Strategic

management

and

the

balanced

scorecard:

case

study

of

telecommunication company

Umesh Sharma* Department of Accounting Waikato Management School University of Waikato PB3105 Hamilton 3240 New Zealand e-mail: ups@waikato.ac.nz Stewart Lawrence Waikato Management School, University of Waikato. Alan Lowe Aston University, UK. *Corresponding author

Strategic

management

and

the

balanced

scorecard:

case

study

of

telecommunication company

Abstract Purpose: This paper presents some evidence on an aspect of the design of a strategic control at a micro level within Telecom Fiji Limited. The research aims to illustrate how the balanced scorecard (BSC) has been used by the company as a calculative tool to enrol employees on the path to commercial business routines as the organisation moved from corporatisation to privatisation. The major focus is on BSCs implementation and practice.

Design/ Methodology/ Approach: a case study method is applied which was chosen to illustrate the use of BSC model. It utilises qualitative field study approach to provide an understanding of BSC implementation. Institutional and practice theory are utilised to inform the case study.

Findings: BSC was used internally to bring employees on board for privatisation path and encouraged employees to focus on customer and shareholder perspective. Employees were rewarded for reasonable scores in the BSC through quarterly performance bonuses.

Research limitation/ Implications: The analysis is limited to one case company, thus no generalisation, except to theory, can be implied.

Originality/ Value: Few studies have reviewed BSC in organisations that made transition from public sector to private company. Combining insights from the emerging practicebased literature on strategy and institutional theory, the paper examines how BSC contributed to shape the strategy at TFL.

Keywords:

performance measurement, employee share scheme, strategy formulation,

institutional theory, management control systems, Fiji.

Strategic

management

and

the

balanced

scorecard:

case

study

of

telecommunication company

1. Introduction

The relationship between strategy and management control has been researched over the past two decades (Chenhall, 2005; Nyamori et al., 2001; Lord, 1996). The research on strategy and management control has developed over time from being dominated by a contingency perspective whereby strategy and management control have been treated as essentially given or exogenously determined to how management controls are implicated in strategic change. The broader literature has shown an increasing interest in aspects of strategy formulation and practice at the level of individual manager (Johnson, 2000; Johnson et al., 2000; Modell, 2009; Lowe & Jones, 2004).

Strategy is perceived as imperative for the organisation since it is the key element leading the organisation into future- guiding actions, plans and results (Modell, 2009; Lowe & Jones, 2004; Nayamori et al., 2000; Lawrence & Sharma, 2002). Bunce et al., (1995, p.253) note that as strategies are changing in response to many competitive and structural pressures, it seems evident that new management systems are needed to reflect these new realities. Several scholars have addressed the emergence of performance management systems using not only financial, but also nonfinancial measures and relating them to strategy (Kaplan & Norton, 1992, 1993, 1996; Lynch & Cross, 1991; Nor-Aziah & Scapens, 2007; Neely et al., 2001).

This paper presents some evidence on an aspect of the design of a strategic control at the microlevel, within Telecom Fiji Limited. It provides information about how a

telecommunications company utilised financial and non-financial measures in the form of a balanced scorecard to align its strategy. The research question being asked is: how did BSC get implemented and embedded in practice at TFL? Was there any resistance to such

practices? To what extent did the BSC have to be modified from the four perspectives advocated by Kaplan and Norton (1992) to suit Telecoms context? The research used a qualitative field study approach to provide an understanding of strategy formulation. The aim is to contribute to an area of literature which is of increasing significance, but relatively
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underdeveloped in terms of application of in-depth field research techniques. Combining insights from the emerging practice-based literature on strategy, management control and institutional theory, the paper examines how the formation of management control practices contributed to shape the strategy of Fijian Telecommunication Company which made transition from a public sector to privatised company over 1989-2002. The paper examines the role of managers within the process of identification of key performance indicators, and more broadly the formulation of a strategic performance measurement practice

Where do new practices come from? While institutional theory research has been widely renowned for its emphasis on tracing how novel innovations or activities become established or taken-for-granted practices as a result of isomorphic diffusion, little work in this tradition has addressed the origins of new practices (Scott, 2001; Lounsbury & Crumley, 2007; Lounsbury, 2008). Part of the problem is that diffusion studies have normally treated

practices as objects that are either adopted or not, essentially precipitating the routine acceptance of practice (Lounsbury & Crumley, 2007, p.994). This structural emphasis on institutionalised processes has resulted in a number of critiques about the lack of attention paid to the role of actors in creating and promulgating innovations (DiMaggio, 1988; Greenwood & Hinings, 1996; Lounsbury, 2008; Seo & Creed, 2002; Lounsbury & Crumley, 2007). Within institutional theory, this broader structure-agency debate is often referred to as the paradox of embedded agency (Friedland and Alford, 1991; Seo & Creed, 2002; Holm, 1995). The theoretical puzzle is as follows: if actors are embedded in an institutional field and subject to institutional constraint (Clemens & Cook, 1999; Seo & Creed, 2002), how are they able to envision alternative practices and then subsequently get others to adapt them? One response to this disquiet has been the introduction of the concept of institutional entrepreneur, featuring the role of powerful actors who are able to reshape social organisations and help establish a new dominant practice (Garud, et al., 2007; Greenwood et al., 2002; Lounsbury & Crumley, 2007). The concept of institutional entrepreneur is covered more in-depth in the ensuing theoretical framework section.

The paper proceeds in the next section to outline the prior literature on balanced scorecard and strategy, which is followed by the theoretical perspective adapted for the study. We discuss how institutional and practice scholarship can be combined to shed light on practice creation, motivating our empirical case. The case company is then described followed by the
4

research method. The next section of the paper presents the empirical evidence on the strategic business plan and balanced scorecard as practiced at Telecom Fiji Limited (TFL). This is finally followed by a discussion and conclusion section.

2. Balanced Scorecard and Strategy Various authors have previously reviewed the BSC framework (Farneti & Guthrie, 2008; Norreklit, 2000, 2003; Kaplan & Norton, 1996, 1998, 2001; Butler et al., 1997; Kloot & Martin, 2000; Figgie et al., 2002). The CIMA (2005) report calls for research that focuses on the implementation and practicability of the BSC framework.

The concept of strategic performance measurement such as BSC was developed in response to the criticism that traditional performance management systems are financially driven and historically focused (Kaplan & Norton, 1993). The traditional BSC was structured as a tool to complement financial accounting measures, and provide non-financial measures, including the activities of the organisation that can be regarded as operational, such as customer satisfaction, internal processes and innovation. The BSCs four dimensions encompass

financial perspective, customer perspective, internal business perspective and innovation and learning perspective (Kaplan and Norton, 1992). The BSC was developed as a tool to develop strategy management, linking strategies and performance indicators.

Roselender & Hart (2003) suggest that strategic management accounting seeks to integrate insights from management accounting and marketing management within a strategic management framework. The marketing accountability project identifies the necessity to employ multiple performance measures in a reporting format such as a balanced scorecard (Roselender & Hart, 2003). Atkinson (2006) suggests that the essence of strategy

implementation suffers from a general lack of academic attention. The balanced scorecard has been offered by its inventors as ...the cornerstone of a new strategic management system.... (Kaplan and Norton, 1996, p.75), positively linking an organisations long-term strategic intentions with its short term operational actions.

The balanced scorecard was developed to address a number of significant weaknesses associated with traditional performance measurement systems- including particularly, that they are dominated by short-term or financial metrics that are internally oriented and are not linked to organisational strategy (Eccles, 1991; Lynch & Cross, 1991; Kaplan & Norton, 1992; Norreklit, 2000; Hoque & James, 2000). BSC makes explicit the link between

strategic objectives and operational goals, by identifying clear performance targets at all levels in the organisation, and by engaging employees at all levels of the organisation in the discussion of the strategic priorities. Atkinson (2006) underscores that the effective

integration of the balanced scorecard with strategic and management control systems, however, remains a potentially significant inhibitor to successful strategy implementation. According to Otley (2003), it appears that designers of performance management systems do not fully anticipate the likely response of those being controlled.

The BSC has found favour in many organisations (Chenhall and Langfield-Smith, 1998; Hoque & James, 2000; Lawrence & Sharma, 2002; Sharma & Hoque, 2001). Given the obvious benefits of a BSC, it is assumed to be relatively unproblematic to implement in a logical and sequential fashion (Northcott & France, 2005). However, this view is challenged by academics and practitioners who have found the BSC elusive and problematic to implement (Ittner and Larcker, 1998; Norreklit, 2003; Sandhu, Baxter & Emsley, 2008). The implementation process brings together managers from different organisational functions, such as accounting, marketing operations and human resources (Sandhu et al., 2008). Sandhu et al., (2008) suggest that a network of actors, both human and non-human is involved in translating a BSC.

Norreklit (2003) suggests that the BSC may be good at justifying cost reductions and at making employees increase their level of customer service. Through the BSC employees need to show themselves and their surroundings that they are in control of the uncertainty involved in their jobs. They do so by becoming isomorphic relative to their surroundings and adopting the behaviour of others (Meyer & Rowan, 1977; DiMaggio & Powell, 1983, 1991).
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Ax and Bjornenak (2005) examine the communication, diffusion and transformation of the BSC in Sweden from a supply side perspective. They argue that BSC perspectives can be examples of stakeholder rather than shareholder models. They cite an example of a scorecard developed in a Swedish state school that includes a financial perspective, a student perspective, a teacher and staff perspective, a development perspective and a school administration perspective. The current study in telecommunication intends to examine the various perspectives employed within company and whether it extends the perspectives conveyed in the original Kaplan and Norton literature on BSC. Ax and Bjornenak s (2005) study noted that in addition to Kaplan and Nortons four perspectives, the majority of Swedish organisations include an employee perspective. The next section examines the theoretical basis for the study. 3. Theoretical Framework Institutional theory and practice theory have been adapted for this case study. Particularly useful to institutional theory is the attempt by some practice scholars to draw on activity theory (Engestrom, 1999) and to perceive practice as subsuming activity (Lounsbury & Crumley, 2007). Ahrens & Chapman (2007) employ practice theory in considering the role of management accounting in the constitution of organizations. They build on Schatzki (2002, 2005) for their particular version of practice theory. According to Ahrens & Chapman (2007) using practice theory enabled them to describe management control systems as structures of intentionality which both shape and are shaped by shared norms and understandings in the interrelationships between technical and interpretive accounting processes.

According to Schatzki (2002, 2005), social practices are organized by human activities. Jarzabkowski (2005) views activity as the action of and interactions between actors as they perform their daily routines, while practice refers to activity patterns across actors that are infused with broader meaning and provide tools for ordering social life and activity. Lounsbury & Crumley (2007) posit that activity involves acts that are generally devoid of deeper social meaning or reflection such as pounding a nail, while practice, such as professional carpentry, provides order and meaning to a set of otherwise banal activities. Defined this way, practice is seen as a kind of institutionally- taken-for-granted set of rules and routines (Lounsbury & Crumley, 2007; Lounsbury, 2008; Seal, 2010).
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By focusing more on actors and organizational heterogeneity, institutional theorists may seek connections to currently fashionable domains such as practice theory that have been somewhat influential in contemporary studies of accounting (Ahrens & Chapman, 2007; Hopwood & Miller, 1994; Lounsbury, 2008; Malmi & Granlund, 2009; van Helden, Aardema, ter Bogt, Groot, 2010; Baldvinsdottir, Mitchell & Norreklit, 2010). The theoretical gap between actor micro-processes and institutions provide an opportunity for theoretical development and empirical insight, and the new directions of institutional analysis to be explored (see Lounsbury, 2008). Combining institutional theory and practice theory in this paper offers a new direction for institutional analysis in capturing organisational heterogeneity and practice variation (Lounsbury, 2001, 2008) by allowing a focus on actors and their activities. A practice perspective offers a way of understanding the diverse

activities involved in balanced scorecard practice at TFL.

Given this approach to practice as a kind of institution, the research question giving our efforts is: how may innovation such as BSC in activities lead to the establishment of a new practice via institutionalization? Institutional theorists have long grappled with the issue of how institutionalized structure and agency exercised by actors with vested interests influence each other (Barley and Tolbert, 1997, DiMaggio, 1988; Hirsch and Lounsbury, 1997). Research on institutional sources of practice variation has only began to be developed (Burns & Scapens, 2000; Siti-Nabiha & Scapens, 2005; Modell, et al., 2007; Seo & Creed, 2002; Dorado, 2005; Beckert, 1999; Sharma & Lawrence, 2008; Sharma, Lawrence & Lowe, 2010).

The problem of embedded agency may be resolved to some extent by institutional entrepreneurs who act as internal change agents in the organisation (Benson, 1977; Beckert, 1999; Seo and Creed, 2002; Dorado, 2005). The term institutional entrepreneurs refers to actors who have an interest in particular institutional arrangements and who leverage resources to create new institutions or to transform existing ones (Maguire et al., 2004, p.657). Garud, Hardy and Maguire (2007) put forward that juxtaposing institutional (takenfor-granted rules and routines) and entrepreneurial forces into a single concept, institutional
8

entrepreneurship offers opportunity for understanding how and why certain novel practices or new organizational forms come into existence and become well established over time. Institutional contradictions allow institutional entrepreneurs to disrupt existing routines within an institutional arrangement. Institutional structure, informal rules and taken-forgranted rules and routines come under pressure from agents who recognize that these factors constrain more efficient outcomes. There is an ontological position that understands the world as always in flux and that the new practices lie in the everyday activities of actors (Lounsbury, 2008).

In many organizations, the management control system constitutes the stable rules and routines which enable and constrain actions (Scapens, 1994; Burns and Scapens, 2000). Rules are the formally recognised ways in which things should be done while routines are defined as the way things are actually done (Burns and Scapens, 2000, p.6). Rules capture the formal characteristics of an accounting system: for example, rules are standard operating procedures, budget manuals and appraisal guidelines. The Burns and Scapens (2000) model of institutional theory emphasises the stability embodied in rule-based behavior and routines in organizational systems. Nevertheless, to study accounting change we need to study

institutional contradictions that give rise to changes in rules and routines via institutional entrepreneurs.

Practice theory emphasizes the role of actors in drawing upon rules and routines of management control practice (Seal, 2010; Lounsbury & Crumley, 2007). The theory assumes that actions are organized around practical understandings, rules and engagements that define and connect agents qua practitioners (Ahrens & Chapman, 2007). Practice is shaped through purposeful activities and as a concept seeks to capture actors skilful working with and constructing of understandings, rules and routines (Ahrens & Chapman, 2007; Burns & Scapens, 2000; Burns & Baldvinsdottir, 2005). The rules and routines are discursive and practical resources that actors manipulate skillfully to signal interests, motivation and achievements. Our practice perspective emphasises the way in which BSC come to be constructed through the daily activities of individuals engaging with each other and interacting with management control systems.
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While there have been other attempts to address the relationship between innovation and institutions (Burns & Scapens, 2000; Dillard et al., 2004), there have been no explicit efforts to draw upon practice and institutional theories to address how new practices are created and enacted. The next section presents the research method for the case company.

4. Research Method The case study was conducted over a 6 year period from 2002 to 2007. Our research study made use of multiple sources to collect evidence. Data were gathered from four sources: publicly available information, including TFL annual reports for the last fifteen years; media and government reports; internal proprietary documentation, including board papers; and semi-structured interviews.

The researchers were also given internal proprietary documentation such as TFLs Strategic Business Plan, annual reports and performance evaluation templates. Media reports were obtained from the National Archives of Fiji in Suva. The reports as far back as 1990 described the organizational culture prior to TFLs corporatization. Government reports were obtained from the National Archives of Fiji. These reports included parliament papers

pertaining to TFL when it was government-owned, together with other documentation such as an enquiry report on FPTL affairs which covered a period when there was open resistance to corporatization. Compared to a single source of data, these multiple data sources helped provide a more comprehensive and valid portrayal of the phenomenon (Jick, 1979; McKinnon, 1988; Modell, 2005; Perera et al., 2003). TFL annual reports were used to provide an understanding of the history of the organisation and to facilitate the interviews.

The interviews were carried out between 2002 and 2007. Interviewees were asked to reflect on past events surrounding the privatization of TFL as well as the current implementation of new management control practices such as balanced scorecard. Forty two semi-structured interviews were conducted at TFL, each lasting from one to two hours. Twenty five staff
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were interviewed at head office in Suva and its branches in Nadi, Lautoka, Ba and Tavua. Interviews ranged between 6 and 8 in each year from 2002 to 2007. Some interviewees such as quality manager, strategic manager, public relations officer and accountants were visited more than once to clarify information and review our picture of the change process. The interviewees were selected from different sections of TFL such as the Finance, Human Resources, Customer, Public Relations and Strategic Management divisions. The interviews took place in formal surroundings, either within the office space of employees or in the companys board room. Most of the interviews were tape-recorded and were subsequently transcribed. For a few interviews that were not tape-recorded, notes were made by one of the researchers as the interviews proceeded. Furthermore, three informal contacts were made by e-mail or phone. The informal contacts were particularly useful for checking or

supplementing evidence collected during the formal interviews.

While the data triangulation approach (Hoque and Hopper, 1997) adopted was useful in enabling us to capture a contextual understanding of the social phenomena under study, it also created challenges in terms of analyzing and making sense of empirical evidence collected from various sources. To overcome this problem, the analysis was initiated by preparing tables listing issues frequently raised in interviews in order to answer our research questions: how were agents able to introduce MCS (such as BSC) within TFL? How were BSC institutionalised at TFL? Several themes (such as business plan, shaping BSC and initial reception, resistance to change and enactment of BSC) were drawn from these responses. The data representing the themes were clustered together at this stage. The documentary evidence collected was subsequently matched with themes (Tsamenyi et al., 2006). In the last part of the analysis, we drew on our theoretical framework to make sense of the data.

5. Background to the Case Company TFL was of interest to the researchers as it was the first public sector enterprise in Fiji to be fully privatized and listed on the South Pacific Stock Exchange through its parent company of

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Amalgamated Telecom Holding Limited.

Accounting and organisational changes were

introduced and provided the focus for our study.

The Fiji government began to dismantle state-owned enterprises in the late 1980s and corporatised many public enterprises, including Fiji Post and Telecommunications Limited (FPTL). Under further restructuring FPTL was split into Telecom Fiji Limited (TFL) and Post Fiji Limited in 1996. Currently, TFL is the sole provider of local and national (trunk) telephone services. The company owns the only public switched telephone network in Fiji. The TFL network comprises 55 telephone exchanges throughout Fiji, connecting more than 101,000 customers (Telecom Fiji website, 2010). In 1998 the Fiji government consolidated all telecommunications companies into one company: Amalgamated Telecom Holdings Limited (ATH). ATH owns all the shares in TFL. For the organisation chart of ATH, see Appendix 1.

In 2002, the government floated its stock in ATH to the general public in an initial public offering of $1.06 per share. The general public owns almost 7.2% of shares in ATH, while the government holds 34.6% of the shares. The Fiji National Provident Fund has a shareholding of 58.2%.2 ATH was formally listed on the South Pacific Stock Exchange in Fiji on 18 April, 2002 (Telecom Fiji website, 2010). TFL describes its vision as Telecom Fiji, bringing the best of telecommunications to the Pacific (TFL website, 2010). The mission of the company is to: - provide telecommunication products and services that our customers value strive for excellence in everything we do develop a capable workforce by rewarding superior performance and grow shareholder value (TFL website, 2010).

In April 2002, Internet Services Fiji Ltd (operating as Connect) was set up to take over internet service provision at the retail level from TFL. TransTel Limited was formed on
2

The Fiji National Provident Fund is a superannuation company in Fiji. The employer and the employee each contribute 8% of gross wages to the Fiji National Provident Fund.

12

April 2003 to market and sell prepaid calling and internet cards and manage all public booths on behalf of TFL.

Vodafone Fiji Limited (Vodafone) was incorporated in 1993 in the form of a joint venture between Vodafone Europe BV Holdings (49%) and TFL. The latter has assigned part of its domestic licence which deals with mobile communication to its subsidiary in which it has 51% shareholding. Vodafone has a customer base of approximately 154,000 (Amalgamated Telecom Holdings Limited annual report, 2006). Xceed Pasifica was formed in April 2003, taking over all customer premises equipment and related activities such as cabling from TFL. Fiji Directories Limited was set up as a joint venture in 1993 between FPTL (90%) and Edward OBrien Ltd (10%) and moved to ATH in December 2002 (Telecom Fiji website, 2010). The next section outlines the case findings for the study. 6. Case Findings This section presents the findings in 3 subsections. The first subsection examines the

introduction of a business plan. This is followed by shaping BSC and its initial reception, linking that to the strategy of the company. The third subsection examines reservations about the possibilities of BSC.

6.1 Business Plan at TFL

This section examines the role of the business plan which is part of the management control system at TFL and how accountants and management contributed to planning. The

accountants were pivotal in the establishment of commercial targets in the plan. TFL had a 5 year business plan, as evidenced by a strategic manager: We have a business plan which company accountants were helpful in putting in place and everything may need to be achieved in accordance to the plan. We have specific profit targets on the plan which we are striving towards. The targets include connection of lines, service restoration, revenue level, expected profits and so on. TFL sets out its vision as: We are committed to building a better Fiji by being the best in service, providing quality communications and making it easier for people to keep in touch
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and provide a better return on shareholders fund (TFL Strategic Business Plan, 2001-2006, p.4). The vision was mobilized to encourage people to get themselves more challenging. The management and workers were expected to work towards the business plan by the CEO and the Board. The business plan was also developed with the assistance of Telecom New Zealand consultants on the invitation extended by TFL CEO. The steering committee at TFL was made up of key managers and accountants who helped to develop the business plan. The plan focused on the aims of meeting customers expectations and cost reduction. The key goals for five years were: 1. Financial- achieve revenue, profit targets which were in terms of return on investment of 12.5% and debt to equity ratio 2. Development- add at least 8,000 lines per year and increase telephone penetration to about 35 per 100 population 3. Reliable delivery of quality service on time, in full, every time, and 4. Be easy to do business with. (TFL Strategic Business Plan, 2001-2006, p.10). The business plan was a bulky document, intended to inform the management of the expected targets. It may not be read by everyone except the senior management. The senior

management established new performance targets and benchmarks by which business decisions and actions would be judged and perceived and formed part of management control systems (MCS). The steering committee decided to publicise the plan throughout the

organization, down to the operational staff, ensuring it is an integral element of business practices at TFL. Business plan pamphlets were distributed to staff while seminars were also held to spread corporate awareness and develop new knowledge of the plan. The business plan was designed to establishing new ways of thinking, as well as helping to dismantle old taken-for-granted public service assumptions. A manager commented: With the implementation of the business plan, some of us now aim to complete work even if it is after 5:00p.m. This was not the case when we were with the government; we might leave it for the next working day. But now completion of work has become important practice for us.

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A strategic manager claimed that the business plan drove everything at TFL. According to a manager, business processes were aligned to the business plan. So, the business plan was a new rule that embodied the intended new ethos of the business, and to which other organizational phenomena (systems, structure, practices, etc) should be aligned.

The Finance Strategic Business Unit employees played a significant role at TFL and advised management on financial decisions, in terms of cost reduction and undertaking projects that yielded positive net present values and EVA. In these contexts, the Finance division

employees recast dialogue from telecommunication language and engineering into their business language of markets and profitability. The establishment of new accounting systems had been vital in changing organizational practices from a centralized bureaucratic one to a decentralized management one and in shaping new roles so that meaningful budgets and performance reports could be established. Through business planning, the accountants,

public relations personnel, marketing managers and customer service managers increased their power relative to engineers.

The management team was bound up in the creation of the business practice. While there were some initial resistance when TFL was privatized, nevertheless with wider education and performance based pay incentives, employees were bound to adapt new business plan. The management and the finance teams, including a steering committee, were the institutional entrepreneurs of the change. Seminars were conducted for the various operation managers by Finance, consisting of financial awareness practices aimed at such topics as budget setting, budget management, capital expenditure and cost reductions. A finance manager described this as a skill transfer. What we have been doing is a skill transfer- providing knowledge to operation managers on decision making based on financial information. And we showed them financial information and said this is how you use it. The finance team attended team meetings to contribute to business decisions that previously would not have concerned them. The operation managers appeared to embrace such

interactions and relationships with the Finance team. A strategic manager commented:
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Accountants are now more integrated into the business. Theyre more proactive and help us. We often ask them to help us focus on what is needed for improvement. Through the integration of accountants, thrift and concern for money became much more important for TFL members. Accountants, as institutional entrepreneurs, continually advised the managers of Strategic Business Units of sound business practices, becoming powerful actors within TFL and well respected. A couple of managers spoke high of the management accountants in their business units. They claimed that these management accountants guided them in financial decision making and were highly regarded by the members in their division. The business practices became new routine for TFL actors which was reinforced by the business plan. The business practices was further enabled by the enactment of BSC. The next section examines the shaping of BSC at TFL.

6.2 Shaping of BSC and its initial reception This subsection examines managers perceptions of BSC and its initial reception. In the later section, we will illuminate the opposition to BSC and how it was not working well for some of TFL employees. The possibilities being attached to TFLs BSC were informed by the transition of the organization to privatized company from a public sector entity. The idea was to enroll actors into commercial business oriented ways of thinking. The CEO commented: through BSC we measure output and the pay and job advancement is based on BSC scores. This has been well communicated to the employees and they very well understand the consequence of not working up to par. BSC was thought appropriate by the CEO to enable actors to assimilate commercial business practices. Satisfying the expectations of stakeholders such as customers and shareholders was pivotal for TFL managements business units. TFLs corporate performance was measured using historical accounting measures; there was little or no information on the underlying drivers of performance. Some senior managers felt there was a need for more forward-looking measures and a better alignment between performance management system and strategy. The BSC measures had to be aligned with the companys business plan. A manager maintained: if we dont align our staff to our companys strategy or goals, and if we are not measuring them, we wont be fulfilling those goals.

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Some senior managers and the CEO championing the BSC became aware of it during their undergraduate studies and gained a better understanding while undertaking MBA studies. A senior manager stated: From what I understand, the BSC is a scorecard that measures the company performance and drives the company towards achieving its goals and gain some advantage by measuring financial results, customer results, internal processes and learning and growth.

Some senior managers and CEO convened a meeting with other managers to float the idea of BSC. Overall, the managers were receptive to the idea of implementing a BSC, with some expressing genuine interest in it. Others were motivated to join the project because of an awareness of senior managements intention of linking BSC to an incentive scheme. A senior manager commented: The last thing we want our guys is to come to work and get fortnightly wages and not know how to contribute to the companys strategy the BSC will help us manage that. I want to make sure BSC is linked to their pay. Measuring financial, customer, internal processes and learning and growth perspectives possibly made the BSC attractive to each departmental manager because of possible improvements that might emerge in their respective fields of work.

The BSC performance indicators were aligned with the business plan for the organization. It starts with macro objectives, that is what the company likes to achieve in terms of its vision and mission which filters down to the operational level. A manager stated: BSC performance management system outlines what were expected to do and what were actually doing. Each business unit has its own measures. There are key areas one is measured on. The divisions are given their own targets- monthly targets and then finally, of course, it comes to daily performance. Another manager stated: Generally if we do not measure performance of employees, then we simply cannot manage them. BSC like PMS is used as a discipline exercise for employees. All the employees have a job description and the key performance indicators are discussed with them by the superiors. The BSC like performance measurement system took a year of education. The new CEO and the Human Resource division staff were instrumental in the education and implementation of BSC. External consultants were also involved in training
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staff to adapt the new BSC. The CEO advocated setting of goals of every people in the company. A manager commented: Through training, the staff developed an awareness that it is important to measure performance. The PMS document was continually revisited to simplify the document. From initially 5 to 6 pages, it was reduced to 2 pages. Initially employees were allowed to set KPIs for

themselves around four perspectives of the BSC. It became a bulky document and was gradually reduced to two pages. Employees chose KPIs around their professional

development needs, reliability of customer services, punctuality to work, customer complaints, in-house and external training needs amongst others. Initially, the workers and employees did not lay emphasis in making a target explicit but rather on learning the process of setting goals. A manager commented: I think it is a struggle to set KPIS. I was sometimes not so eager to set clear targets. Most managers find difficulty to set KPIS and they cannot identify good KPIs. But they tried and began to manage to do so. It was a good challenge for them. There were differences between managers. Some senior managers could set quantitative measures but others could not. The CEO and the Human Resource Division were

instrumental in assisting the managers in order to share the long-range framework among the managers. BSC measures set by the CEO and management team involved a wide range of performance indicators covering quality, human resources, operational and financial matters. The

employees were assessed by their superiors on a quarterly basis on indicators such as customer service focus, business/financial focus, professional attribute/interpersonal relationship, managing change and job expertise, and were assessed out of a total weighting of 100%. Those getting 70% and above were entitled to a quarterly bonus (see Appendix 2 for performance measurement forms). Interviewees claimed: These performance indicators were developed to make TFL employees more customer focused and quality driven. The performance indicators are seen as a means of motivating staff. The agreement with workers is there in terms of setting objectives. Union was also consulted in the process of target setting and they wanted the percentage to be around 70%. rather than 80-90% which the management was advocating. Another manager stated:
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On every quarter, assessment is done. Every individuals assessment is done. Percentage rating is done which measures the amount of bonus. If one doesnt meet the target of 70% or more in the first quarter, then they can catch up with the targets in second quarter and will be paid back bonus for the first quarter as well. The BSC encompassed an open system where the targets were agreed with ones supervisor which was then signed off. The managers actually worked out targets with subordinates. The subordinates have to meet the 70% BSC KPIS. According to a manager, the employees were given an opportunity to view the report and to respond as well. The employees may also request for specific knowledge and skills to be developed for the BSC exercise. The managers normally provide a short training program to improve ability of such employees. The training used to happen on a regular basis. Some staff in Finance division were encouraged to take Bachelors degree papers from the University of the South Pacific at their own expense. On passing the paper, the company used to reimburse employees the

appropriate tuition fees. Participation in the BSC process needs to include the staff who will be key users of performance measures (Lynch & Cross, 1991; Neely et al., 2001). At TFL, majority of measures were developed by employees.

Apart from the performance indicators, the financial ratios of liquidity, profitability and financial structure ratios became important for TFL management. TFLs balance sheet

showed strengthening results over the years, partly due to BSC, total quality management practices and other commercial goals. Return on assets, for example, averaged 12% from 2001 to 2006 while return on shareholders fund improved from 17.5% in 2000 to 39% in 2006 (ATH annual report, 2006).

According to an interviewee, once the key performance indicators (KPIs) were developed, which included customer consciousness as one of the five factors to be evaluated in terms of customer complaints, peoples attitude changed and they gradually began to accept business routines. The aim was to also reduce defects in the telephone lines. A manager commented: There is no doubt that quality has the strongest connection with customers. That s why we put the greatest emphasis on quality. Decrease defect rates and dont deliver defect services to our customers. These are the focal points in our continuous improvement activities.
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Also, to have resisted business practice change would have been unhelpful for employees career prospects. Those accepting business practices were rewarded in the form of quarterly bonuses which were not extended to those who opposed business practices. There were some employees who resisted the BSC. According to a manager the resistance came from old workers. He summarized the resistance as: Older horse possibly take longer to understand the new race course. Those who did not get bonuses were mainly people who received below 70% in their quarterly performance report. Chenhall (1997) points out that an important concern in the implementation of business practice such as Total Quality Management and its relevance to MACS is the extent to which such practices are developed together with a managerial performance evaluation system. It is argued that business practice is enhanced once

managers and employees are evaluated on the basis of non-financial measures such as customer satisfaction (Chenhall, 1997).

As a movement towards the BSC exercise, TFL management established in-house and external training programmes for all its employees which included commercial awareness courses. The following interview quotes illustrate this: We develop our staff. We send them for training and further studies at the University of the South Pacific, the Fiji Institute of Technology and the Training and Productivity Authority of Fiji. We gave our people a lot of in-house training including customer service training which is conducted by external consultants. This makes employees more sort of responsible in the manner they deal with customers. We also depend a lot on information systems that provide reports so that we can give quick answers to our customers. We have a number of people qualified in Masters degree. A number of people have BA Economics or BA Accounting or Management. People are still studying. We also sponsor people for Training and Productivity Authority of Fijis short-term courses. People also have opportunity to bring their new ideas to the company and we say to them okay this idea is fine as long as it is beneficial to the company. We have been training people a lot even by sending them on overseas trip for short courses.

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I previously have been to Japan, Australia and New Zealand Telecom and brought the ideas from there, blended and retuned it until it fitted into our system. Once it fits into our system, then it is okay.

An additional employee perspective was also common at TFL apart from the traditional four perspectives of BSC. Such attributes included professional attribute/ interpersonal relationships. Under the employee perspective, a technicians BSC would include ensuring repair works on all faulty products were carried out in accordance to manufacturing specification, ensuring health and safety procedures at workplace were carefully observed and to observe and adhere to service targets. Training and development needs were also identified for the incumbent by an assessing officer. Other employee attributes constitute team work, analytical skills, effective communication, self management amongst others. Through the BSC practices, individual performance is evaluated, based on routine tasks and current year work plans which were derived from the companys broader action plan and the operational KPIs, which were used for staff evaluation (see Appendix 2). The individual workers were assessed by their superiors on a quarterly basis and are allocated marks out of 100 on BSC achievement. A manager at a regional office in Nadi commented: BSC practice is measured on individual accountability. Individual workers are allocated marks out of 100 by their respective supervisors. Some of the key performance measures at the regional centres are: punctuality, maintaining error free work and disputes in terms of customer complaints. Through BSC we dont measure time, but performance. Previously in government days, people used to fill time by working from 8:00-4:30pm. Now they work beyond 4:30pm to ensure the assigned work is completed. One of the managers who was interviewed at lunch hour responded about his employees: Some of my people as you came down; you would have seen that they are still working at lunch time. Thats the change, the biggest change we have seen in our people. I dont care if you want to have two hours off to pay your bills and all that but end of the day I want the report whatever I wanted from them. How one utilises the time, it is upon them. But there is a strict target on your head. Everything is based on targets here. Everybody has been set against BSC like KPIS. Before there was no BSCs. We have set BSC targets, we give them time frame, and you must finish that kind of job. I need those reports because I have to make decisions based on their answers.
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An interviewee stated that amongst some of the common accountability areas in which people are evaluated are profitability and staff development. The staff development

encompasses expected versus actual performance in terms of training undertaken. As for customer perspective, the key accountability factor is the quality of service in terms of line repairs which, for residential customers, are as follows: 80% of customer line repairs to be done in 24 hours after receiving a complaint; 95% of customer line repairs are to be done in two working days after receiving a complaint; 100% of residential customers line repairs are to be done in five working days after the receipt of a complaint. For corporate customers, 80% of the line repairs were to be done within two hours of receiving complaints. According to an engineer, once a complaint (fault in line) is received, it was logged in the computerised Integrated Customer Management System and had to be cleared within a specified time limit. TFL managers and employees were result-oriented. The use of new BSC practices allowed employees to be rewarded for bonuses if they exceeded 70% in their quarterly BSC report. A Human Resource Manager commented: There are a number of rewards in the company. If one performs one gets a bonus. If the company performs better than budgeted amounts, you get extras, and also on top of that is the Cost of Living Adjustment rewards.

A Quality Manager commented: The BSC targets are within the reach of employees and encompass both financial and non-financial indicators and are a fair system. Some workers possibly did not consider BSC as a fair system as will be evidenced in the next sub-section. A manager stated that non-financial targets relate to customer queries. TFL has been instrumental in setting up customer contact centres in various urban centres in Fiji. Through this centres the companys management are readily able to capture customer complaints, number of telephone faults reported and so on. A senior manager commented: We give our own people a lot of customer service training courses in-house as well as externally such as attending customer service courses at the Training and Productivity Authority of Fiji. This makes employees sort of responsible in the manner they deal
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with customers. We depend a lot on information systems that provide reports so that we can give quick answers to our customers. Another manager commented: Customer is the source of revenue and so in order to maximise profit we need to keep them happy. An engineer stated: Customers are important for us. Before we used to call them subscribers to telephone but now we call them customers. Our focus has changed. We need to keep our customers happy to retain profit and earn bonuses. There is the view that non-financial performance measures of employees are better indicators of management effort (Ittner & Larcker, 1995, 1997; Banker, Potter & Srinivasan, 2000). Non-financial measures need to supplement financial measures to provide support for business practices (Hoque, 2003). The non-financial performance measures can provide feedback to decision makers on the outcomes of their efforts (Chenhall, 1997). The feedback from PMS provides information to enhance managers and employees to achieve performance goals.

Through the BSC of TFL participants, business practices became routinised within TFL. Employees were rewarded with bonuses on achievement of 70% and above on their quarterly BSC assessment. This bonus reward would be equivalent to a fortnights pay for an

employee. According to a manager, the BSC practices regime creates and demand systems of surveillance and trigger discipline amongst TFL employees. A manager claimed that the employees perform to achieve desired outcomes and receive a bonus, which is a motivational instrument. According to an interviewee, BSC practice is used as a form of discipline, a way of making TFL workers more efficient, focused and compliant. That is, they are institutionalised as part of shared norms of discipline and result-oriented. An interviewee claimed that self-interest by participants in the form of bonus payments motivates them to adapt to business practices. The next section examines the resistance by the employees about the possibilities of BSC.

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6.3 Reservations about the possibilities of BSC practice This section presents evidence from employees and managers to demonstrate how BSC practice was not working for some of them. While interviewees in the study believed

positive benefits would eventuate from a BSC, there were concerns about the best way to localize it. These concerns were acknowledged by a senior manager: My concern is accuracy of measures. Some measures are subjective which needs to be removed.

A manager commented that the BSC like PMS still had some bias due to Fijis communal nature of society which includes tribal loyalty and tribal rivalry. It is a challenge to keep quarterly bonus confidential due to the close relationship that employees have with one another in accordance to the Fijian culture. A manager sated: Sometimes people may say how come, for example, Timoci got the bonus while I didnt and I worked much harder than Timoci. These sorts of problems were ongoing at TFL. A senior manager proclaimed that they were attempting to make the system as transparent as possible and ensuring that the system was fair. He highlighted the problem as: In a work place there are people who feel that they have not been rewarded the way they expected of course. Last thing we can think of is two human beings are involved and the relationship may be affected. Then we are always requesting managers to be working on performance rather than looking at who the performer is.

A manager commented: Workers, in particular, the traditional ones are conservative and do not want changes. We still have some around. These workers feel that in terms of assessment if there is a payout, give everyone 2 to 3% irrespective of whether they perform or not. People say we all play for this team. If there is $1000 given to team, everyone should get a share of that. For example, with ten players, they should each get $100. But BSC looks at each player; this is where the difference is. Some people still argue that we all should get equal share rather than that being distributed inequitably. The above comments reflect Fijian societys communal relationship where they believe in sharing and caring. Kerekere system is pervasive whereby if a person seeks assistance in form of goods or money and the other person has it, then this cannot be denied. Denial may

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represent being unfijian and an insult to the culture. Kerekere demonstrates the generosity of Fijian culture.

A technician had some scepticism of the system. He commented that sometimes they had to go to the interior, several kilometres from the city on the gravel road, for maintenance purposes. It may take hours to reach there. The company does not take into consideration the travelling time. The worker responded: Roads in the interior areas are pretty bad gravel roads with lots of pot holes that are not so good for the vehicles. To reach area like Monosavu, it takes two hours from here (Tavua). The speed limit is 80km per hour. If someone is caught driving beyond that speed limit by the police, then they are fined and the driver has to pay the fine in quest for reaching the target and not the company, TFL. The company does not consider our grievances here. Another manager commented: There was some kind of resistance when PMS was initially implemented. PMS is all about information. When you got to understand the whole exercise, it works well. There was contention at the beginning that a lot of paper work is involved. In the initial stages people had to spend their weekends catching up with the paper work, The employees at the initial stage had to set goals for themselves and their subsequent accomplishment alongside their job description which meant that a lot of time had to be invested in that exercise. The assessing officer reviewed this and the goals may have to be subsequently revised or rewritten extensively. This was all happening around the

introduction of PMS. Over time it led to a standard bulky document of 8 pages which now have been reduced to 2 pages only, overcoming some of the resistance of the past. The managers expected resistance to BSC as it brought an increase in workload. The technicians claimed that there was a lot of administrative (paper) work after coming back from job sites.

A manager expressed some scepticism of the PMS as follows: There are some elements of subjectivity in the PMS. There is some victimisation as well. If one doesnt get along with their boss, then they may become victimised. Some rating is given by judgement. In Telecom, we know one another and some people are even related and thus the system can have biasness. While data manipulation may be an issue, the senior managers championing the BSC were also concerned about limitations of the existing management information system. Much of the information was not useful as a manager explained:
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A lot of time when we have data, we do not make best use of itthe data may be all over the place. The unintegrated and manually intensive nature of TFLs existing system was seen to be problematic. According to a manager, there was a lot of manual recording of data which possibly needed to be done electronically. As a non-human actor, the management

information system limited the possibilities of what the BSC might become. A manager proclaimed that BSC possibly shaped more cooperation, productivity and businesses. The BSC shaped actors to assimilate business practices. The next section brings the narrative together in relation to the theoretical framework and concludes the paper.

7. Discussion/Conclusion This paper presents some evidence on an aspect of the design of a strategic control at a micro level within TFL. The research aimed to illustrate how the BSC has been used by the company as a calculative tool to enrol employees on the path to commercial business practices as the organisation moved from corporatisation to privatisation. Institutional and practice theory have been utilised to inform the case study. BSC as a practice perspective is concerned with the relationship between what BSC promised to do and what BSC actually does (Vaivio, 1999). The BSC practically links performance measures with business strategy (Otley, 1999). Otley (1999) points out that traditional BSC did not emphasise BSCs link to reward structures and other perspectives such as employee perspective. Our paper attempts to address these issues.

BSC was used as a calculative tool to enrol actors into commercial business routines. Participation in the BSC process included the staff who were the key users of the performance measures developed. The study suggests insights into how BSC practices

became integrated with MACS. Practice theory emphasises the role of actors in drawing upon rules and routines of BSC practice. The CEO and senior managers were the

institutional entrepreneurs introducing BSC at TFL. The main institutional entrepreneur was the CEO. Our practice perspective emphasises the way in which BSC comes to be

constructed through the daily activities of individuals engaging with each other and interacting with management control system of BSC. The majority of measures were

developed by employees. Our paper made an effort to address the relationship between innovation and institutions (Burns & Scapens, 2000); Dillard et al., 2004). There have been
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scarcely any explicit efforts to draw upon practice and institutional theory to address how new practices such as BSC are created and enacted. While traditional BSC framework emphasised on the four perspectives of financial, customer, learning and growth and internal business, our study shows that an additional employee perspective is utilised by TFL.

Future research may like to expand on institutional theory and practice theory on other organisational case studies in other settings on BSC practices. Cultural practices and their implication on BSC practices in settings like Fiji may provide new insights so that possibly cultural dimensions may also need to be added to BSC dimension. Fijian society is more communal in nature; power distance is large and ahs a high uncertainty avoidance society. Kerekere (borrowings) is pervasive with no intention of returning what is borrowed showing the generosity of the culture. Such cultural attributes may make Fijian case studies somewhat unique. Our study shows that an additional perspective in BSC of employee perspective is widely utilised at TFL.

Our findings have both theoretical and practice implications. Different actors hold various interpretations of BSC; there are various translation of BSC which sustain the multiple possibilities informing the overall implementation process of BSC.

There are implications for practitioners as well. The study provides practitioners with an understanding of how the BSC functions. Managers need to be aware that a BSC emerges from a particular network that shapes its possibilities. As Sandhu et al. (2008) note that BSC does not exist as an independent and external object waiting to be implemented; rather it has to be translated locally. The practitioners or consultants may also need to be aware of cultural attributes of Fijian society in order to implement practice changes locally. Lack of sensitivity to local culture may shape resistance to organisational change practices such as BSC.

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Appendix 1 Figure 1 ATH Ownership Structure

Government of Fiji 34.6% Fiji National Provident Fund 58.2% Institutional & Individuals 7.2%

Amalgamated Telecom Holdings Ltd

ATH Technology Park Ltdproposed owner and operator of

Fiji Directories Limited (90%) Telecom Fiji Limited (100%) FINTEL (51%)

technology park (100%)

Trans Tel Ltd (100%)

Xceed Pasifica Limited (100%)

Internet Services Fiji Limited (100%)

Vodafone Fiji Limited (49% Vodafone Europe BV Holdings) (51%)

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Appendix 2

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Appendix 2: Performance Assessment Forms continued

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