributions, it is not efficient to individually reward employees based on targets to increase performance (Pfeffer, 1998 and Simons, 1995). What is more, when organizational member narrowly focus on financial targets, it is often at the expense of innovation (Hope & Fraser, 2003). As noted above, too much focus on budgetary boundaries for instance makes it difficult to seize opportunities and to meet challenges (Simons, 1995a). To feed innovation and motivate employees intrinsically, rewards should not be based on a fixed performance contract, but built on trust and long-term goals. As such, employees are empowered and focus is but on competitive performance, rather than arriving at some number (Hope & Fraser, 2003). The Beyond Budgeting Model (Hope & Fraser, 2008) is supported by the idea of interactive control systems (Simons, 1995a). An interactive control system sends a signal from management that employees’ input is relevant in strategic questions. Management is able to keep an active surveillance throughout the organization, and subordinate
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managers are able to engage in interactive dialogue, which increases learning in the organization and allows new strategies to emerge (Simons, 1995a).
3.2.2.1.4 Belief Systems
Belief systems aim at presenting a set of beliefs that defines value, purpose and gives direction for the organization. These systems are typically “concise, value- laden, and inspirational” (Simons, 1995b, pp. 82) and often presented in mission and vision statements. The belief system is meant as a guide for the organizational members when they come across uncharted terrain. They inspire organizational opportunity-seeking, and are especially important at times of changes and where new values and priorities need to be internalized (Bruning et al, 2004). Belief systems are sometimes criticized for lack of substance (Simons, 1995a). However, as the purpose of them is to inspire and make employees commit to the organization, it is rather necessary that they are stated in broad terms. What is more, the core values signaled by the belief system must be broad in order to allow all organizational participants to commit to the values on their own terms. This can motivate organizational members to seize new opportunities and innovate. However, given the broadness of the belief system, it needs to be combined with boundary systems that limit the organizational search activity motivated by the belief system (Simons, 1995a).
3.2.2.1.5 Boundary Systems
Boundary systems are control systems that define the limits of what is not allowed. They balance the inspirational and broad belief systems, and aim at decreasing the possibility of opportunistic and risky behavior. In order to be effective, the boundary systems need to be linked to credible threat of sanctions. Boundary systems are especially useful in organizations with high reputation costs, when there is risk of excessive opportunity search and experimentation risk (Simons, 1995a). Boundaries can for example be set through financial data, which protects the organization from financial risk (Tuomela, 2005).
Boundary systems are, as mentioned, balanced with belief systems. Belief systems aim at inspiring and giving direction, while boundary systems limit the opportunity space. Thus these two systems together define the domain within which development and innovation can occur, without the risk of opportunistic behavior
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and unnecessary risk-taking (Simons, 1995a). Figure 5 below illustrates the defined domain within which organizational members guided by the beliefs system can search for new opportunities.
Figure 5 Opportunity space for action (Simons, 1995a)
3.2.2.2 Balance within the framework
Balance is central in the LOC framework; the aim of the framework is to balance the competitive demands of control and innovation. Balance within the framework refers to three main organizational dynamics. First, the dynamics of creating value, which is the balance between opportunity seeking and limited attention that is necessary in order to create value. Second is the dynamics of human behavior, the balance between individuals’ self-interest and the organization’s interests. Third, the dynamics of strategy making, the balance between intended strategies and emergent strategies (Simons, 1995a). The balance within the framework is dependent on both the individuals and the organization, and inherits a dynamic tension (Mundy, 2010). If the organization is unable to maintain a balance, the risk of lower performance is greater (Bisbe, Batista-Foguet & Chenhall, 2007).
3.4 Summary of theoretical foundation
In this section we have presented our theoretical foundation and analytical framework. To study the management of the elderly care providers we will examine what MCSs they use. For this purpose we will apply the analytical framework presented above. The theoretical foundation constitutes of theories on market creation, specifically market actor creation. This foundation will be used to discuss the analytical findings to understand institutional confusion and how the elderly care providers have handles their multiple roles- how they have managed to
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become market actors without losing focus of their welfare responsibility. This discussion moreover aims at contributing to giving light to the theoretical link between marketization and market actor creation and management control. As such, we hope to fulfill our purpose of the thesis- understand why marketization has lead to and continues to be an institutional challenge for the elderly care providers.
4. Methodology
In this chapter we will outline our research methodology. First, we will discuss and present the chosen qualitative case approach. Next, we will introduce our case design and present the case example organizations that we make observations in, referred to as case organizations. Third, we will outline the data collection and data documentation. The chapter concludes with a description of the data analysis process.
4.1 Qualitative research
When making the methodological choices of our study, the purpose and problem formulation has been in focus (Justesen & Mik-Meyer, 2001). To our knowledge, there is limited research studying the marketization in an operational context of municipal providers of elderly care. Consequently an explorative approach was considered most appropriate5. Not only would it provide the possibility to further understand the less known circumstances (Andersen, 2012 and Saunders et al, 2009) but it would also enable us to go beyond what previous studies have shown to explore what has not yet been fully understood (Ghauri & Grønhaug, 2010).
It is common to distinguish between qualitative and quantitative research (Andersen, 2012 and Ghauri & Grønhaug, 2010). A qualitative approach allows for deeper understanding of the studied subject (Yin, 2013) and is according to Conger (1998, pp. 108) preferred before a quantitative approach “[…] in the exploratory phases of researching a topic area.” Our research question focuses on studying MCSs applied and since we view the context of a privatized welfare sector as relevant for how MCSs are used, it calls for a qualitative methodology (Holme & Solvang, 1997 and Justesen & Mik-Meyer, 2011). Thus we adopt a
5 Other possibilities were descriptive and explanatory (Saunders, Lewis & Thornhill 2009) 22
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qualitative methodology to fulfill the purpose of the study and answer the defined research questions.
4.2 Research approach
In this study we adopt an inductive methodological approach, which is a combination of deductive and inductive approach (Andersen, 2012). The abductive approach implies that the researcher analyses empirical data without eliminating the application of theory. The researcher moves between empirical data and theory to understand underlying patterns (Alvesson & Sköldeberg, 1994 and Guvå & Hylander, 2003). As the empirical data for this study was gathered we inductively analyzed the data by discerning connections and themes, which gradually increased our understanding of the ways in which MCSs are used in the context of municipal elderly care. At the same time, we worked deductively, by applying theoretical assumptions on the empirical data. Hence, the abductive approach was followed.
4.3 Case study
The primary research approach applied in this study is the case study approach. Our case is the Swedish municipal elderly care sector.6 The case study approach is common in qualitative research (Lundahl & Skärvad, 1999) and offers several advantages to fulfill our purpose. First, this approach is favored when answering “how” and “why” questions (Benbasat et al., 1987; Yin, 2003), and thus relevant for this study as we examine how MCSs are used by municipal providers of elderly care and why challenges have occured. To understand elderly care we made empirical observations through interviews with people at different positions in different municipal elderly care providers.
4.3.1 Case design
This thesis follows a single-case study approach by examining the municipal elderly care sector through empirical observations in different example municipalities. The single-case study is favorable when the case is unique and representative (Yin, 2003), which the elderly care sector is for the purpose of our study.
6 A description of this sector can be found in chapter 2, “Background.” 23
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4.3.2 Selection of case example organizations
In order to study the case of municipal elderly care we selected a few case example organizations from where we collected empirical data. The municipal case organizations were purposefully selected according to defined criteria, in line with Holme & Solvang (1997) and Yin (2003).
Our primary selection criterion when choosing the case organizations was that they should have implemented, or be in the process of implementing marketization. Moreover, we aimed at selecting municipalities that were in different stages of implementing marketization in order to get a diverse and realistic view of MCSs used today in municipal organizations. Second, we aimed at selecting geographically spread municipalities to get as a broad range of contexts as possible. However, due to personal restrictions of travelling across Sweden to conduct interviews, only two of the five municipal case organizations were outside Stockholm metropolitan area. Our third selection criterion was to select municipalities of differing political majority since the degree of privatization of a municipality’s welfare service is affected by the political structure (Grant Thornton, 2010). Therefore two of the municipalities are more right-winged whereas three are more oriented towards the left. Finally, we believed that it was necessary that we were given sufficient access to the organizations. Therefore our fifth and last selection criterion was to select organizations that were committed to and open towards participating in our study, and that gave us access to face-to-face interviews. Face-to-face interviews allowed us to take advantage of social cues such as voice, intonation and body language and to gain more detailed information from the respondents (Opdenakker, 2006 and Denscombe, 2000). Although we could have included more municipalities in order to get a more comprehensive picture of our case, the Swedish municipal elderly care sector, we deemed that we had sufficient data from the five municipalities included to compare, and that searching for further case organizations would only add time pressure.
To get access to the municipalities we turned to Nordic Healthcare Group (NHG), a consulting firm specialized in health and social care. NHG helped us to establish contact with the municipalities. Furthermore, a representative from each of the municipalities was selected to be a point of contact throughout the study.
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4.4 Presentations of case example organizations
The case example organizations are presented in Table 1 to provide the reader with an overview of the participating municipalities. An in depth description of the case organizations is moreover provided in Appendix 4, and in Appendix 5 the organizational charts for each municipality are presented. .
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Table 1 Overview of the municipal organizations part of the study
Nacka Österåker Sundbyberg Sundsvall Östersund
Inhabitants 94 000 40 000 41 000 97 000 60 00 Purchaser-Provider X X model Form of competition LOV (home help LOU & LOV (as of LOU & LOV LOU & LOV LOU & LOV services) 01/2014 Location Stockholm county Stockholm county Stockholm county Northern Sweden Northern Sweden Unclear Strong focus on Re-organization Focus on freedom of responsibilities Challenging political independent result taking place due to choice since 1980’s between politicians situation with a strong units implementation of and civil servants opposition LOV. Relative strong Challenging to control through Focus on limiting Vanguard, LEAN for implement directives Focuses on Karin implementation of overflow in the service, have Characteristics and structures in the and Karl as a way to BSC and result organization developed their organization emphasize increased agreements control at one unit customer focus Have taken the first Unclear Only private home steps to increase Focus on marketing responsibilities Striving to find care services business and differentiation on between purchaser better goal understanding of the the market and provider formulations units
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4.5 Data collection
4.5.1 Semi-structured interviews
The primary data was collected through interviews as it is an efficient source of information for case studies (Yin, 2003). The interviews were semi-structured, which allowed for depth and digression, as well as enabled us to pick up and discuss issues that came up during the interview (Alvesson, 2001 and Keats, 2000). In order to get satisfying answers without limiting the respondents, the interviewer asked “why” and “how” questions as well as asked the respondents to develop, explain or exemplify their reasoning when necessary. As such, the respondents were able to share their ideas of MCSs with great level of detail, at the same time as we were able to collect the necessary information from each respondent (Gillham, 2000).
In addition to interviews, we consulted secondary sources in the form of annual reports and strategic plans of the municipalities, as well as human resource data such as organizational structures and job descriptions. These sources were mainly used to gather complementary data to the interviews, since we after finishing our interviews believed that we had gathered sufficient data to analyze.
4.5.2 Interview protocol
In line with Yin (2003), we prepared an interview protocol in order to be able to gather the necessary data needed to answer our research questions. The interview protocol consisted of five parts. The first part focused on grasping the respondents’ background and role in the organization. What is more, general questions about the respondent’s organization and its structure was asked in this part. Apart from introducing us to the case organization, the purpose of the first part was to make the respondents feel comfortable and to establish a relationship with the respondent (Alvesson, 2011). In the second part, questions about MCSs were asked. The aim was to capture the respondents’ ideas of what MCSs are and how they are applied in their organization. Specifically, we were interested in the respondents’ experience of how they work with MCSs. This part was adapted somewhat depending on the role of the respondent. For example, when a manager was interviewed, questions such as “What tools do you use when controlling/steering your operation?” and “Do you experience that your staff knows what you want to accomplish?” were asked. In contrast, when a staff member was interviewed, questions such as “How do you experience that the operation is
Challenges of marketization Brandt Forsius & Molander, 2013 controlled/steered?” and “Do you experience that you know what the management wished to accomplish?” were asked. The third part of the protocol focused on goals, goal setting and goal follow-up as instruments of control. The purpose of this section was to capture the implementation of MCSs in the organization. Again, the protocol was somewhat adapted depending on the respondent’s role and background. In line with Alvesson (2011), we concluded the interview in the fourth and final part with complementary questions such as “Is there anything you would like to add?” Even though the protocols were carefully prepared, they were not used as strict inquiry forms since we, as mentioned, were interested in gathering ideas and thoughts that arose during the interview.
To overcome the issue of translating academic vocabulary familiar to the researchers but perhaps not to the respondents, the questions were formulated to relate to the respondents environment. For example, rather than asking “when have you achieved your goals/targets?” we asked “when do you know that you have done a good job?” This may have limited the applicability of our analytical framework on the empirical findings, as we might have made misleading interpretations of the words used by the respondents. However, we believe that the empirical findings still provide a good enough proxy for the respondents’ perspective on the discussed issues. The interview protocol is outlined in Appendix 1.
Moreover, to further understand the respondents’ answers, we sent the empirical data and data analysis to the respondents for approval and to get feedback. The comments from the respondents were incorporated in the analysis and sent to the representative in each municipality for approval.
4.5.3 Interview setting
The interviews lasted from 30 minutes to two hours, depending on how much time that the respondent could spare. All interviews except for one were conducted in the offices of the organization in question. One phone interview was conducted due to logistical reasons. All interviews were held in Swedish, in order to allow for the participants to express their thoughts in their mother tongue (Alvesson, 2011).
In line with Voss et al. (2002) we sent our research purpose to the respondents prior to the interview. To make the respondents feel comfortable the interviewer moreover explained the research purpose once again before the interview, and also explained what
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Challenges of marketization Brandt Forsius & Molander, 2013 the respondents’ participation would lead to. However, this introduction was deliberately kept short to prevent the respondents searching for “correct” answers, rather than giving their interpretation of the MCSs applied in their organization today.
Unfortunately, the interviews were conducted only with one interviewer as only one of the authors was located in Sweden at the time of the interviews. However, in order to reduce the impact of individual bias the interview recordings were listened through by both authors, after which they were discussed and evaluated via video calls.
4.5.4 Respondents
In total we conducted 36 interviews with 56 individuals. Of these interviews, ten were focus groups interviews with two to four individuals with the same type of role7. We organized focus groups instead of individual interviews when we believed that respondents, such as staff members, would be more comfortable in expressing their thoughts if they could discuss with their colleagues (Yin, 2013). In some cases the interviewees requested to have group interviews to feel more comfortable and not as exposed. What is more, focus groups were in some cases favored due to efficiency and logistical reasons. We acknowledge the risk that depth was lost in favor of efficiency in the focus groups (Yin, 2013), yet we hope that we managed to overcome this risk by carefully letting every participant in the focus group express their voice.
We aimed at making a purposeful selection of respondents (Babbie, 2007) in order to receive as comparable data as possible from the different case organizations. However, in some municipalities we did not get access to the individuals we wanted to interview, and so we chose the closest alternative fit.8 To obtain a broad perspective of how MCSs are applied at different organizational levels (Bryman, 2004) we interviewed individuals from diverse backgrounds and with different roles, ranging from staff members and unit managers to politicians. What is more, in some municipalities we conducted interviews outside the producing organizations, for example with quality controllers and with business controllers. Since these individuals have an important role in the producing organization, even though they are not directly part of it, we believed that they could provide us with valuable insights.
7Examples of focus groups: four staff members; unit manager and deputy unit manager. 8 For example, in Österåker there was no unit manager in employment at the time when the interviews were conducted. Instead, we interviewed the manager for the Social Service Center (part of the client organization). 29
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Apart from the interviews conducted at the case organizations, several focused interviews were conducted with a variety of experts in the field of elderly care and management control in Swedish municipalities. The purpose of these interviews was to capture earlier experience in the studied field and to get valuable insight into our research process. The expert team helped us to assure that relevant questions were asked during the study, and that current issues regarding the municipalities’ role were clearly understood from both an academic and practical perspective. The expert team is presented in Appendix 3.
4.5.5 Data documentation
All interviews were documented with the interviewer’s mobile phone recording function and stored digitally, with the consent of the respondents. In addition, the interviewer took notes during the interview in order to aid the discussion steering (Yin, 2013). However, since the interviews were recorded, focus was still on the conversations itself. The interviews were transcribed immediately or the day after the interview to aid a simultaneous analysis (Yin, 2013).
4.6 Outline of analysis
In order to analyze our empirical data in a methodological and structured manner we followed a four-step analysis model. The steps included (1) Compiling, (2) Disassembling, (3) Reassembling, and (4) Interpreting (Yin, 2013).
(1) Compiling As all interviews had been completed and transcribed, we returned to each case organization separately for analysis. Prior to the discussions, both of the authors re-read the transcriptions and made individual notes, in order to assure that important ideas were not lost. The following guiding questions were used during the common discussion:
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The questions are based on our research questions and theoretical foundation. During the discussions we returned to the transcriptions multiple times in order to mark important phrases, words and sections. Following this, we organized the transcriptions according to the discussion and summarized our thoughts in order to construct a compiled document for each organization. The end-result was a compiled document of four to six pages for each example municipality.
(2) Disassembling
In the second step we conducted a within–case organization analysis based on the compiled documents. The aim was to identify themes and patterns for each municipality. We read the transcriptions again and listened to some of the interview recordings to refresh our memories and clear out question marks. In this process, focus was on MCSs and we used our analytical framework as a guide. In addition, we noted where clear discrepancy between respondents’ roles could be seen for each municipality. These processes were highly iterative and it was only after multiple analysis rounds that we were able to define new etiquettes for the data. At the end of this step, we had defined three to four themes for each case organization and summarized the compiled case organization documents according to the themes9. Examples of themes noted include “Budget focus”, “Innovation” and “Quality systems”.
9 Some case organizations had similar reoccurring themes whereas others had unique themes 31
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Next, we extracted quotes relating to the themes into an excel document, which were later quoted to present our empirical findings to the reader. Any ideas and thoughts that arose were moreover documented as memos to avoid losing important ideas or concepts, in line with (Yin, 2003).
(3) Reassembling In the third step we moved from the within-case organization analysis to focus on comparing and contrasting the case organizations to look for commonalities and differences (Ghauri & Grønhaug, 2010). We returned to our research questions and theoretical foundation and used these to search for patterns across the case organizations. In line with Yin (2013), we compared different findings and aimed at discovering alternative conclusion by asking critical questions such as “Are the themes understandable?”, “Are the themes meaningful?”, “Have we noticed something unexpected?”. This exercise was however not an isolated part, but conducted throughout the analysis process. Yet we did pay specific attention to asking questions when reassembling data in order to assure that the patterns, differences and similarities we noted were valid. Having identified patterns across the case organizations we used our analytical framework to discuss municipal differences and further organize the data. After this discussion we noted three relevant and overarching empirical subject headlines the municipalities, namely Organizational structure, Strategy and goals and Measurements applied. We have structured the presentation of the empirical data according to these headlines.
(4) Interpreting In the fourth step we applied our analytical framework to interpret the empirical data and draw conclusions. We examined the extent to which strategy and LOCs are used in the municipality, according to our analytical framework. Having analyzed each case organization, we summarized the findings in circle diagrams (see example in Table 2 below). The circle diagrams represent our qualitative interpretation of the empirical data, interpreted with our analytical framework. The analysis of each case organization is relative to the other municipalities in the study, and should therefore not be considered as absolute. Each of the circles represents to what extent MCSs are present in the municipality, relative to other MCSs in the given municipality as well as relative to the other municipalities in the study.
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Table 2 Example diagram of the analytical interpretation
The analytical findings constitute the foundation of our discussion on marketization of the elderly care sector. In the discussion section following the analysis we problematize the dilemma of the multiple roles that the municipal elderly care is faced with.
4.7 Quality aspects
4.7.1 Objectivity
Objectivity refers to the relative neutrality and freedom from unacknowledged research bias (Miles & Huberman, 1994). In order to increase the objectivity of the study we followed a carefully constructed analysis approach, as described above. In this approach, the initial analysis of the empirical data was done individually prior to being discussed in pairs, which reduced the possibility of research bias. In addition, we discussed with representatives throughout the analysis process in order to get feedback on the empirical findings. Throughout the analysis process, we had meetings with representatives from the case organizations to review analysis drafts and discuss findings, in order to avoid misinterpretation of the data. We discussed among each other, with the municipal representatives, as well as with the expert team to arrive at an accurate interpretation of the empirical data. The data was in other words viewed from different perspectives, both practical and academic, to reduce the research subjectivity. Yet we recognize that we could have increased the objectivity further by for example sending the transcriptions and initial impression documents to each respondent, rather than only to the municipal representatives. However, given the length of the transcripts10 and time constraints of the respondents this was not possible. Instead we contacted the respondents by e-mail or phone calls if we needed to clarify anything.
Despite these actions, we acknowledge that it was not possible for us to be completely objective and that this study is our interpretation of reality. We realize that our previous experiences and resulting assumptions may have steered us in certain directions (Holme
10 The transcriptions ranged from 4 to 10 pages. 33
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& Solvang, 1997). Nevertheless, our genuine interest in the topic and our willingness to learn as much as possible made us open towards different views.
4.7.2 Construct Validity
Construct validity tests the degree to which the study manages to develop correct operational measures for the studied concepts (Yin, 2003). According to Yin (2003), case studies are sometimes criticized for being subjective regarding data collection. In order to address this critique we developed operational measurement sets, as suggested by Yin (2013). To assure that we indeed study MCSs of the organizations, and not for example the organizational culture, we conducted certain steps. First, we applied a developed and recognized framework for analyzing MCSs, namely Simons Levers of Control (1995a). Second, we carefully designed our interview protocol to assure that we study the specific aspects we aim to study. Third, we aimed at interviewing respondents with diverse roles in order to use a multiple source of evidence, in line with Yin (2013). Fourth, as the methodology description above convenes, we have aimed at maintaining a chain of evidence (Yin, 2013), illustrated by our citations to our case organization data base (see Section 5 Empirics) and interview protocol (Appendix 1). Finally, representatives of the case organizations as well as the expert team reviewed drafts of the case study report. These steps increase the construct validity of our report. Yet, we acknowledge that other data collection methods, such as observation, could have been applied to increase the construct validity.
4.7.3 Reliability
Reliability tests if errors and biases are controlled to the extent that the operations of the study can be repeated over time and across researchers with the same findings (Miles & Huberman, 1994; Yin, 2003). In order to assure reliability we carefully documented all procedures of the study. All interviews were recorded, transcribed and summarized according to initial impressions. As we analyzed the data, we collected the findings in a case organization database, as explained above. Finally, we describe our analysis process of compiling, disassembling, reassembling and interpreting the data, in order to arrive at conclusions.
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5. Empirics
In this chapter we will outline the empirical findings from our data collection. The chapter is structured according to the different municipalities, and the findings are presented according to the three themes explained in the Methodology: Organizational structure, Strategy and goals and Measurements applied. Throughout the empirical presentation we use quotes from the interviews to support our statements.
5.1 Nacka
5.1.1 Organizational structure
Nacka introduced the Model of Choice model already in the 1980s. Around the same time, the municipality adopted the purchaser-provider model and removed the production board as it was considered inefficient. Although this caused some confusion, the municipality is today committed to a decentralized organization. For instance, the municipal production is not subordinated to any committee, as illustrated in the organizational structure in Appendix 5. Instead, the unit managers are directly accountable to the municipal operational board. The production manager is subordinate to the municipal operational board but above the unit managers and does not have responsibility of results. Instead, the production manager mainly takes care of staffing and follow-up of the unit managers. This role is however somewhat unclear according to the interviewed department manager:”The production manager is responsible for debriefing and the unit managers have responsibility for the result. We need to review this”.
5.1.2 Strategy and goals
The overall goal of the providing organization is focused on producing competitive services. However, the staff has difficulties in distinguishing between the responsibilities of the municipal provider and the purchaser. ”The direction we have specified today includes both the municipal provider as well as the private providers in Nacka. We need to be more specific.” (Unit manager)
The respondents explain that the objectives of the municipal provider, as defined by the politicians, have not been explicit. While the elderly care units are controlled with control systems, they do not know what the long term role of the municipal provider will be. .According to some respondents the focus of the municipality has been on implementing marketization, at the expense of supporting the municipal providers.
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“When everyone is implementing LOV, we go out and talk about how good it is and how beneficial it is, but it also has its downsides. What is the position of the municipal provider in the municipality?” (Controller)
The politicians have however identified this ambiguity and are currently developing a defined direction for the municipal provider. One of the department managers mentioned that the development is focused on system implementation rather than making specific decisions regarding how the operations should be run. The ambition to avoid micro-management is welcomed by the respondents: “On the political level they let us know that as long as the user is happy and does not report back, they will not mind our business. I like that.” (Unit manager)
The municipal providing organization in Nacka has the aim of involving its staff in the strategy development process. One of the tools applied in line with this aim is a performance evaluation tool called organizational dialogue. With this tool performance evaluation is team based rather than conducted individually. Instead of having individual meetings, the staff group gathers to discuss how they should work, what their goals should be and how they will accomplish these goals. All members of the organization are part of some dialogue group, and so the tool impregnates the entire organization. According to the unit managers, the organizational dialogue tool has been successful:
“We have to evaluate the outcome next year, but the tool has been highly appreciated. You still have the possibility to have a short individual meeting, but that should also be connected to the organization: ‘How do you contribute to the organization’s goals?’ The demands on the staff increases, but when we have this dialogue they understand the connection between them and the organization.” (Unit manager)
The distinct feature of Nacka is the prolonged focus on Model of Choice and maintenance of competition neutrality. According to the respondents, the reason for this continuity may be that the president of the Municipal board has been the same for 20 years. The continuity has reduced the feeling of ambiguity that the unit managers have had of being ultimately being ruled by elected politicians. “It is important with continuity, that you can feel that what you’re working on actually will take place.” (Unit manager)
5.1.3 Measurements applied
In contrast to many other municipalities, budget deficits in Nacka are transferred to the next year and not erased. The units are expected to meet their targets. Surpluses are however not returned to the unit in question, but used to cover deficits from other units.
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The unit managers were somewhat disappointed about this: “Surpluses should be kept as equity. As long as the department as a whole runs at a deficit, I am not allowed to touch them.” (Unit manager)
Along with developing a clear direction for the municipal provider, the politicians in Nacka are concerned with increasing the competitiveness of the municipal providers.
“We need to make a competitor analysis. Each unit has to view themselves as independent from the other municipal units. Concerning some issues we should cooperate, but in some we should not.” (Politician)
This focus on managmentization is reflected in the implementation of the balanced scorecard that Nacka has done. ”We have chosen to use the balanced scorecard (…) it works well and we get a clear connection between the municipality’s overall goals and the specific goals for the elderly care.” (Unit manager) The balanced scorecard is a natural part of the units’ operations, and for example used to set the agenda of internal meetings.
5.2 Österåker
5.2.1 Organizational structure
The Model of Choice was introduced in Österåker in 2009, and since then the elderly care has been organized according to the purchaser-provider model. However, the model has not been fully anchored in the organization. The respondents on the provider side explained that the politicians on both the purchaser and provider side interfere in each other’s responsibilities: “Some politicians are very keen on being involved in the ‘how’, even if that’s the responsibility of the production committee.” (Politician, production side) The interviewed controller further explained that the production board is uncertain about how the organization should be controlled, and that the purchasing committee tends to intervene in the providers’ decision-making. As a result of these interventions, the freedom to act within the providing organizations is experiences as limited:
”The municipal board has made a decision that we should have this purchaser-provider model, but they haven’t given us any directives on how we should work in reality in this organizational structure. (…) The politicians intervene in each other’s roles.” (Controller)
The politicians responsible for the production however have the ambition to have front line decision-making in order to create conditions for innovation. One of the unit managers mentioned that to nurture innovation trust needs to be created: “There has to be trust, like in any complex organization. If you don’t trust you have to control centrally, which leads to
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Challenges of marketization Brandt Forsius & Molander, 2013 little innovative development.” The unit manager further explained that she felt that the board put too many demands on the providing organization, given that they are disconnected from the daily operation and do not have a realistic picture of what can be implemented. The other interviewed unit manager was nevertheless positive as she felt that she has the possibility to control her unit and its performance.
5.2.2 Strategy and goals
The defined vision for the municipal elderly care provider in Österåker is to “be an attractive provider that produces the highest quality” (Österåker municipality Annual Report, 2012). However, this vision does not seem to be anchored in the organizations and its operations. One of the staff members for instance mentioned that she does not know what the vision of Österåker is, and that the municipal board “doesn’t really take care of its staff. There are a lot of demands but no carrot.” (Staff member) The view that the vision is not fully implemented was noted in several interviews. For instance, the Social department manager explained that the performance goals she has defined for the organization has not been followed up by the municipal board, and that officially these goals are not part of her responsibility: “All committees received the task to break down the vision into performance goals. Everyone did that but nothing has happened since I presented my goals to the municipal board.” Nevertheless, there was general consensus among the respondents that the needs of the user should be the operation’s focus.
The elderly care operation in Österåker has a performance indicator of 75 percent user- time. The respondents believed that reaching this goal would lead to more satisfied users and to increased compensation for the units. However, the interviewed staff felt that there is too much focus on time in the everyday operations, and that this focus leads to quality being compromised.
5.2.3 Measurements applied
The budget is the main control tool according to which the units control their operation and keep track of targets: “Everything is controlled with the financials. It’s a lot about making the numbers balance. It’s not that much about quality.” (Controller) There is however a discrepancy across the organization regarding understanding of the connection between the budget and the operations. The controller explained that some unit managers lack interest in understanding financial issues:
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“We need to implement a mindset that doesn’t separate financials and operations. Today the unit managers take care of their operations, while the financials are something else. But they are the same! The units need to be educated in this so that they understand that they have performance requirements to meet. Today they think that the financial department is some way ‘creates’ the numbers out of the blue.” (Controller)
The unit managers and staff members did however mention the importance of being up to date, keeping track of up- and downturns and of the financials. However, they also said that this is not the most relevant part of their work.
At the time when the interviews were conducted, Österåker was in a special situation as several leading officials had terminated their employment, including the production manger and municipality manager. As a result of this, one of the unit managers explained that “I could not have more freedom to act. Who is going to prevent me?” In line with this, the social department manager said that her work is currently not being followed up: “It’s up to each committee to work with their operation. To do their thing.”
There is not a clear follow-up system in place to measure goals, and generally there is not a clear understanding of the consequences of unmet goals, even though the staff suspects that it will affect the budget and customers. Respondents working with the financial data however mentioned that it is important to make the budget balance. The poor follow-up is reflected in that there are no clear measurements regarding work performance. Many respondents explained that they only know if they have reached their goals by relying on their professional experience:
”There are no indicators to tell you if you get closer to the goals. You fill in the numbers, that’s what counts, everything else is ignored. It’s hard to get the unit and area managers to create relevant measures. It should be their responsibility, but they are not in the loop.” (Controller)
Several of the respondents raised the issue that budget surpluses are not controlled or managed by the unit manager generating the surplus, but used to even out the deficits of other units:
“We had politicians who told us that we would get to keep parts of the surplus. I’m a strong believer of carrots. If you work well you should get a carrot. But at the turn of the year we didn’t get it. The staff was very disappointed about this.” (Unit manager)
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Even though Österåker’s defined a vision is to deliver the highest quality, there is no clear definition of what quality implies and how it should be followed up with metrics. Some respondents viewed quality as making the user feel safe with their elderly care choice, whereas others viewed qualitative care as putting the needs of the user in focus. One of the unit managers in turn explained that she viewed few complaints as a quality assurer, since complaints highlight problem areas. “Quality has not been defined by the production committee, it’s a subjective measure. Our role is to look at how we will produce what is needed.” (Area manager)
5.3 Sundbyberg
5.3.1 Organizational structure
The Model of Choice was introduced in Sundbyberg in 2012. However, the municipality has not implemented the purchaser-provider model. The Social welfare board in the municipality is responsible for the elderly committee, and the elderly committee is in turn responsible for both the purchaser and the provider. This implies that the purchaser and the provider operate under the same organizational management team and with close collaborations. The unit managers explained that the collaboration implies that politicians and managers in the municipal board are engaged in the providers’ operations and decisions. The intertwined relationship between the provider and the purchaser is further enhanced by the provider’s restriction not to respond to any of the municipality’s tender within the Contract model (LOU). This means that the municipal provider of elderly care is assured to remain as an actor on the market and does not take part in the tender process as the private providers do. “The municipality cannot put any offers on the welfare tender, it would demand too many resources” (Department manager)
The intertwined relationship between the purchaser and the provider make it challenging for the unit managers to know what roles and responsibilities the different actors within the municipality have. What is more, the respondents explained that the politicians are involved in the operations even though they “don’t have understanding of some parts of the organization.” (Unit manager) This overlap is moreover reflected in the quality control function of the municipality. The quality manager explained that it has been hard for her to define her role for the municipal providers:
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“I’ve had to work hard to define my role. It’s about personal relationships. (…) Some don’t see me as a quality controller but more of a supporter, whereas others have said they wish that I had more of a controlling function. But we can’t be both. We suffer a bit from this, that the roles are so unclear.”
5.3.2 Strategy and goals
According to the unit managers, the overall ambition of the municipal providers is to get the staff to work against the goals that the politicians set for the elderly care. The respondents however explain that the politicians have set many different goals for the providers, and that these have not been fully aligned. To handle the diversity of goals the operational organization has defined four perspectives to focus on: Customer, employee, finances and quality. With these perspectives the management team of the providing organization has limited the amount of goals and broken down the operational plan into unit plans. The unit plans makes it clear to the unit managers what is expected of them. “We work towards the goals in the unit plans that the politicians have set. It’s like running a business. We are followed up in the same way as the private providers are.” (Unit manager)
The political goals, decisions and ambitions strongly affect the elderly care operations in Sundbyberg. However, at times the decisions of the politicians do not support the providers and may for instance lead to higher costs for them:
“Some questions are politically very sensitive but there is not always space in the budget for these questions. Full time employment rate is a good example. The politicians want 100% full time employment, but staff is costly. Our experience tells us that from a scheduling perspective, 75% is most efficient.” (Department manager)
The respondents explain that some of the politicians’ demands relate to their goal of getting re-elected rather than to the best interests of the elderly care operations, which may affect the operations negatively. Indeed, several respondents mentioned that the need for politicians to be re-elected may hamper the development and limit the time horizon of planning.
The respondents in Sundbyberg had an ambivalent relation to the formulated objectives and visions of the organization. Generally, the respondents talked about quality goals and balancing the budget, but few referred to a specific vision. One staff member mentioned that the vision is to “keep our customers and get new customers.” The interviewed politician explained that they had tried implementing a common mission and vision in the organization, but it may be the wrong focus:”Creating a mission has almost become a smear
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Challenges of marketization Brandt Forsius & Molander, 2013 word; it is very trendy to have a mission. But it’s more important to have the right people working for us.” (Politician)
5.3.3 Measurements applied
The respondents mentioned that they aim at acting on results and meeting their financial targets. The controller explained that the staff members have become much more aware of the importance of the financials. However, she also mentioned that there is a need to increase the understanding of the financial results and how different actors, such as controllers, managers and employees, impact the financial results. “It’s very important to pedagogically explain and make it as easy possible for the employees. They must for example understand that few customers are not a good thing!” (Controller) There is a need to clarify the drivers for success in the organization and what actions correspond to what results, explains the controller.
Follow-up of the results is in Sundbyberg according to one of the unit managers fairly straightforward: “The financials are controlled once per month. We are also followed up on how we follow the set directives, how the nurses perform and also on customer satisfaction.” (Unit manager) Another unit manager however mentioned that generally the municipality lacked incentives for follow-up, specifically regarding quality, and that there is a need to create a curiosity for metrics among the staff. In line with this, the quality manager explained: “I think that quality follow-up is based mostly on what you hear and see: those who are out in the operations get feedback from the customers regarding what’s bad and what’s good.” The unit manager said that if the value of metrics can be seen, it would be easier to conduct measurements.
5.4 Sundsvall
5.4.1 Organizational structure
Sundsvall introduced the Model of Choice in 2012 but has not organized its elderly care sector according to the purchaser-provider model. Instead the Social committee is responsible for both the purchasing and the providing organization. Social services is the purchasing organization and is run by the Social welfare manager. The providing organization is called Social services production and is run by the production manager. The municipal board is adapting to this relatively new structure and is trying to encourage the unit managers to work as independent units. Despite these efforts one of the unit managers explains:
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“I am absolutely not [controlling my own unit], they [the municipal board] have been talking to me about that the whole year, that we should be prepared for LOV and that then we will be controlling our own unit. But we are not able to control anything.”
The unit managers feel that they have limited control over the operations. In fact, many of the respondents referred to “over-control” and micro-management of the municipal board.
5.4.2 Strategy and goals
The municipal provider has trademarked the name “Sundsvall’s home care” in order to differentiate itself on the market. The vision in Sundsvall is that all units should act as independent organizations, which all respondents referred to. However, the production manager also mentioned that Social services production is a hybrid organization, and that it “shouldn’t become like an own company, but at the same time it shouldn’t be too close to the municipality. The units need to have freedom to act.”
The unit managers were concerned about the politicians’ strong influence on the operations, and mentioned that that this influence may negatively impact the financial results of the units. The politicians have for instance been involved in decisions such as determining the need for environmental cars and full employment, as they have a political goal of being an environmentally friendly municipality that offers employment. However, these decisions mainly lead to higher costs for the municipal providing organization. The unit managers explained that there are situations when the politicians make the providing organization create goals that are not optimal for the units in terms of balancing the budget. The staff also highlighted this, and mentioned that when they want to focus on the user, the politicians have employment and environmental goals that they prioritize. Sundsvall has recently implemented the Model of Choice. As a result, the municipality has become more aware of costs and for example identified costs that previously had not been followed-up on. The unit manager explained that this has made them more aware of the financial. In line with this, to the production manager said that priority on customer satisfaction has been on the expense of budget goals:
“Satisfied customers have been the main priority in Sundsvall, sometimes at the expense of the financials. But we can’t survive on satisfied customers. We must also balance financially.” (Production manager)
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The focus on the customer can be illustrated by a pilot project called Vanguard, which is a LEAN project for services. Vanguard has been tested on one home care unit in Sundsvall, and the staff has been positive towards the project. Within this project, the providing organization has formulated a user focused vision statement: “Give me the support I need, so that I can take care of myself and reach high quality of life”. However, the production manager explained that it has been challenging to spread this vision in the organization and to align it with the municipality.
5.4.3 Measurements applied
The management in Sundsvall perceives it as difficult to measure and compare customer satisfaction indices since it is unclear what should be measured, how to compare the different measurements and how often measurements should be conducted. One of the interviewed politicians explained: “It is difficult as the targets we have are for example ‘well-being’, ‘having a good life’ etc. With these kinds of targets it can be very confusing to set goals.” (Politician) Both the production manager and operations managers confirmed this and said that it was unclear what activities should be prioritized.
Despite the challenges to set measurements, Sundsvall has implemented 16 different systems for the unit managers to work with. However, the financial manager explains that there are too many measurements and over-control in the organization:
“It’s all about measurements, measurements and measurements. But you have to act as well. I think we have too many metrics and that it makes the units feel over-controlled. (…) It encourages short-term thinking.”
The unit managers confirmed this and mentioned that the providing organization seems to be interested in gathering numbers rather than making people accountable. “There is a focus on ‘how’ questions, rather than ‘what’ questions.” (Unit manager) The HR manager and financial manager had also noticed this: “We have to decentralize more and give the units space to act.” (HR manager) In line with this, the financial manager said:
“If the units create positive results they should get access to the surplus to be able to do something extra for their unit. I think that if you empower the units, you create an interest in metrics. If the unit managers see that they can have an impact, they will start asking for measurements. We can’t control the organization centrally!”
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The financial manager also explained that often the organization measures merely to measure, and do not know what to do with the results. “We measure for example the percentage of sick leave. But there is no strategic plan regarding what to do with the results.” (Financial manager) The department manager confirmed this and said that they need to find ways to evaluate the organization effectively: “We need to build systems that we can use to follow-up the operations, measure the expenditures and incomes so that we can have a result.”
5.5 Östersund
5.5.1 Organizational structure
The Model of Choice was partly introduced in Östersund in 2012, and is currently being implemented entirely in home help services. This change is expected to be completed by the beginning of 2014. As a result of these changes, Östersund’s municipal elderly care is conducting an organizational re-structure where the units will be divided according to sectors rather than according to geographical area. This will strongly affect the organization. Many respondents were uncertain of what the re-structure will imply for them. “I can’t plan longer than August; I have no idea where I will be in the fall.” (Unit manager) However, the department manager highlighted the importance of creating a clearer structure and defining roles more explicitly. What is more, the municipal organization should “be kept from an arm length’s distance from the controlling organization, like with the private actors.” (Department manager)
5.5.2 Strategy and goals
The strategic focus for Östersund is to have balanced financial and satisfied users, which all respondents mentioned. The user focus was reflected in the metaphorical way the respondents talked about the users, using the names “Karl and Karin”. The needs of Karl and Karin should always be in focus:”Karl and Karin should have the best care. We cannot say that we ran out of money; it is our responsibility to make sure that the money suffices. That’s our challenge.” (Department manager)
Several respondents moreover talked about the importance of having a common goal within the organization:
“Our greatest challenge is to make everyone fell participated- we should all move in the same direction. In a political organization a lot of decisions just land on us, and getting everyone involved in this type of organization can be challenging.” (Unit manager)
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According to the department manager a way to increase the feeling of participation is to make the employees feel proud of working for the municipality as well as make them talk positively about the municipality in the public.
When discussing the changes that Östersund faces, some respondent said that the implementation of LOV would affect the municipality in limited ways. Yet, a majority said that they hope that competition would make the municipality more efficient, and that it would allow them to increase their marketing actions and create better plans and documentation systems. One of the unit managers said for example that LOV and the reorganization could make it possible for the unit to target a specific niche market, which would increase their competitiveness.
“We could for example employ staff with specific language skills, such as Arabic. That kind of thing is difficult to implement when we are responsible for an area, since we don’t have the resources, but with the sector structure it could work. So there are some benefits of the re-organization.” (Unit manager)
5.4.3 Measurements applied
Östersund has a solitary way of handling the budget: deficits in one unit are evened out by surpluses in another. Also, deficits are not carried to the next year’s budget, but only noted with a comment and plan for action. The respondents generally viewed this solitary financial system as being relevant since some units, such as the home help services, face difficulties in keeping within the budget boundaries. The department manager highlighted that trust and confidence among the employees and managers is important to make the system functioning:
“The budget is a management and control question for the area managers; it is their responsibility to handle it. But we have to help each other, out of solitary. It’s about building trust and confidence. One year I may have to bring a bit more, but next year it could be the other way around.” (Department manager)
The greatest challenge facing the organization is to run the operations within the boundaries of the budget, which all respondents mentioned. The financials therefore have highest priority. The controller mentioned that her main goal is to make the home help services reach the budgeted targets. The budget is set up for one year at a time and is followed up three times a year. Mostly, the respondents regarded the budget setting process as too slow; it may take several months before it is completed. If there are deficits, the typical solution is efficient planning and staffing, according to the unit
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Challenges of marketization Brandt Forsius & Molander, 2013 managers. At the same time, the unit managers felt that it is difficult to understand how the budget is distributed and how for example staffing cost could be controlled. ”It is difficult with a control system designed for controllers. After all, we are the ones who are supposed to work with it.” (Unit manager)
The structure of the reimbursement system was criticized by a majority of the respondents. The unit managers did not see any benefits with this system, and generally felt that they have little control over the unit’s performance, especially regarding the home help service since they “never know how many users and what resources there will be.” (Unit manager) However, one of the unit managers mentioned that she did have some freedom to implement own initiatives: “Our unit has been preceding and tried some new things. We were for example first on having electronic locks on the users’ doors. So there are some possibilities to try new things.”
Apart from the quantitative control system, the organization uses qualitative indicators such as customer satisfaction index, share of hourly paid workers, long term sick leaves, employee satisfaction and share of male employees. These systems are according to one of the unit managers in place in order to “get some control and increase the continuity”. However, according to the department manager there is not a unified quality system is place that complements the quantitative control system. The quality aspects are in other words not followed-up to the same extent as the budget is, even though the respondents mentioned that quality and especially satisfied users is important. It is effectively up to each unit to decide how to measure qualitative goals. Indeed, when asked how the respondents know when they have done a good job some of the area managers referred to control systems, whereas others said that they have done a good job when there are few complaints.
One indicator of quality used in Östersund is continuity for the user. To give the users continuity the municipality has focused on reducing sick leave among employees. One initiative implemented in line with this goal involved the unit managers calling the sick employee to hear how they are feeling, ask when they thought they would be back and, most importantly, make them feel needed and valued by the organization: “It’s not to make them stressed to get well. It’s just a way of showing that we care about our staff.” (Unit manager)
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6. Analysis
In this section we will analyze our empirical findings with our analytical framework. First, we will conduct a within-case organization analysis of the five case organizations. This will enable us to understand the focus of control systems in place in each municipal provider. Second, we will conduct a cross-case organization analysis to compare and contrast and to get an overview of our case examples. Finally, we will provide a summary of our analytical findings.
6.1 Within-case organization analysis
6.1.1 Nacka
Nacka has a clear strategic vision that freedom of choice should be central, that competitiveness of the units is important and that micro-management of the units should be avoided. This suggests that the municipal board whishes that each unit forms their individual strategic direction, in order to avoid discrepancy between the intended and emergent strategy, as explained by Johansson (2003). However, the unit managers demand more directives from the decision-makers in form of defined long term goals, in order to know where the municipal providing organization is heading. In our view, this indicates that Nacka has put more emphasis on emergent than deliberate strategy formulation (Mintzberg & Waters, 1985), and would benefit from top-down communication from the management to aid the unit managers. The initiative to increase strategic planning through system planning, as explained in the empirical findings, can however be seen as a sign that Nacka puts more weight on deliberate strategy formulation.
The strongest control system in Nacka is the interactive control system called organizational dialogue. This control system is used by the providing organization to involve the staff in strategy planning, decision-making and follow-up. The dialogue enables the staff to combine their respective knowledge fields to discuss future plans and link these to other critical decision-making processes (Mintzberg & Waters, 1985). The dialogue also creates a basis for discussion and sends a signal to the staff that their expertise and ideas matter (Simons, 1995a). This suggests that the organizational dialogue effectively functions as tool through which the staff can get their voices heard and through which the managers can involve themselves in the daily operations, which according to Simons (1995b) is one of the purposes of interactive control systems.
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The staff in Nacka confirmed their strong engagement in developing the direction of the unit and also mentioned that they work effectively in cross-functions. This suggests that Nacka has been able to overcome the issue of the staff lacking knowledge about the strategy and vision of the organization, as highlighted by Johansson (2003). The implementation of an effective interactive control system can also be linked to employee motivation (Hope & Fraser, 2003). The focus in Nacka has been to empower the employees, give them freedom through decentralization and empower unit managers with result responsibility. The high trust and positive atmosphere that this has created indicates that employee motivation has been nurtured through interactive control systems. This is in line with Hope & Fraser’s (2003) research suggesting that team-based targets are more effective that individual targets since they merely function as an extrinsic motivator.
A tool used for communicating the vision in Nacka is the balanced scorecard, referred to by several of the respondents. According to Johansson (2003), communication through balanced scorecards may lead to one-way communication since the language used by the managers and the employee are different. This risk was however not noted in Nacka; the respondents describe the balance scorecard as an effective tool to share knowledge across the organization and communicate about organizational goals. The balance scorecard is also used as foundation for internal discussion and meetings. From the interviews we can therefore identify that Nacka has implemented the balanced scorecard as a part of their elderly care management control. The combined use of the balanced scorecard and organizational dialogue enables Nacka to implement and communicate defined strategies, as well as to evaluate if the there are any rising emergent opportunities that are worth focusing on.
In Nacka budget targets are expected to be fulfilled, and any deficits are carried on to the following year. This indicates that Nacka strives to use the budget as diagnostic control system that monitors the organization’s outcome (Simons, 1995a). We do not see indications that the budget encourages an allowance mindset in Nacka, which according to Wallander (1999) is one risk of the budget. However, we note that there are not any sanctions if the budgetary goals are not met, and surpluses are used to cover the deficit of other units rather than invested back in the units creating the surplus. This indicates that the boundary system in Nacka is not as strong as the interactive control system.
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Then findings of the strengths of the different LOCs in Nacka are summarized in the table below.
Table 3 Level of strategy and LOC in Nacka
6.1.2 Österåker
Österåker has a defined vision of being a municipal provider that delivers the greatest quality. However, having conducted interviews at all levels in the organization we identified discrepancy in the view of this vision. One of the respondents was for instance unable to explain the strategy of the organization. This reflects Johansson (2003) findings that it is challenging to communicate the strategy throughout the whole organization. What is more, the failure of the organization to gather thoughts and ideas bottom-up suggests that the vision has not been implemented fully in the organization, and that strategy formulation mainly has been a top-down activity in Österåker. Minztberg & Waters (1985) and Simons (1995a) highlight the importance of emergent strategy formulation as a way to take advantage of opportunities that arise. The risk of not involving employees bottom-up may therefore be lost opportunities for Österåker.
The purchaser - provider model has not been implemented fully in Österåker and the roles and responsibilities of different parts of the organization are not clear, as described in the empirical section. This suggests that that the multiple roles of being both purchaser and provider have been challenging to handle in practice in Österåker, as Kastberg & Siverbo (2007) note. We see that the weak management and the unclear roles in Österåker may be an example of loose boundaries. As Kastberg & Siverbo’s (2007) theory suggest, loose boundaries threaten the autonomy of both the purchaser and provider. We see signs of this in Österåker; for example, the purchaser side intervenes in the operations of the providing side. This suggests that Österåker has faced difficulties in adapting its organization to the market situation.
The budget is used as a control mechanism to monitor the organization’s outcome. However, the budget process is created in the support function by the controller. The unit managers have according to the controller little understanding of the purpose of the
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Challenges of marketization Brandt Forsius & Molander, 2013 budget. This can be seen as another reflection of the top-down communication that is present in Österåker. We also see that there is biased focus on the budget and diagnostic control, which is in line with research by Hope and Fraser (2003). We therefore see a need of additional control systems in Österåker to balance the strong focus on diagnostics. For instance, even though quality is viewed as important, there are no metrics to measure and follow-up on quality. What is more, there is not a common view of what quality implies. This is in line with Henriksen’s (2003) findings that actors within municipal elderly care often have contrasting views on how to best serve the users. Kraus & Lind (2008) suggests that efficient control in the care sector implies that there is a balance between horizontal and vertical control processes. In line with this, we see that Österåker inefficiently controls its organization as there is a heavy bias towards budgetary control.
Even though strategy implementation was noted to be weak, the unit managers did not show a clear need to reach a common goal. Rather, they were content with focusing on their individually set targets for their specific units. This is supports Henriksen’s (2003) findings that elderly care organizations are fragmented and lack clear goals, structure and leadership. This causes the organization to be perceived as inconsistent, prioritize different matters at different times and in different directions.
Table 4 below summarizes the findings in Österåker.
Table 4 Level of strategy and LOC in Österåker
6.1.3 Sundbyberg
Sundbyberg has implemented the Model of Choice by creating an integrated organization where the purchaser and provider collaborate. This is in contrast to the purchaser- provider model used by many other municipalities, such as Nacka and Österåker. In other words, the municipal elderly care providers are controlled with a hierarchical relationship rather than with a contractual (Kastberg & Siverbo, 2007). This organizational structure enables the municipal organization to collaborate without taking into account boundaries. However, the lack of boundaries makes exchange of services
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Challenges of marketization Brandt Forsius & Molander, 2013 more complicated (Kastberg & Siverbo, 2007), reflected for instance by the ambiguity regarding roles in the organization. The Swedish Competition Authority (2012) highlight that a risk of keeping the purchaser and the provider in the same organization is that competition neutrality may be hard to maintain. Indeed, in Sundbyberg the quality controller mentioned that is has been hard for her to define a role. At the moment, the controller is a friend, a supporter and a controller at the same time, although her role should be to follow-up the municipal providers to the same extent as the private ones are followed up. In other words, the close collaboration and unclear roles threaten the competition neutrality in Sundbyberg. What is more, as the boundaries between the purchaser and provider are vague, the municipal provider has limited possibilities to act. Boundary systems (Simons, 1995a) define the opportunity space and the limits of what is not allowed. However, since the unit managers in Sundbyberg are uncertain about their role, they have limited possibilities to act as a market actor on a competitive market.
We also see that the ambiguity regarding the organizational structure create a dilemma for the municipal providers. The providers follow the vision set by the politicians; one goal for the providers is to make the staff move in the direction decided by the politicians, as explained by the respondents. At the same time however, the units have the goal of attracting and retaining customers. This goal is a result of marketization; as competitive actors they cannot apply for money like they could as political organizations. Rather, compensation is based on the number of users, and the unit managers therefore viewed it as imperative that everyone in the organization understand the importance of attracting customers. Brunsson & Sahlin-Andersson (1994) explain institutional confusion, the phenomena when a political organization adopts features from the company organization without considering the consistency of the organization as institutional confusion. As the politicians in Sundbyberg are part of operative decisions, at the same time as the unit managers try to prioritize market goals, we see tendencies of institutional confusion arising in Sundbyberg. This may lead to difficulties in prioritizing among goals and reaching targets. Table 5 Level of strategy and LOC in Sundbyberg
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6.1.4 Sundsvall
Sundsvall does not have a defined strategy for the providing organization in place to guide the units in decision-making. In line with Poister & Streib (2005), who find that it may be challenging for municipal governments to implement strategic plans, we see that Sundsvall municipality faces challenging in aligning their organization. This can be exemplified by the issue that the staff’s and unit managers’ goals differ from the goals of the politicians. What is more, the providing organization’s management could clearly explain what measures they use, whereas the staff was uncertain to which extend the operation was evaluated. This illustrates that Sundsvall has not aligned a common strategic vision for the organization.
We further note that the diagnostic control systems in Sundsvall are not efficient, even though there are numerous metrics in place. First, there is not a common understanding which metrics are relevant. Second, there is no action plan in place to follow-up on the measurements. Simons (1995a) point out that the function of diagnostic systems is to determine critical performance variables. However, since there is an abundance of metrics, Sundsvall fails to use the metrics as a tool to give overview of the organization’s performance.
The micro-management noted in Sundsvall can be seen as an indication that there are few efficient interactive control systems in place. As there are no systems in place through which managers can involve themselves in the decisions of the unit managers, they are forced to control the organization centrally. We note that this affects the motivation of the unit managers, who feel that they do not have enough freedom to act. This is in line with Hope & Fraser (2008) who found that empowerment of employees can be linked to employee motivation and satisfaction.
Table 6 Level of strategy and LOC in Sundsvall
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6.1.5 Östersund
The strategic focus of Östersund is user focus and financial balance, which several respondents referred to. The municipal organization has realized that in order to stay competitive, they need to create value for the users, while keeping within the boundaries set by the budget. The frequent referral to the names “Karl and Karin” indicate that the user focus has been implemented throughout the organization. This metaphor can be functions as a belief system in Östersund as it aligns the organization towards the goal of satisfying users and guides their decision-making (Simons, 1995a). The user focus has inspired the employees to be innovative, reflected by the idea to target a niche market that one of the respondents referred to. This illustrates that the organization have been successful in encouraging the employees to find new opportunities to realize emergent strategies.
The organizational change taking place at Östersund has however led to confusion among the employees, as the empirical findings show. This suggests that Östersund mostly has communicated the intended changes top-down, and failed to involve the units in the organizational re-structure. These findings are in line with Johansson (2003) who explains that strategic plans often fail as a result of poor communication, followed by a top-down strategy. Thus, at the same time as the municipal providing organization effectively has implanted the user focus and innovative thinking, they have failed to involve the employees in important changes, resulting in overall dissatisfaction and loss of freedom to act. Furthermore, as no clear structure have been identified to measure the performance of the organization, it has been difficult to align the strategic planning and performance measurements (Mintzberg, 1995a). The planning possibilities associated by a budget (Andersson, 1995) are thus limited as the staff does not know what to expect.
Östersund has a target to balance the budget. However, in order to be able to monitor the outcome of the organization, as well as to correct deviating behavior, effective diagnostic control systems need to be in place (Simons, 1995a). The budget system in Östersund is solitary and there are no sanctions if the budget is extended. We therefore see that the diagnostic system does not function as an efficient monitoring tool. Moreover, as no unified quality system has been implemented, it is difficult to determine the success of the individual units and how they succeed in satisfying customers. This implies in turn that it may be challenging to determine where interventions should be made.
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Below is a summary of the degree to which strategy and the different LOCs are present and effective in Östersund.
Table 7 Level of strategy and LOC in Östersund
6.2 Cross-case organization analysis
In order to get a comprehensive view of our case, the municipal elderly care sector, we will in the following section compare and contrast the case examples. We will first analyze the strategy in the different municipalities. When analyzing the LOC, we will focus on the balance between the different control systems, as balance is central in the framework (Simons, 1995a). First the balance between diagnostic and interactive control systems will be analyzed, followed by the balance between belief and boundary systems.
The within case organization analysis is summarized below.
Table 8 Summary of the level of strategy and LOCs
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6.2.1 Strategy implementation
Table 9 Level of strategy in the case organizations
We have identified that strategy formulation is not complete in the studied municipalities. What is more, there is discrepancy between the different case organizations. Nacka is a municipality with a fairly developed and implemented strategy, and the control systems in place support the defined strategy. In contrast stands Sundsvall, where the politicians intervene in operative “how’” questions rather than defining the “what” of the organization, i.e. the strategic direction. What is more, the politicians tend to create goals that do not support the strategic direction of the municipal provider. In Sundsvall, but also partly in Österåker and Sundbyberg, we note that the unclear boundaries, uncertainty of the political landscape and politicians’ volatile behavior limits the providers possibility to define a long term strategy. Mintzberg & Waters (1986) explain that strategy is about making choices, and view strategy as a pattern of committed and coordinated activities that are undertaken in order to reach a specific goal. Our findings suggest that the municipal providers fail to undertake activities that are both committed and coordinated. Often, the municipal board has a vision, such as being “the best” or providing “the highest quality”. However, the vision is seldom supported by a strategic plan that defines how the vision shall be realized. Instead, the politicians intervene in micro-level decisions in order to assure that their political goals are carried out. At the same time, the unit managers struggle with their budget and with assuring that the users are satisfied. The units in Sundsvall, Österåker and Sundbyberg are in other words not guided by the vision and strategy set by the management.
Our findings moreover indicate that the goals and visions of the politicians do not always align with the actions and motives of the employees. One example is Sundsvall, where the politicians bought in environmental cars for the home help service, but which made it challenging for the units to balance their budget. The politicians’ visions are not adapted to the environment that the municipal providers act in. Taken together, the politicians set a vision and strategy that in many municipalities11 change after four years.
11 The political situation has been especially interchangeable in Sundsvall, Sundbyberg and Österåker. 56
Challenges of marketization Brandt Forsius & Molander, 2013
The providing organization however has to carry out care to the users regardless of the political situation. As such, they find it challenging to internalize the political vision. The difficulty in defining and implementing a strategic direction can therefore be linked to the situation Johansson (2003) explains: Strategy implementation often fails as the vision formulated by the management, in this case the ruling politicians, are realized differently by those implementing them, the individual elderly care units.
6.2.2 Balance between diagnostic and interactive control systems
Table 10 Balance between diagnostic and interactive control systems
The diagnostic control system in the municipalities constitutes to a great extent of the budget. However, the use of the budget seems to differ among the municipalities. In Östersund for instance, the budget is generally used as an allocating mechanism rather than a tool used to monitor the organization, reflected by the solitary budget system. In Österåker, the budget goals are primary, yet there seems to be little understanding of the budget across the organization.
Our findings show that the respondents in the majority of the municipalities lack understanding of the connection between the business performance and the operational activities, as well as have limited responsibility of and access to the budget setting process. What is more, the budget setting process is for the most part slow and disconnected from the operations; in Östersund for example the budget was finalized three months after the deadline. These findings indicate that the budget system in the municipalities is subject of the critique that the budget has received, for example by Hope & Fraser (2001) and Wallander (1999). Hansen & Van der Stede (2004) suggestion to involve lower level management in the budget process, and not treat it as an isolated function, seems to be an improvement that could benefit the municipalities. Greater involvement of employees at all levels of the organization would serve to increase the knowledge and understanding of the budget and its connection to the operations. What is more, it would
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Challenges of marketization Brandt Forsius & Molander, 2013 serve to ease some of the pressure that we note is present today as a result the new compensation system. As a result of marketization, compensation for the units is determined by the number of service hours that the units produce, rather than pre- determined as previously. This compensation model implies that the budget receives greater focus. The unit managers need to manage their resources and try to attract more users, in order to increase compensation rates. In line with this change, our findings show that the unit managers were focused on the budget and aware of the importance of it balancing. However, most of the respondents did not clearly see the rationale behind the budget focus, as mentioned, but rather as a necessary evil that the finance department had imposed on them. There is in other words limited knowledge on how to effectively use the diagnostic control systems to monitor and evaluate performance. If the employees received greater voice and responsibility in the budget setting process it is likely that they would gain a more positive attitude towards the budget, and view it as a helpful tool, in line with Raghunandan, Ramgulam & Raghunandan-Mohammed (2012). In sum, we note that the municipalities focus lies on creating an accurate budget, indicated by the time consuming budget setting process, rather than used as a diagnostic control system to gain a performance overview and measure progress towards targets, as suggested by Simons (1995a)
Our findings show that there is discrepancy in the degree to which effective interactive control systems have been implemented to balance the diagnostic control systems. In most municipalities, we note that there is a narrow focus on the financials, as explained. According to Simons (1995a) this may involve the risk of lost opportunities. In Österåker and Sundsvall for instance, we noted that there was a focus on reaching targets. However, we did not see signs of re-evaluation of the targets to assure that they were effective and worth striving towards. In line with this, the micro-management was identified in several municipalities. The municipal board and politicians in Österåker, Sundbyberg and Sundsvall seemed to be more focused on operative decision-making, rather than gathering information to develop the strategic direction of the municipal elderly care in their respective municipalities. This corresponds to Simons’ (1995a) findings that a focus on limitations rather than opportunities may limit innovation as well as lead to employee dissatisfaction, reflected by the complaining attitude of the lower level employees.
In contrast to the above stand municipalities such as Nacka and Östersund who have invested in interactive control systems. In Nacka the municipal provider has
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Challenges of marketization Brandt Forsius & Molander, 2013 implemented the tool organizational dialogue, which is used as a group based performance evaluation tool. The dialogue enables the management to gather strategic information from all levels of the organization and discuss it in face-to-face meetings. Östersund vision, “Balanced financials and satisfied users” inherits itself a balance between control and innovation. The elderly care units Östersund moreover explained that they have a number of quality metrics in place to measure the temperature of the organization and gather additional data. Östersund has also invested in a re-structure in order to remove unnecessary middle management positions and create a more agile organization. Even though the re-structure has been challenging for the employees, it seems as Östersund is investing in an organization that will be able to gather data bottom-up more effectively. Moreover, the unit managers’ explanation of the vision that they have for their units, for example in the form of niche market opportunities, indicates that there is innovativeness present. The different systems that we note in Nacka and Östersund empower the employees and avoid a narrow focus on pre-defined targets, which is in line with the purpose of interactive control systems as described by Simons (1995a).
In sum, our analysis is in line with Kraus & Lind (2008) and Johansen (2005) who find that that the public sector traditionally has a narrow focus on financial measurements. Even municipalities with a fairly strong interactive control system, such as Östersund, did not have a unified definition and view on how to measure quality. Thus, on the whole there in unbalance between diagnostic and interactive control systems. At the same time we note discrepancies between the case organizations, which indicates that it is possible to balance the narrow diagnostic focus of municipalities with interactive control systems. It is likely that this would make the municipalities more agile, innovative and, in turn, competitive.
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6.2.3 Balance between belief systems and boundary systems
Table 11 Balance between belief and boundary systems
The different case examples had vision statements in place. Often these were communicated on a large scale, reflected for example by the respondents’ ability to quote them. However, we note that the belief system in many cases was defined for the municipality as a whole or the welfare sector as a whole, rather than for the elderly care provider or for the individual units per se. Moreover, it seems as the general nature of the vision statements has made it challenging for the employees to make the connection between the visions and the operations. For example, the vision in Österåker, “provide elderly care of the highest quality”, was not something the employees specifically related to. According to Simons (1995a) however, one of the key functions of the belief system is to provide guidance in uncertain terrain. Our findings suggest that the municipal board finds it more important to have a vision to communicate externally to the citizens, rather to have a vision that can be applied as an internal belief system. In this sense, the vision is not implemented as a control system but more of a marketing statement.
Simons (1995a) argues for the importance of having broad belief systems in order for all organizational members to be able to commit to the vision in question. This could support the municipalities’ broad vision statements. Indeed, we note that in Östersund and Sundsvall the vision statements12 are related to the work of the employees. In these municipalities the employees seem to be inspirational and provide focus. For example, the metaphorical use of the names Karl and Karin help the employees in Östersund bring the vision of satisfied users to practice. The names help the employees to see each user as an individual, and thus deliver the best care for every user.
12 Sundsvall: “Give me the support I need, so that I can take care of myself and reach a high quality of life.” Östersund: “Karl and Karin should have the best care”. 60
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The boundary systems aim at limiting the opportunity space to match the strategy of the organization (Simons, 1995a). However, in the studied case organizations we found that the boundaries were not clearly defined, and when boundaries were present the sanctions related to them were not clear. One reason for this can be related to the organizations in question being municipal welfare providers. This implies for example that a threat of exit is not present. For example, in most of the municipalities the budget system was solitary, and any deficits were carried one to the next year. This was prominent in both Östersund and Österåker. The organization in Östersund focused on budgetary control through providing the possibility to divide both surpluses and deficits. This enabled managers to have deficits within the organization without direct consequences. According to Simons (1995a), this may lead to risky behavior. Yet, our findings in Österåker do not support this conclusion. In Österåker the middle management had left the organization, resulting in unlimited freedom to act for the unit managers. As a response, the managers rather seemed to create more narrow boundaries in order to assure that they did not cross any unknown boundaries. Instead of taking new and unexpected decisions, the unit manages acted more cautiously. This suggests, in contrast to Simons (1995a), that lack of boundaries may lead to the employees creating more arrow boundaries for themselves.
In general, we find that boundaries are not thoroughly implemented in the case organizations. For example, budget deficits are not linked to sanctions. However, elderly care in Sweden is ultimately controlled by the Health and Human Services department (Socialstyrelsen) and the Social Services Act. What is more, the media and public as stakeholders function as a control mechanism with their close surveillance of any risky behavior. Although not formally in place, we therefore note that the strong legislation and media’s surveillance may functions as a boundary system for the elderly care units.
6.3 Summary of analysis
In the first section of our analysis we evaluated each case example’s use of control systems. In this part we found that the municipal providing organization generally uses MCSs to a limited extent. Often the provider focuses on one or a few control systems, and face challenges in implementing additional control systems effectively. We specifically note that there is a bias towards measuring financial aspects. Most municipalities did not have a quality control system in place, although they did identify qualitative services as an important goal. The risk of biasing measurement towards financial issues is that focus is shifted from user needs to numerical targets, which
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Challenges of marketization Brandt Forsius & Molander, 2013 according to Kraus & Lind (2008) has been the case in Swedish elderly care. This implies that follow-up of the organizations is not functioning optimally. Our findings therefore indicate that the MCSs in place in the municipal providers have limited effect on the organization, management and employees.
In the second part of the analysis we compared the different case examples, focusing on the balance between different LOC. Our findings show that the differences between the municipalities are greater than expected. Municipalities like Nacka, with a long experience from marketization, have managed to implement control systems to a greater extent than for example Sundsvall, which is merely at the starting point of evaluating performance and tracking revenues and costs. In previous research (c.f. Kraus & Lind, 2008) public organizations are typically treated as having similar traits. However, our findings indicate that there are differences in how the municipalities use MCSs. Municipalities in Sweden are fairly autonomous13, and in line with this the municipalities face different challenges and have different motives for implementing MCSs. For example, Nacka’s focus has for the last decades been on marketization in the form of freedom of choice for users and competitiveness of the municipal organizations. Nacka has also sold off the municipal home help services, which has been possible since there have been private actors present. For a municipality like Östersund on the other hand, selling off the municipal home help services is not as straightforward, even though it runs with deficits, as there are not enough private actors that find the geographically spread Östersund region to be an attractive market. Thus, when evaluating municipal elderly care it is important to acknowledge for the specific circumstances present.
Our findings also show that there are similarities between the municipalities. In line with Kraus & Lind (2008), we see that a great challenge facing the municipalities is to balance different control systems and avoid over-focus of one. As mentioned, we find that most municipalities focus on measuring financial targets at the expense of qualitative metrics. Examples include Östersund and Österåker. In these municipalities quality was mentioned as being important, high quality was even mentioned in the mission statements of these municipalities. At the same time however these municipalities did not have a unified quality definition or a system of controlling quality. Our findings therefore indicate that there is a need to define qualitative metrics in addition to the financial metrics. Once again, it is worth noting that balance is central. In line with Kraus
13 See section 2 “Background” for a description of the Swedish municipal system 62
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& Lind (2008), we note that the overall aim of the municipal providers is not to create results; they have a welfare function to fulfill which implies delivering qualitative care to all citizens. However, given this welfare function, there will always be a need for more resources, which calls for an effective use of the resources. In this regard, we believe that a balanced MCS would benefit the providers.
Finally, we have identified that time is an aspect of relevance regarding marketization. We noted that Nacka has a more developed and more balanced MCSs compared to the other municipalities. Nacka is also the municipality with greatest experience of marketization. Therefore, we may conclude that marketization puts pressure on the municipalities to change, but the change does not happen immediately and takes time to implement, in line with Anjou (2008).
7. Discussion
In this section we will discuss the implications of our findings. We will first examine the importance of market actor creation, which is followed by a discussion of handling the multiple roles of the municipal providers. Next, we will present two extreme solutions to the problem that marketization has resulted in. Finally, we will conclude by providing a topic of discussion for the future.
In this study we have applied Simons’ LOC framework, complemented with relating theoretical references, to analyze the operative function of the municipal elderly care providers. The aim of this analysis has been to understand how the municipal providers control their operations to produce care, in order to understand why marketization has been challenging for the providers. In this section we will discuss our results to understand why the task of being both market actors and welfare producers is challenging to handle.
7.1 The importance of market actor creation
Marketization of the elderly care sector implies that competition and customer choice has become the primary way to organize the elderly care services. However, marketization has not only led to the introduction of new actors. It has also implied a change for the municipal actors; a range of organizational changes and new management approaches has been implemented in the municipal providing organization, such as the purchaser- provider model and compensation based on number of users (Erlandsson et al, 2013). Previous research highlights that as a result of marketization, the municipal providers
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“must adjust their organization and activities, and develop new skills in their role as purchaser, while continuing as one of the providers of eldercare services” (SKL, 2011b in Erlandsson et al, 2013, pp. 58). Our findings however suggest that the providers should not merely continue as one of the providers. Rather, the providing organization has to change in its role as a provider. Being a market actor, in addition to being a welfare producer, implies that the municipal provider needs to be able to track and monitor performance of its operations. It needs to measure costs and revenues, and plan its operation accordingly. According to Brunsson (1994) it must company-ize its organization; adopt features from the company organization. This means that is is not sufficient to “continue” with the providing role. The providing role needs to change. This implies the effective use of MCSs becomes relevant. Indeed, control is a centerpiece in creating efficient use of limited resources (Anthony, 1965). In order for this to be possible however, the municipal provider must have clear boundaries to its external environment, as suggested by Kastberg & Siverbo (2007). Below, we will explain this conclusion further.
In their research on quasi-markets, Kastberg & Siverbo (2007) point out that it is necessary to create distinguishable market actors for the quasi-market to function well. The purchaser-provider split that has been implemented in many of the municipalities in this study can be seen as a way to crate market actors. By separating the purchasing organization from the provider with boundaries, the ability for the provider to be an independent organization increases. However, in this study we note that in practice clear boundaries are seldom created. Instead, the inherent problem of the purchaser and provider belonging to the same principal is noted. This has lead to externalities in the form of the purchasing organization intervening in the operations of the provider. These findings are in line with Callon (1998). As a result, the autonomy of the providers is put at risk. This makes it challenging for the municipal organization to implement MCSs and adapt to the market situation: At the same time as they receive directives to be more efficient, customer oriented and competitive, they have purchasers and politicians involving themselves in their actions and decisions. Thus, the weak autonomy of the provider can be linked to the low use of MCSs in the providing organizations. In order to be able to control and monitor, you have to know what you control. What is more, you have to know that it is your responsibility to control. In contrast, our study shows that unit managers often were unclear regarding roles and responsibilities, and did not feel empowered. This suggests that the municipal organizations’ boundaries towards the
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Challenges of marketization Brandt Forsius & Molander, 2013 purchaser are vague, resulting in them failing to become autonomous market actors. As the municipal organizations are not market actors, it becomes challenging for them to act on the market and fulfill the demands of a competitive market.
The organizational pre-requisites for market actor creation can be explained by Brunsson & Sahlin-Andersson’s (2000) concept of complete organization. In line with Kastberg & Siverbo (2007), they highlight identity, but also note the importance of hierarchy and rationality when constructing organizations in public sector reforms. Our findings indicate that the municipal organizations could be marked as incomplete. Control, coordination and management, i.e. hierarchy, is often weak, as explained, and the defined goals and metrics, i.e. rationality are often vague. This brings understanding to the challenging situation that the municipal providers are in as a result of marketization. They act in a competitive environment, yet internally as organizations they are incomplete. In other words, they are acting on a market, without being market actors. Most investment in the marketization process thus seems to have been put elsewhere than in the change that the municipal provider should undergo. This serves to explain why the municipalities face challenges in combining their multiples roles. This further supports that the weak market actor identity of the municipal organization can be linked to the low use of MCSs.
7.2 Handling the multiple roles
Research on the consequences of marketization of the elderly care sector is so far limited (Anell, et al, 2011). However, there is some evidence that suggests that the total costs of the elderly care sector has not decreased as a result of marketization, and that distinguishable quality improvements cannot be noted (Kastberg & Siverbo, 2007 and Anell, et al, 2011). All together, it therefore seems that the introduction of market ideas on the elderly care sector has not lead to the intended effects of increased quality and efficiency. One possible reason for the default increase in quality and efficiency may be the time aspect (Anjou, 2009). Our findings show that the municipal provider in Nacka demonstrates signs of autonomy, reflected for instance by their strong identity and hierarchy (Brunsson, 1994). Nacka introduced marketization in the early 1990s. In this municipality the purchaser-provider split is clear, the municipal provider has few middle managers and the dependence on the political organs is fairly small. These findings support Kastberg & Siverbo’s (2007) conclusion that market actor creation is necessary for quasi-markets to function well. If the municipal provider receives an identity of being
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Challenges of marketization Brandt Forsius & Molander, 2013 a market actor with clear boundaries to the external environment, the multiple roles of being both a welfare producer and market actor seem to become manageable.
Brunsson’s (1994) theory on company-ization and institutional confusion further highlights the challenge of adapting to external pressures and handling multiple roles. Company-zation (Brunsson, 1994) can be noted in the municipal providers of elderly care. Most providers have for example adopted the term customer, implemented management models as well as gained an increased focus on competitiveness. However, we also note that the company-ization has led to problematic institutional confusion. One illustrative example is the budget system of the municipalities. The traditional purpose of the budget is to be an internal instrument for top-down control (Andersson, 1995). In the case examples of this study however, the budget is rather viewed as a necessary evil that needs to be in place in order to receive compensation. In other words, it is viewed as an allocation mechanism, typical of the political organization (Brunsson, 1994). In a political organization, the budget defines the resources that each tax financed unit receives. From this viewpoint, a positive result suggests that the unit was allocated too much of the total tax sum, and thus positive results of one period may lead to less resources the following period (Brunsson, 1994). However, as a result of marketization, the municipal elderly care units should be independent actors, competing on the same terms as the private providers. In this type of environment the budget should be used as a way to keep track of costs and revenues to monitor performance. Thus, at the same time as the municipalities talk about “customers”, they view the numbers in the budget as something to be fulfilled. This indicates that institutional confusion is present. The institutional confusion explains the paradox the municipal providers are faced with as they try to marry two opposing roles.
As Brunsson (1994) explains, the municipal organizations seem to have implemented individual features of the company organization, without considering the consistency of the organization. The municipal providers seem to be institutionally confused; the marketization changes have put pressure on them to adopt features of the company. However, as the change has been fast and as the consistency of the organization has been put aside, problems arise in the form that the providers struggle to handle their multiple roles. The units are expected to focus on efficiency and results, and act as independent market actors. At the same time, they are political organizations with strings attached, implying for example that they are unable to choose their customer segment or
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Challenges of marketization Brandt Forsius & Molander, 2013 limit their production. The unbalance between the diagnostic and interactive control system highlights this struggle. The institutional confusion is therefore another aspect that explains why the providers face challenges as a result of marketization.
Our findings are illustrated in the model below. From the empirically analysis we found that there was a weak use of MCSs, as well as an unbalance between different control systems. In the discussion, we linked the weak use of MCSs to the vague boundaries and low autonomy of the providers. This conclusion is marked in the red box: “Low autonomy”. Second, we related the unbalance between different control systems to institutional confusion. For example, at the same time as the municipal providers felt a need to prioritize financial measurements, to meet the demands of the market, they were expected to act as a political organization, fulfilling political goals. This unbalance between MCSs is market in the second red box: “Institutional confusion”. The low autonomy and the institutional confusion serve to answer the question we stated in the beginning: why the municipal providers face challenges in combining the multiple roles.
Figure 6 The paradox of multiple roles explained (own model)
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The paradox of having multiple roles questions the possibility of successfully implementing a quasi-market, and raises the question if and when market models are suitable on a welfare market. To address this question, we will provide to extreme alternatives in the section below.
7.3. Alternatives for solving the problem
The Model of Choice can be viewed as an initiative to solve the presented paradox of multiple roles and resulting dilemma for the municipal providers. As users gain exit possibility (Hirschman, 1970) it is likely that the municipal provider is given greater freedom to for example target niche markets. This may facilitate identify creation. The Model of Choice would in other words serve to company-ize the municipal providers further, and thus reduce the institutional confusion. This would imply that the individual units would focus less on their role of being a welfare producer and more on their role as market actors. The welfare responsibility would in turn move higher up in the municipal hierarchy. The Model of Choice is further supported by the purchaser-provider split, which is implemented to officially separate the different roles of the municipality. An effective Model of Choice and purchaser-provider split are likely to reduce the complexity of having multiple roles, which the situation in Nacka seems to support. In Nacka, the municipal providers are not focusing on their role as welfare providers. Rather, all efforts are put on managing production in order to use resources efficiently and satisfy users. The welfare responsibility lies elsewhere in the municipality.
However, research suggests that the Model of Choice is not always effective since information in elderly care services often is poor, resulting in users seldom changing provider (Anell et al. 2011). This suggests that the possibility of the Model of Choice to reduce institutional confusion may not be very great. Thus, the questions that follow are: Can the quasi-market function at all, and is it possible for the actors on a market to manage multiple roles?
Our findings indicate that it is challenging for the providers to control their organizations, i.e. carry out production effectively. These findings can be linked to the challenge in creating markets actors and a quasi-market. The failure to split the purchaser and provider affects the autonomy of the provider, leading to poor management of the providing organizations. To solve this problem, one solution, albeit extreme, is to remove the municipal production of elderly care altogether, and let private providers
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Challenges of marketization Brandt Forsius & Molander, 2013 carry out the production. In this model, market actors would be created naturally and no actor would face the challenge of multiple roles. The market mechanism would moreover serve to rule out inefficient actors. On the other end, the alternative is to remove the market model and private actors’ access to the elderly care sector. In this case, institutional confusion and the dilemma of multiple roles would be reduced as well. The municipality could instead focus on fulfilling its societal function. However, as noted, the societal function also implies that there is an indefinite need of resources: there will always be a hole to fill with money (Kraus & Lind, 2008). Thus, if the market model is removed completely, the citizens will still wish that their tax money is applied in the best way. Thus, regardless of the “be or not to be”-decision of marketization, an effective implementation of MCSs is necessary to provide care effectively. This suggests that regardless of ownership structure, a focus should be on developing MCSs that help the municipal providing organization to use its resources effectively to produce elderly care.
7.4 Discussion for the future
The societal and political debate regarding elderly care has mostly focused on the resource question- how much money that should be allocated to elderly care sector, and on the ownership model- if private actors should be allowed or not (c.f. Kraus & Lind, 2008 and Anell et al, 2011). Our findings however suggest that the focus of the efforts should rather lie on the production and how it should be carried out. Marketization has not merely implied that new actors have entered the market. Rather, an entirely new market has been created. This implies that the municipal providers that acted on the welfare market before the introduction of marketization has to change drastically to adapt to the new situation. The discussion worth having is therefore not to make or buy, since that discussion already has been concluded. Rather, the discussion worth having is how to implement a strong management, good leadership and effective control in the municipal organizations. Questions such as these are relevant to address. Effective implementation of the purchaser-provider model to create clear boundaries and, as a result, clearer responsibilities, is one step in reducing the institutional confusion. Our results moreover suggest that there is room to improve the MCSs of the municipal providers’ by increasing autonomy and reducing institutional confusion, the main reasons behind the poor use of MCSs. When MCSs are improved, it will be possible to measure the temperature of the organization, which in turn will make it easier to write
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Challenges of marketization Brandt Forsius & Molander, 2013 the right prescription. As of now however, most of us are blindfolded. Since we do not have clear metrics to look at, we cannot define the illness. All we have are the symptoms.
8. Conclusion
In this section we will outline the conclusion of our thesis. We will first provide a general conclusion by briefly summarizing our main findings. Next, we will present the theoretical and practical implications of the study, along with the limitations that we have identified. We will conclude our thesis by presenting an outlook for future research.
The purpose of this thesis was to study why the municipal providers of elderly care face challenges as a result of marketization, although marketization has been in place for a few decades. In order to study this, we examined the operations of the municipal organizations, which provided us with a foundation to discuss the challenges of marketization. To fulfill our purpose we addressed the following research questions:
Why do the municipal elderly care providers face operative challenges as a result of marketization?
What management control systems do municipal providers of elderly care exposed to marketization use?
We conducted an empirical study of the municipal elderly care sector, with five municipalities as case examples. By selecting a broad variety of case organizations we were able to provide a diversity of municipalities and study the case of elderly care in different contexts. The analytical framework applied to analyze the empirical observations constituted of Simons’ Levers of Control, complemented with additional research. The findings from the empirical study were discussed with our theoretical foundation on marketization theories. As such, we examined management control from an institutional perspective, and provided a link between theories on management control and marketization.
Our findings suggest that MCSs generally are applied to a limited extent in the municipal providers of elderly care. Most municipalities focus on diagnostic control systems, and fail to create a balance between the different LOC that support the strategy. There is for instance few performance metrics in place to measure quality or employee performance,
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Challenges of marketization Brandt Forsius & Molander, 2013 although quality and satisfied employees were noted goals. However, we also found differences between the different contexts. Nacka has for instance developed its management control further, reflected for example by the balance between its MCSs.
We found two main factors linked to the weak use of MCSs. First, the municipal providers’ lack of autonomy made it challenging for them to know what and how to control. The purchaser-provider split was not effective in most of the municipalities, leading to that different actors intervening in the providers’ operations. Thus effective implementation of MCSs in the municipalities was found to be hindered by the vague boundaries between the purchaser and provider.
Second, the institutional confusion of the municipalities impeded effective implementation of MCSs. The municipalities had undergone company-zation; for example, customers’ needs were in focus and competitiveness had been put on the agenda. This company-zation had however led to institutional confusion as the company traits had not been implemented carefully in the organization. For example, the budget was mostly viewed as an allocating mechanism rather than as part of a control system. What is more, as the municipal providers adopted certain features of the company organization, while keeping some features that typically relate to the political organization, the dilemma between the multiple roles was nurtured.
Taken together, the difficulty in implementing MCSs and the institutional confusion, nurturing the the difficulty to marry the opposing roles, served to answer our question why the municipal providers face challenges as a result of marketization. These findings made us present two extreme alternatives as solutions to the institutional confusion and the problem of the multiple roles. The first alternative was that the municipality remove s it’s providing function in favor of private providers. As such, the municipality could focus on its role as market creator. The actors would all be private, and the problem of institutional confusion would be reduced. The second alternative presented was to remove the market model, which would erase the demand for competiveness of the municipal provider. Regardless of alternative, an effective use of MCSs was deemed as important as the financing source still would be tax resources.
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8.1 Theoretical implications
Our study contributes to the public management literature by exploring the MCSs applied in municipal providers of elderly care. As we apply the analytical framework of Simons Levers of Control (1995a) in a municipal context we extend the understanding of municipal providers’ application of MCSs. Specifically, we examine control and management in the light of institutional change presented by marketization. Previous research has not focused on the operative changes of the municipality as a result of marketization, and thus this thesis adds to our understanding of operational challenges that marketization may lead to. Moreover, we question the benefits of quasi-markets as it provides a mix of public and private factors that has shown to cause confusion. These findings provide new insights within the field of marketization of public sectors.
8.2 Practical implications
Our findings offer insights to the municipal providers of elderly care that are or will be exposed to marketization. Our results suggest that the discussion should be shifted from the “make or buy” question to the “what” question: what type of elderly care that the municipal providers should produce. The focus of the providing organization should in turn be on how the production should be organized and carried out. This thesis can act as a foundation for discussion about these types of questions.
The discussion should not be limited to the MCSs applied, but also include what implications marketization will and is having on the elderly care provision. This would force the municipalities to further motivate their choice of elderly care provision, and by that earlier identify the challenges and benefits of different solutions. Contrary to the populist belief that politicians should control the providers of services hands on, politicians together with civil servants need to create systems that enable them to detect and follow the overarching development of the organization.
8.3 Limitations
In this study we have identified three main areas of limitations: The generalizability of our study, biases in the data and weaknesses in the analysis process.
By limiting our study to five case examples, we cannot guarantee generalizability across our case of the Swedish municipal sector. To offset this limitation we could have
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Challenges of marketization Brandt Forsius & Molander, 2013 increased the number of case examples to include more municipalities that are exposed to marketization. However, due to the limited access to municipalities as well as the limited time frame of a master’s thesis, this was not feasible.
Our data was collected though interviews and interviews are subjective reflections rather than objective accounts of reality. Thus the data might be biased by our perceptions and interpretations of management control in municipal organizations. In addition, we acknowledge the limitation of translating academic language for the respondents. For example, our understanding of the word “strategy” might have differed of the respondents’ understanding of it. This implies that there is a risk that we misinterpreted the answers of the respondents. Moreover, due to scheduling difficulties, some interviews were conducted with employees from the purchasing organization. This complicated the comparison between the case examples somewhat. We tried to account for this imbalance in the analysis, yet it is possible that it affected our results
Finally, we acknowledge limitations in our analysis process. The disassembly, reassembly and interpretation of the data to find overarching themes were made from the interview transcriptions. This implies that the sorting was based on our interpretations of the data. This might be problematic as we as researcher are biased. What is more, there is risk that we misinterpreted the responses, drew conclusions that were faulty or failed to recognize important themes. We tried to limit these factors by analyzing the data individually before discussing it in pairs. We also reviewed our findings throughout the research process and consulted the respondents and the expert team.
Given the above mentioned limitations, the findings of this study should be interpreted with caution until the study has been replicated in different settings and with different methodologies.
8.4 Outlook
Based on our findings and limitations we have identified a wide range of opportunities for further research.
First, Simons (1995a) framework is limited, and to completely understand MCSs in municipal providers of elderly care this framework would need to be expanded.
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Therefore, we suggest that an area for future research is to conduct the similar research with other management control frameworks, such as Otley’s (1999).
Second, it would be interesting to conduct a cause and effect analysis between management control and marketization. As such it would be possible to make clearer predictions about the significance of the relationship between the variables. This would further validate the findings made in this explorative study.
Third, we identify that a longitudinal study would serve a purpose. Studying municipalities over a longer time would give greater insights into the process of marketization, and the impact of time. In this type of study, it would be interesting to compare municipal providers that have not been exposed to marketization with those that have. This would provide us with deeper knowledge regarding the effects and challenges of marketization.
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What are your organization's purpose and goals? B. MCS - how are they used in practice Control 1. How do you feel that you control / check your organization? 2. What resources do you have to be able to control / monitor your activities? Which of these is most important? 3. Do you feel that your staff knows what you want to accomplish? How do you communicate it? 5. What is your aim with these means to control the business? What is it you want to accomplish? (Strategy, control, strengthening abilities) 6. What are the success factors for effective means to control the business? 7. What data do you base control on? 8. Do you feel that you have control over costs and revenues? 9. Have you worked with other devices in the past? What is your experience of this? 10. What kind of support do you feel that you need to better manage your organization? Being controlled 1. How would you describe that you are guided in your work? 2. How do you feel that the allocation of resources is done in your organization? 3. Do you feel that you have freedom in your work? Qualitative control system 1. What is your mission statement look like? 2. How do you know that you have done a good job? How do you know your business has done a good job? 3. Who assesses whether you have done a good job or not? 4. What happens if you do not meet the set expectations? 5. How would you identify a good result? 6. How evaluated the degree of goal achievement? 7. What is the process for determining the mission statement? 8. What constitutes "good" mission statement? How do you work to accomplish this? Quantitative control system 1. What do you key figures do you use in your business? Why these? Does all committees prepare clear, concrete and measurable indicators of its activity? 83 Challenges of marketization Brandt Forsius & Molander, 2013 2. What are the advantages of key figures? What shortcomings do you feel with the ratios that exist today? How facilitates these your work? 3. The role of finance / HR and quality? When you take contact with these functions? 4. How does the workflow into the goal-setting process? 5. What is your quality like? 6. How do you perceive quality? Are they beneficial or not? Do you use it? Why? Budget 1. How is the surplus / deficit in the business? What are the consequences of the result? 2. How is the budget for the coming year? Staff Survey / user survey 1. What is the purpose of these? 2. What contributes to these surveys? 3. How often are these and how to communicate the results to local users and staff? C. Follow-up control system Follow-up on goal 1. What metrics do you use? 2. How do you see that these metrics can help in your everyday work? 3. What goals are used to monitor? (E.g. last year, benchmarking, public, targets) 4. Are you followed up on targets? 5. How often do you follow up the business? What is done on a weekly, monthly and yearly basis? Sanctions / Incentives 1. What are the consequences of achieved/not achieved goals? 2. How do you create controller incentives for the organization and management? Personal motivation 1. What kind of feedback do you get? What type of follow-up of your work is done? 2. How do you like your work? D. Comparison between public and private providers Overall differences 1. What do you think is the biggest difference between the private and public sector? What do you think causes these differences? 2. What do you think the private production can learn from the municipal production? 3. What do you think the municipal production can learn from the private production? 4. Can you compare municipal production with a private company? Conditions 1. Do you feel that the conditions are different? 2. How do you feel that the goal is? What do you think? 3. In the literature often discussed ownership between these activities? How do you think the difference between public and private activities affect your work situation? 84 Challenges of marketization Brandt Forsius & Molander, 2013 4. Many of the private companies in home care have operations in Sweden, how do you think it affects the difference between them and you as a public company operating in a municipality? 5. Through the years, the public sector has been told that they should implement corporate-like mechanisms (e.g. BSC, MBO). Do you think that this has been successful? Why/Why not? 6. Do you think there is a difference in the ability to be transparent? Is there a fear that measured? How can you limit this fear? E. Supplementary questions 1. A number of questions about the governance and management in municipal and private production have been asked, what do you think the conclusion of this essay? 2. Are there any questions or points that you feel that we have not touched on? 3. Given the questions I have asked, do you have any additional person you think I should get in touch with? 4. Is there anything else you would like to add? 85 Challenges of marketization Brandt Forsius & Molander, 2013 Appendix 2 – Interview participants 86 Challenges of marketization Brandt Forsius & Molander, 2013 Appendix 3 – Expert team Ph.D Leif Anjou Affiliated to the Institute for Local Government Economics (ILGE); former CEO of PwC Komrev. Ph.D Fredrik Eklund, Affiliated to Karolinska Institutet management department; partner and senior consultant at NHG. Lennart Jonasson Former executive of the Center for e-Society, SKL; royal commissioner and city chief executive at Nacka municipality. Associate Professor Henrik Jordhahl Program Director (The Economics of the Service Sector) at the Research Institute of Industrial Economics (IFN); External Research Director at the Centre for Business and Policy Studies (SNS) in Stockholm. Anders Norrlid Manager of RKA (Rådet för främjande av kommunala analyser; responsible for www.kolada.se, a website for comparative data of public services. Per Törnvall Partner and senior consultant at NHG. Has more than 15 years experience of being clity chief executive in Vaxholm municipality. Former manager of the municipal elderly care in Nachka. 87 Challenges of marketization Brandt Forsius & Molander, 2013 Appendix 4 – Description of municipalities Nacka Nacka municipality is located south east of Stockholm and is part of the County of Stockholm. Nacka has 94 000 inhabitants. The right-winged political parties have had the political majority in Nacka during several decades, a position which they have strengthened during the last elections. Today the Moderate party, The Liberal party, The Center party and the Christian democrats form the political majority in Nacka. A clear ambition of the politicians is to increase the competition exposition of welfare services. Model of Choice in the municipality Nacka has a long history of privatization of welfare services; already in 1985 the municipality introduced the check system14 for foot care, which in 1991 was extended to home help services. Since then, LOU and later LOV have been introduced in most of the welfare services that the municipality has responsibility to provide for.15 Elderly care is one of the welfare services in Nacka that have been exposed to competition. Model of Choice in retirement housing was introduced in 2001 and LOV was implemented in 2009. The municipality’s market share for retirement housing is 8.3 per cent. In 2008 the municipality closed down their own home care service unit and as a result there are only private providers of home care services in Nacka. Currently, there are 52 private providers of home care services and no municipal provider of home service. Nacka was the first municipality in Sweden to close down the municipal provider of home care services, an action that as of today has been followed by three municipalities in Sweden. For retirement housing, 42 per cent (five out of twelve) is provided by the municipality and 58 per cent (seven out of twelve) is provided by private providers. In total, the home care services in Nacka cost 163 Million SEK in 14 The check-system enabled the municipality to provide a certain amount of money, a check, and then the citizens were allowed to choose who should provide this service. This was before the exposition to competition was controlled through regulations. 15 The following welfare services have freedom of choice: in Nacka home help services (1992), schools (1992/1993), pre-school (1994), escort services (1998), Sheltered accommodation (2001), family counseling (2005), adult education (2005), family treatment (2007), music school (2007), daily activities, elderly (2007), career advice (2008), labor market efforts (2009), accommodation support (2010), occupation, psychological disabilities (2010), non-institutional care (2011), daily activities, disabilities (2011) 88 Challenges of marketization Brandt Forsius & Molander, 2013 2012. The cost of retirement housing in 2012 was 383.7 Million SEK. The municipal retirement housing provider made a deficit of 8.1 million SEK in 2012. Municipal organizational structure The organizational structure of Nacka municipality is divided into political organs, administrative authorities, production and support units. The political organ that has the purchaser role of social welfare services, including elderly care, is the social welfare board and is directly under the city council. The production of welfare services is divided in two units, Education and Culture16 (FFS17) and Social care18 (VVS19); elderly care is part of the latter of these. The VVS manager is responsible for the elderly care operations except for their results. Instead, the result responsibility lies on the unit managers. Österåker Österåker municipality is located north of Stockholm and is part of the county of Stockholm. The municipality has 40 000 inhabitants. The Moderate party has been in majority since 1982, with exception from 1994 to 1998 when the Social Democrats and the Liberal party governed the municipality. Today the right-winged bloc parties govern the municipality together with the local party Österåkrespartiet. Political goals set for the period until the next election in 2014 includes among others improving education and elderly care. The welfare production board had a negative result of 1.47 million SEK in 2012, and the health and social care board had a negative result 4.5 million SEK in 2012. Model of Choice in the municipality Österåker introduced LOV in home care services in 2012 and is planning to introduce it for retirement homes in 2014. Retirement housing has been exposed to competition in Österåker through LOU during the last years. Today, 80 per cent of the retirement homes and 20 per cent of the home care services are operated by private providers. Municipal organizational structure 16 Own translation 17 Short for the Swedish term”Föskola, fritid och skola”. 18 Own translation 19 Short for the Swedish term ”Verksamhetsområdet sociala stödresurser”. 89 Challenges of marketization Brandt Forsius & Molander, 2013 Österåker municipality has implemented the purchaser - provider model for their welfare services. Welfare services are divided into a production committee and a social service committee. The social service committee is the purchaser organization of elderly care and the organization that has the overall responsibility of elderly care in Österåker, including setting agreements with specific units, conducting quality controls and assuring the functionality of the Model of Choice. The organization responsible on providing the services is the production board, and it is accountable for the operation of the municipally owned welfare services, including elderly care. Sundbyberg Sundbyberg is part of Stockholm County and is located north of Stockholm city. The municipality is geographically the smallest municipality in Sweden, but it is fast-growing in terms of population. As of today, there are 41 000 inhabitants in Sundbyberg. The political situation in Sundbyberg is unique as the two political blocks to a great extent cooperates. Historically however, the Social democrats have had the political majority in Sundbyberg for several decades. It was not until the election in 2006 that right-winged parties entered the city council. Today, the Social democrats, the Green party, the Christian democrats and the Center party are in majority. The municipality has focused on enhancing the quality within elderly care as they a few years ago noted quality deficiencies within the elderly care sector. Model of Choice in the municipality Private providers within the retirement housing sector entered the market in the beginning of the 1990s as the Public Procurement Act (LOU) was introduced in Sundbyberg. The home help service sector was exposed to competition in 2012 when LOV was implemented. There are 17 different private providers and five municipal providers of home care services in Sundbyberg. There are three municipal retirement housing and three private providers. Sundbyberg had a positive result of 0.4 M SEK in 2012 within home care and a market share of approximately 66 per cent in March 2013. Their retirement housing made a negative result of 2.8 M SEK in 2102, and had a turnover of 182 M SEK. Their market share during 2012 was 45 per cent. 90 Challenges of marketization Brandt Forsius & Molander, 2013 Municipal organizational structure Sundbyberg municipality is organized into a municipal board and different committees and public administrations, such as the elderly committee and elderly administration. The municipal board as well as the committees and public administrations lie under the city council. The employees of the municipality constitute the administrative organization and they execute the municipal plan created by the trustees in the committees. The administrative organization of Sundbyberg has 1900 employees. The elderly committee acts as a purchaser whereas the elderly administration is the provider. However, the separation between these two is not clear since they both respond directly to the city council. Sundsvall Sundsvall municipality is located in northern Sweden in the County of Västernorrland. The municipality has 97 000 inhabitants which makes it the third largest municipality in northern Sweden. Since the election in 2010 Sundsvall municipality is governed by a coalition constituting of the Moderate party, the Christian democrats, the Centre party and the Green party. Traditionally however, the Social democrats have had the political majority in the municipality. The political landscape in Sundsvall is somewhat unstable since a politician of the majority has chosen to support the budget of the opposition. Therefore Sundsvall is in a situation where the right winged parties steer the municipality with a budget presented by the opposition. Model of Choice in the municipality In 2012 Sundsvall exposed the elderly care sector for competition by introducing LOV in home care services. Retirement housing has not been exposed to competition, but it is planned that LOU will be implemented in this sector by 2014. Municipal organizational structure Sundsvall municipality is divided into committees and public administrations and each committee within a certain area is responsible for the public administration of the same area. The committees lie under the city council and municipal board. The committee responsible for the elderly care sector is the Social committee, and it controls the Social 91 Challenges of marketization Brandt Forsius & Molander, 2013 administration. The Social administration is in turn divided into two organizations: Social services and Social services production. Social services is responsible for the strategic planning and allowance decision making of the elderly care. They are the purchaser organization and orders production of elderly care from the Social services production organization. The production organization carries out the allowance decisions, among others within home care services and retirement homes. The purchaser and provider of elderly care therefore both lie under the Social committee. Sundsvall municipality operates 21 retirement housing units as well as 21 home care services. There are ten private home care service providers; as mentioned, there are no private providers of retirement housing. Östersund The municipality of Östersund is located in northern Sweden and is part of the County of Jämtland. Östersund has 60 000 inhabitants. The Social Democrats have been in majority since 2012, together with the Moderate party and the Center party. In 2011, the municipality had an overall result of 71.1 million SEK. The social welfare board had a negative result of SEK 2.5 million in 2012. Model of Choice in the municipality The elderly care sector was exposed for competition for the first time in the early 1990s when LOU was introduced in retirement homes. In 2010, LOV was partly implemented in home help services. 20 LOV is currently being implemented entirely in home help services, a change that is expected to be completed by the beginning of 2014. In total, 25 per cent of the retirement housing in Östersund is conducted by private actors. Municipal organizational structure The municipal organization is currently undergoing an organizational re-structure as a result of the implementation of LOV. The change implies that the organization will be divided into different sectors rather than geographical areas. The health and social care administration is responsible for providing elderly care in the municipality. Moreover, as the administration is both responsible for allowance and production of elderly care the separation has not taken place between purchaser and provider. 20 It was implemented for general services (omsorgstjänster) but not care services (vårdtjänster). 92 Challenges of marketization Brandt Forsius & Molander, 2013 Appendix 5 – Municipal organizational structures = Organizational unit were the interviews were conducted * = Other departments and commitees in the municipality (e.g. Education committee, Cultural department, etc.) Nacka Municipal Council Municipal board KSVU** The city executive office Municipal purchser Committees Municipal provider (principal) Support functions **KSVU= Kommunstyrelsens verkställande utskott- The executive committee of the Municipal Board 93 Challenges of marketization Brandt Forsius & Molander, 2013 Österåker Municipal Council Municipal Board Departments* Social Department Production board Production Social Committee committee Sundbyberg Municipal Council Municipal Board Committees* Departments* Elderly committee Elderly department 94 Challenges of marketization Brandt Forsius & Molander, 2013 Sundsvall Municipal Council Support function Services and facilities Committees* Social department Social services Departments* production Östersund Municipal Council Municipal Board Committees* Departments* Social committee Social department 95 Challenges of marketization Brandt Forsius & Molander, 2013 Appendix 6 – Summary of Simons’ Levers of Control Belief systems Diagnostic Control system Explicit set beliefs that define values, A Feedback system that monitors purpose and gives direction on how organizational outcomes and corrects What? value is crated and what is the desired deviations from pre-set standards of levels of performance. performance. Effective resource allocation Define goals To provide motivation and guidance Why? to opportunity seeking behavior. Improve motivation Allow ex-post evaluation Free scarce management attention Mission statements Set standards Vision statements How? Evaluate results Credos Reward/sanctions Statements of purpose Performance standards can be set Opportunities expand dramatically Output can be measured When? Desire to change strategic direction Feedback information can be used to Desire to motivate workforce correct deviations from standards Boundary system Interactive control system A set of formally stated rules, limits A control system that managers use to and proscriptions tied to a defined set What? involve themselves regularly and personally of sanctions with a credible threat of in the decision activities of subordinates. sanctions. To set limits of individual freedom and To focus organizational attention on Why? creativity, define the opportunity strategic uncertainties and provoke the space. emergence of new initiatives and strategies. By ensuring that data generated by the system becomes important By ensure that managers in the Codes of conduct organization pay regular attention to the Operational guidelines system How? Checklists/prerequisites/standards By participating in face to face meetings for ex acquisitions and investments. with subordinates By continually challenging and questioning data, assumptions and action plans Reputation costs are high If the organization operates uncertain When? In case of excessive opportunity environment that requires constant search and experimentation risk search for new opportunities. dissipating the resources of the firm 96 Challenges of marketization Brandt Forsius & Molander, 2013 Appendix 7 – Relationship between customer satisfaction and compensation Compensation and SCSI for municipal and private providers of home care services in Sweden 2012. (SKL, 2013a)21 Swedish Customer Satisfaction Index (SCSI), home care Compensation home care providers, SEK/hour 21 The figure above illustrates the relationship between compensation and SCSI of home care services. However, the relationship is similar for the entire elderly care sector.