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Alienation and accountancy
Accounting, Organizations and Society, Vol. 3, No. 2, 0 Pergamon Press Ltd, 1978. Printed in Great Britain
pp. 105-114.
0361-3682/78/0901-0105$02.00/O
ALIENATION AND ACCOUNTANCY*
ALBERT B. CHERNS Department
of Social Sciences,
University of Loughborough
Abstract Alienation is the product of social segmentation and stratification. Increasingly organizations by invading all spheres of life, even the most private, are the engines of alienation. We know how to design organizations which themselves will be less segmented, less stratified. But organization design is constrained by the requirements for measurement. These no longer, even if they ever did, truly reflect their value to society. Recognizing this, accountants are sponsoring new approaches which can however prove manipulative. Sociologists should join the debate.
The mechanisms which relate people to one another are the same as those which isolate them one from another. That which gives us identity is a process of categorization. Our membership of a category can only be defined in contrast to the categories to which we do not belong. There are, then, two sides to identity, that which confers belonging and that which emphasizes difference, uniqueness. The identity we receive which separates us from other categories of people alienates us from them, denying us a common fate with them; our identity is defined in relationship to others in a manner which restricts our sense of sharing with them a common humanity. The sharper our own identity, the narrower are the categories of others with whom we can fully share this sense. If loss of identity is alienation in one sense, the acquisition of identity is alienation in another - a discovery which has been described as the human predicament. It is not, however, my aim to develop this theme, what I wish to emphasize is that the nature of alienation is given by the social mechanisms and processes which confer identity - the processes of segmentation and stratification. The identity which is “given” may itself be alienating or partly so. The number given to a prisoner or a military conscript is a means of identification. The individuality it confers may be
cherished but the meaning of “a number” can be profoundly alienating; the symbolic meaning of a number is indeed used deliberately as a means of separating its owner from his cultural baggage; it is no accident that it simultaneously renders him accessible to accounting procedures - a thing to be reckoned rather than a person to be reckoned with. Marking of this kind, extending to physical mutilation of captives, prisoners or slaves is a practice extending far back into antiquity; tidy numbering is merely a function of bureaucratic sophistication. the vertical divisions and Segmentation, cleavages in a society, not only divides its members into clans or moieties or dialect speakers (urban as against rural dwellers) but also divides the person into roles. The more industrialized the society, the more segmented the roles, giving rise to what has been described as “segmental relationships” (Mitchell, 1966). The psychological and social alienation implied in segmental relationships or segmental encounters is both essential and the inevitable consequence of segmentation. Stratification is the other mechanism which generates alienation. In modern societies, class is the most obvious and pervasive form of stratification, however, age and sex - the dominant forms in pre-industrial society, are still important. Of course, the stratification based on the capitalist
*A paper prepared for the Ad-hoc Group on Alienation Theory and Research at the 9th World Congress of Sociology, Uppsala, Sweden, August 1978. 105
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of production is, in the Marxist formulation, one of the principal causes of alienation. A form of alienation generated within organizations by their structure is often described under or the the term “institutional alienation” alienation of institutional relationships: mode
“ . . the experience
of alienation in institutional and bureaucratized associations is inevitable. One is both personally, and, to a certain extent, socially disconnected from the gamut of complex motives, directives, purposes, procedures, and persons involved in large social organizations. This kind of alienation - based upon the structural complexity and size of the organization - is, however, only one aspect of such alienation. This basic and inevitable estrangement is either amplified or minimized by the degree to which the individual participates in and identifies (at a symbolic level) with the overall purposes, ethics, and norms of the larger organization. If one’s status and identification within the institution are agreeable, then the experience of both social and psychological alienation would be minimized. Conversely, if one’s status is felt to be insignificant, or if one is conflicted about the goals of the institution (or finds such goals meaningless), the sense of alienation will be high” (Johnson, 1973).
Institutional alienation is the product of operation within organizations of the same mechanisms we have described as operating in society as a whole - segmentation and stratification, the essential features of bureaucracy. Organizations are also the main vehicles of the processes of segmentation and stratification within society. We must recognize that organizations are progressively invading all sectors of life. Schools, clubs, societies, institutes, advisory bodies, commercial organizations, clinics, hospitals, media, and the entertainment industry cater for each need that can be discerned or can be induced. Regulatory bodies, government and local government agencies maintain the framework within which organizations operate, providing a structure within which the individual’s life space outside of the areas occupied by organizations appears progressively to shrink. The easiest, the safest, the most approved, the authorized way of satisfying needs, indulging enthusiasms, tackling problems and managing relationships is through the medium of organization. Organizations mediate our life chances. They are not only the mediators of social segmentation, they are also principle mediators of stratification whether of the primary kind such as age, or the secondary such as class. Organizations are the principal generators and distributors of status in society. So pervasive is the
effect of occupational position, rank and classification on social status that in sociological investigations we universally use with barely an apology “occupation” as the single criterion of social status and of social class. But it is not only work organization that distributes social status. An elaborate structure of leisure organizations, sporting clubs, social clubs, political associations, professional, cultural and scientific societies select for membership, elect to office and confer titles recognized outside their own boundaries and membership. Even the distinctions conferred by private and personal characteristics and achievements are mediated by organizations which arrogate to themselves their conferment. I say this with no sense of bitterness that I have not yet been awarded the title of Best Dressed Man of 197-. Thus we must look upon organizations as mediators of social stratification and segmentation, and the alienation consequent on their particularities. We can also regard organizations for this purpose as mini-societies. We shall find within their practices, the embodiment of the principles of stratification and segmentation that operate within the society of which they are a part. Additionally we shall find the value assumptions on the basis of which they are constructed and we can take these to be the defining values of their society. Organizations in our society are essentially constructed on the basis of two principles: specialization and hierarchy. Specialization goes far beyond the simple distribution of labour which is a structural principle of all social institutions everywhere at all times. Specialization is really of two kinds: (1) specialization which accompanies the requirement for esoteric skills and (2) specialization which results from the fragmentation of simpler skills. Of course they are related in that fragmentation of simpler skills may and does lead to requirements for esoteric ones to deal with its consequences. The fragmentation of simpler skills (which may require considerable knowledge and practice but are not conceptually or theoretically based) is associated with the developments of the factory system called “scientific management”. The motivation for this development was a curious mixture of idealism and exploitation. A strong belief in the efficacy of scientific methods (at a time when atomism was triumphant) encouraged a search for the basic elements of skill which could then be put together
ALIENATION
AND ACCOUNTANCY
in various and convenient ways. This approach was especially successful in introducing into factory working people with no experience or background in industry and no familiarity with the work disciplines of the factory; little education and often little familiarity with the language of the country to which they were recent migrants. However, the fragmentation of skill served another calculated purpose. Without craft skills the worker was dependent upon his employer and could be more easily controlled. Without a skill of transferable value he has less investment in any particular technology, or way of working and was less able to resist changes in technology or in method introduced by management.’ If all the fragmented activity was to be integrated an elaborate structure of control, inspection and co-ordination had to be erected. New skills of management were required and a new theory to underpin them. The theory and practice of bureaucracy with its principle of hierarchy developed bringing with it new forms of specialization. As technology developed, as new markets and with them new market competition arose, as the requirements of government expressed in legal regulation grew, so organizations needed in their management knowledge and understanding of technology, of finance, of marketing, of the law, of production control beyond that of the manager of production. The theory of line and staff, and the practice of specialized management fitted neatly with the two principles of specialization and hierarchy. The form of bureaucracy which thus emerged embodied and required a theory of man to explain, justify and support it. The basis of such a theory was ready to hand in the model of man used in economic theory and in the developing psychology of cognitive processes influenced by the theories of evolution which had overthrown the earlier associationism. Structural theories of intelligence readily supported assumptions that the bulk of men were doers, only the few naturally favoured being capable of planning and thinking. It is no difficult task to match the shape of the hierarchical pyramid of organizational control to the distribution of cognitive abilities within the population. The final apotheosis of this theoretical construct appeared as late as 1976 in the demonstration by Jaques that the seven levels of
’ See below for the consequence
in enabling
an exchange
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management typically found in large organizations exactly corresponded, and therefore were the expression of, seven distinct layers of ability to be found in the population! With this convenient theory of the distribution of cognitive abilities goes the appropriate theory of motives: the thesis of economic man. In terms of Parsons’ (1960) pattern variables, the industrial bureaucratic value system corresponds to those in the second column of Table 1. The ideal type of pre-industrial, agrarian, traditional society is recognizable in the first column. TABLE Column 1 traditional Affectivity Ascription Particularism Collectivism Diffuseness of role
1 Column 2 industrial Affective neutrality Achievement Universalism Individualism Role specificity
Neither of these value systems are necessarily held by all classes or segments of industrial society, nor are they typical of any existing society. But column 2 is instantly recognizable as what we have come to describe as the Protestant or Puritan Ethic. This Ethic whose weakening, indeed whose demise has been prematurely celebrated as an accompaniment to the birth pangs of “post industrial society”, does, in my view, constitute the theory of man upon the basis of which organizations - and especially bureaucratic organizations - have been constructed and on whose approximation to truth, or at least acceptability as truth, the effective functioning of such organizations rests. Further, I strongly maintain that these represent the value assumptions underlying the ways in which we have chosen to assess the performance of our organizations. The principles of scientific management match closely the Parsonian column 2, resting upon instrumentalism (affective neutrality), production incentives (individualism), fragmentation of labour (role specificity), hierarchy based on management capability with career open to the talents (achievement, universalism). These principles are naturally reflected in the measures we apply to
value to be assigned
to these skills.
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organizations and the measures they consequently apply to themselves. In the most obvious form, column 2 values which shall be called by their most neutral epithet “the work ethic” accept the validity of representing outcomes in exclusively financial terms. Money is the most perfect embodiment of the value of universalism; it is of no consequence whose it is: it has the same value. If achievement is to be the basis of social status, money is the handiest way of equating its different forms. Instrumentalism implies the subordination of all other forms of gratification to the neutral guarantee of gratification to come: “assets” which again can so handily be compared in money terms. I shall revert to this thesis, but before developing it more fully two further elements in the scientific management must be established bureaucratic - and the work ethic complex. One of the achievements of scientific management was the hardening of one of the lines of stratification within organizations and in society as a whole. By transferring skill from the worker to machines, scientific management placed all power within the hands of management, and transferred these skills into a physical asset. By vesting control in machines on the one hand and in impersonal bureaucratic rules on the other, it removed the man-to-man relationship of worker to manager. The consequences for alienation have been rehearsed often enough; what has escaped notice is that each turn of the screw of alienation has simultaneously strengthened the capacity to record and to measure. Human performance is so variable that the values of human output are inherently difficult to assess. It is therefore an enormous achievement when all skill has been vested in the machine. Control over pace has been vested in the transfer line and we have at last a universal measure of the man’s input - his attendance hours because time like the proverbial tide is the same for all men.
ACCOUNTING
AS REINFORCEMENT
Man models himself; he creates his own ideals and his own straitjacket. But it is only when he has fully indulged his mania for measurement that he can complete his own enslavement. I hope to justify this somewhat sybiZZicutterance, but shall first turn to a familiar aspect of the paradox of measurement: the more we know, the more we
are constrained. With the invention of money and its growth to a universal medium of exchange we acquired a universal basis of value comparison, of measurement. The more we could value in money terms, the more useful the measurement became and the stronger the motive to express all goods in money terms. But we always recognized that some things could not be brought into the cash nexus, love and loyalty and beauty and peace among them. But we have become cleverer and cleverer at putting a cash value even on these transcendental goods. And with such new aids as cost benefit analysis we can project on to the economic axis non economic goods. But sadly the more we bring in the less importance we assign to what we leave out; thus the harder we find it to assign a money value to a good, the less value we assign it. And maybe we should do the reverse - something without value may be valueless or invaluable. If we disvalue the invaluable, we complete our alienation. We may still pay lip service to what we cannot measure, but in practice we discount it. We could regard this as egregious but inconsequential were it not for the fact that we end by destroying it. Paradoxically, we do this by our commitment to ideals, the straitjacket effect of deliberate ideal seeking. The easiest illustration of this paradox is the familiar one of GNP. We are all familiar with the fatuities of this measure - if I clean your car and charge you and you clean mine and charge me (including VAT of course), we virtuously add to the GNP. But, if I clean mine and you yours we stultify economic growth. Digging holes and filling them again adds the GNP; weeding our garden does not - and so on and so on. All this would not matter if GNP were just a game played by mad economists in asylums. Unfortunately it’s growth is an ideal to which apparently sane administrators have committed themselves, and because they recognize the pit they are digging for themselves and us, they and we look hopefully to measures of quality of life. Even if they, and we are successful in finding acceptable measures, the problem will reappear - whatever we at any time cannot measure, we will disvalue. Measurement has its own logic and its own machinery. People have to be trained to make measurements, they acquire a vested interest in the form of measurement for which they have been trained. They research into its improvement; its development becomes a high science and an arcane art. Above all it becomes ethical. Because it can be misused it is protected
ALIENATION
AND ACCOUNTANCY
by law, policed by inspection, if not inspected by police. But what if we have all changed our minds about what the measurement is all about? Too late! We may have intended that our economic and accounting measures should represent the value of products and processes to society. The forces of production developed in one way and the science of measurement in another - may be the needs of society developed in a third way, but we do not need to argue that now. Though it may be in place to point out that we find ourselves obliged to produce and to try frantically to sell goods nobody wants in order that people may earn enough income and firms make enough profit to pay enough tax to build and run the schools and hospitals we seem to want. The result of the divergence of measurement from need, of what is measured and valued from what is not measured and disvalued has been not only to enthrone the heresy of scientific management as part of the natural order, but also to crown the structure of alienation (that only is valued which is taken away from us and sold in the market place). Measurement is also control. This is especially so the case in organizations, where the same type of distortion results (formerly described as the outcome of GNP worship). In hospitals, for example, bed occupancy was taken as the measure of efficiency which from the purely financial point of view it was (Cherns, 1970). The result was to penalize hospitals for promoting the rapid discharge of patients. Distortions of this kind can be comparatively easily rectified because we can oppose one measure with another, in this case, duration of patient stay. However, alternative measures are not always, perhaps not usually, available. Even in the case where the hospital is paid by the day by or on behalf of the patients, other measures of outcome exert little control. For the economist much of this is a question of “externalities” - the costs that are borne outside the system. It is not only externalities such as environmental pollution that have until recently been externalities to those who produce it (Cherns, I977), borne by the community as a whole. Work organizations have been able to regard the “pool of labour” as a “free” good from which they can draw when demand is high and into which they can discharge when demand slackens. The cost of maintaining the pool fell on the community. As the cost of employing labour was measured - wage costs - and the cost of
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maintaining the unemployed - welfare, was not, the organization would judge itself to be efficient and well run if it varied its work force in response to demand. Of course, if it had to pay for the pool, as is now the case where redundancy payments are high, a totally different strategy may become “efficient”; for example, it may make more sense to provide a mix of goods and services which eliminates seasonal variations in demand. All depends upon what is measured, and what is measured is what has to be paid for. Behind what is measured, lie certain forgotten assumptions: (1) that the bottom line is a measure of benefits to the organization; (2) that benefit to the organization is benefit to society (“what is good for General Motors is good for the United States”). Economic theory, or at any rate, economic convention, supports assumption (1) and accounting practice accepts both assumptions (1) and (2). Together they imply that the profit made by our organization represents a surplus of the value added to its products over the value of the resources used to provide that added value. No doubt, in an ideal world that would be so. Similarly, return on capital employed is treated as a valid measure of the organization’s contribution to society, as a comparative measure ofits custodianship of society’s resources - a measure of whether those resources could have been made better use of. Now we know that these assumptions are quite false but we try to behave as if they were true. We know that the money value of a product or a service is not a true representation of social preferences. We recognize this by making public provision for what we don’t trust the market to provide. By regulation we coerce market organizations. Sometimes this is done by creating scarcity or by selective pricing; sometimes a politically desired end is achieved by widening the basis on which organizations are obliged to make their calculations of profitability - far more effective than exhortation or appeal. As we have said, polluting technologies were profitable so long as firms could treat clean air and water as free goods; the costs were borne not by the firm but by the community. When these costs were shifted to the firms, polluting technologies were no longer profitable. As the costs rose to employers of compensation to employees for
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accidental injury, so did the attractiveness of safety precautions. In, for example, the U.K. and Sweden, legislation enforcing redundancy payments to dismissed workers has been shifting the cost of maintaining a pool of labour from the community onto the firms for whom it was formerly a free good. Similar results can accrue in IJSA. from union contracts. It is true that firms can often pass the burden of insecurity onto those which operate in the secondary labour market where unions are less active. But even this means a change in the practice of firms on the basis of a changed evaluation of what is and what is not profitable. Thus, we observe piecemeal reforms all directed towards correcting for the fact that the market system does not automatically change firms for all especially by way of that they consume, communal resources. In other words, firms can consume more resources than the added value they produce with them and make a profit by doing so. The reverse is presumably possible; for firms to make a loss while returning in added value more than they consume. For example, a firm which operates an excellent training scheme whose outputs are bought up by firms which provide us training is in this plight. And indeed in the U.K. a “levy and grant” system was legislated to ensure that this did not occur. The “profitability” of training was thus drastically altered - perhaps too drastically because much training probably has little real value (whatever that means). Now there is some evidence, none of it as yet unassailably strong, that bad jobs, poor quality of working life are a cost to the community. Suppose, then, that the cost to the community of deskilled, stressed and disaffected workers were borne by the firms which produce them, what would the bottom line say? We may never know because we seem to prefer to add gimcrack pieces of legislation to redoing our economic and accounting assumptions. We are more likely to legislate to ban job cycle times of less than some magic number of seconds or minutes, the main consequence of which would be to reinforce enormously the stop watch brigade and their significance in job design, than to tackle the question systematically. In fact, almost any legislation or regulation imaginable would tend to emphasize the individual job rather than to focus attention on more truly profitable ways of tapping human resources in getting society’s work done. Regulation would lock us into our present level of
knowledge. What we know is provisional and incompetent; if sealed into law it would hinder developments based on broader and deeper understanding. I shall return later to the problem of how we can possibly remove the distortions which flow from our present measures. I have not fully implicated our system of accounting to ourselves for our activities among the major sources of alienation. If we think of the growing bureaucratization of organizational life we probably think of it in terms of a casual model of this kind: (1) growing demands of and opportunities in environment +, (2) increasing size and complexity of organizations +, (3) more formal structure +, (4) more formal measurement. We probably incorporate a few feedback loops from (4) to (2) and (4) to (3). But there is a case to be made for a model of another kind: Requirements for formal measurement + more formal structure -+ increased size and complexity. Indeed, the measurement now required by law in some countries imposes a virtually statutory minimum of bureaucratic structure which effectively and quite rapidly is raising the threshold of size below which enterprises cease to be viable. These requirements are not confined to the books which have to be maintained for purposes of taxation (with the extra burdens imposed by VAT), but extend to the increasing requirements for personnel procedures. Meyer & Brown (1977) have discussed the “Process of Bureaucratization”, showing how in public agencies undertaking similar functions the size of their administration and their (consequent) total size has reflected the requirements in force at the time of their origins and subsequently. In short, there is a case to be made for saying that organizations are large because they are forced to be bureaucratically complex by external regulation. The more formal the personnel procedures, the more they reduce the worker, or the citizen, to what is put down on the stereotyped form, the more he is boxed into his separate categories or roles as consumer, producer etc. and the more he or she becomes a bundle of measured entitlements. Finally, measurement is both a feedback loop and a reinforcement. We adopt procedures, seek measures of our compliance. The measures become surrogate goods we can only attain through
ALIENATION
the procedures demonstrating indispensability.’
ACCOUNTANCY
their importance
AND ACCOUNTANCY
and
AND HUMAN RESOURCES
Accountants recognize that the ways in which organizations are measured and evaluated, and measure and evaluate themselves, are inadequate representations of the values of their transactions with the environment. Whether they ever approximated to a “true” accounting of the value of their contribution to welfare is arguable, but it is clear that they do not do so today even within the narrow limits within which we would seek to assess only their efficiency in utilizing social resources. In particular the unequal treatment in accounting of physical and human resources has led the profession to promote the concepts of “human resource accounting”, and more recently, the “social audit”. One of the basic problems which the proponents of human resource accounting face is the difficulty of persuading people to use unfamiliar information especially when it is incommensurable with the more familiar and when the more familiar is supported by regulation. Not surprisingly these new ideas have most appeal for those organizations which already appreciate the importance of their human resources and which pursue advanced personnel policies. Firms of accountants whose stock in trade is the knowledge and skill of their staff are themselves among the most obvious targets for the proponents of the new approach. And indeed accountants who would advocate their use in others while hesitating to apply them to themselves would merit the reproach of “physician heal thyself ‘. Another difficulty, in the long run the more serious, is the change that it requires in the model of the organization and its relationships with society. Acland (1976), Flamholtz (1976), Mirvis & Lawler (1977) have conducted experiments which show that under certain conditions organizations can handle human resource data for internal decision making; this still leaves a gap before external valuation can incorporate the use
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of such data although Acland (1976) shows that investment analysis can weigh human resource indicators. More fundamentally, Gambling (1976) gives an outline of the kind of model of the organization that would be needed to render human resource accounting usable at a more general level. Significantly the urge to develop such a model is the “practical demand” for a form of “stewardship accounting” in justification of personnel policy to outside bodies like the Race Relations Board, the Department of Employment and the TUC. Paradoxically, this very urge to the practical contributes to drawing the teeth of human resource accounting. Its use in legitimizing to the outside critic the present framework of accounting theory and practice undermines its revolutionary potential. At its most ineffectual it becomes cosmetic; at its worst, dangerously manipulative. Studies frequently adopt what can only be described as a manipulative view of “job satisfaction” as a resource with trading value. Hopwood (1976) pointed to this when he commented: “With accounting being seen as a social process through which society, or more accurately, powerful groups in society, articulate their views of the significant, just what is implied by accounting for the human resource? ... shouldn’t . . . we be more concerned with the development of resourceful humans than with the management of human resources? . . . Some critics . , . point to the contrast between ideological systems which focus on the investment component of the human being and those that focus on the human component of investment”. And even more “Are people a resource for the fundamentally, enterprise or is the enterprise a resource for people?” (Marques, 1976). Some of the fundamental questions are being asked, if not yet answered, not only within the accounting profession but within the human resource accounting movement itself. “. . _most on-going (human resource accounting) research implicitly presumes (classical capitalistic) objectives. Indeed it justified the term “human resource”. When Flamholtz studies the individual’s expected realizable value to a formal organization,
*An account of how measurement and accounting systems actually amplify instead of damping deviations is given by Ashton (1976). This helps to explain a strange paradox. If accountancy were really doing its job, the large unwieldly organization could not survive. But the distortion amplification mechanism together with the distortions to the market brought about by regulation deflect accounting from its true function. It then becomes a tool for the justification of sectional interest and a provider of information used as much for antisocial as for social behaviour.
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he implicitly introduces the notion of contibution to a strictly capitalist objective (Marques, 1976). Despite the potential of accounting developments the questions raised by Hopwood and Marques remain. As sociologists we could perhaps be doing more to help answer them or at least to offer help to determine whether they are meaningful questions.
CAN ORGANIZATIONS CONTRIBUTE TO REDUCING ALIENATION? If organizations have become the principal agents of social segmentation and stratification then they should represent strategic points of leverage for introducing change into these processes and their consequences for alienation. Firstly, with reference to the Parsonian pattern variables. The work ethic corresponds closely to a blueprint for alienation, and as I have shown the model of organization based on bureaucratic and scientific management principles fits this ethic very closely, lacking only a greater emphasis on entrepreneurship to make the fit perfect. In fact many organizations have diverged considerably from the model; indeed some of the distortions brought about by measurement have actually helped this process along, producing some of the cosy administrative feather-bedding which lie to the red-in-tooth-and-claw gives the commercial image. The cost savings of scientific management seldom take into account the cost of the time and motion study, the costs of the bureaucratic hamper that must be erected to put together the fragmented operations of the shop floor workers. They rarely include the costs of turnover and the accumulated costs of the repeated induction and even minimal training that are its consequence. This style of managing involves the hiring of new and expensive specialists
to meet each new turn of the environmental wheel. By focusing our measures on the short term and ignoring externalities we allow the accumulation of expensive overheads in the form of specialist departments and services located not only in the organization itself, but in its environment - in commercial services, community services and government. As organizations provide for what the individual is no longer in a position to provide for himself, so he is lulled into a cosy dependence. This cosiness is, however, the product of more not less segmentation and stratification; the individual may be less isolated but is more firmly held in the boxes provided by a benevolent organization and its network of supporting institutions. The growth of “services” and their increasing preponderance even within production organizations are a familiar feature of what has come to be called the Post Industrial Society. Fundamental to this concept is the belief in the decline of the work ethic. Much has been written on the theme of “post industrial society” and its values. Elsewhere (Cherns, 1977a), these values as a non-linear extension of the shift from traditional to industrial society have been traced. On this basis, we may insert a new column 3 in the previous table, see Table 2. The post industrial value pattern rejects the deferment of gratification and instrumentalism demanding the right to express individuality in every activity, to be oneself. Rather than emphasizing achievement as the basis of status, it both democratizes the concept of achievement, and rejects the legitimacy of status differentials the only status is that of human being. A bland universalism which outlaws discrimination emphasizing equality of opportunity is rejected as inadequate to right historic wrongs and particularism” is replaced by a “compensatory which aims at equality of outcomes.
TABLE Column 1 traditional
2
Column 2 industrial (work ethic)
Column 3 post-industrial
Affectivity Ascription
Affective neutrality Achievement
Particularism
Universalism
Self-expression (Equality of achievement) (Denial of status) Compensatory particularism
Collectivism Diffuseness of role
Individualism Role specificity
Neo-communitarianism Assertion of identity
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Neither old collectivism nor new individualism is favoured. In their place we see a reassertion of the primacy of community, but community with a difference; not the collectivity into which we have been born or assigned but the community we choose to belong to. Finally, the concept of role is rejected in favour of “identity” - a phenomenon with its counterpart in sociology itself. The Post Industrial values rejecting both stratification and segmentation except as matters of personal choice, and, breaking their links with life chances, insisting on personal identity as the basis of relationships can fairly be described as a non-alienating value system. To avoid misunderstanding I must stress that I am not claiming that Utopia has arrived or is on the point of arrival in the form of a “post industrial society” or in any other form. Nor am I claiming that the post industrial values are anywhere dominant; rather that they have made their bow especially among educated youth in Western societies in the late 1960s. I suspect we have by no means seen the last of them. Their impact has been felt very widely in organizations in the advanced industrial societies of the West whose response would have been even more obvious than it has been were it not for the ready availability of immigrant populations enthusiastically embracing the work ethic. Under the goad of the post industrial values and the occasional recognition of the shortcomings of the bureaucratic scientific management model in achieving adequate and timely responsiveness to environmental vicissitudes, a number of organizations in many countries have evolved new forms. In fact, we now know enough about these new forms to be able with some confidence to describe their design principles (Chems, 1976, 197713). These organizations embody a different set of assumptions about the nature of man from those of scientific management and a different theory of control from that of bureaucracy, thereby seeking to place all the necessary resources of information, material and authority in the hands of the workers - either in groups or as individuals - who have the responsibility for the task to be performed. While in most cases these organizations can acquit themselves creditably enough on existing measures, the latter do not include those on which their advantages would be most obvious. Consequently, diffusion is slow and the new forms insecure. On “human resource” measures their
advantages would be far clearer but for their full benefits to be apparent we shall need a more realistic basis for evaluating the exchange between the organization and society.
CONCLUSION Alienation in society is the product of segmentation and stratification. Organizations have become the principal agents of both. Incorporating the values of the “work ethic” and the principles of bureaucracy and scientific management, manufacture alienation. they Theories of the relationship of organizations to society based on the same values and principles of measurement based on the uniqueness of monetary exchange value reinforce and further distort by amplification these principles of organization. These macro and micro economic theories underpin both accounting practice and the regulations which constrain them. New forms of organization exist incorporating values closer to those described as post industrial. They are demonstrably less alienating but are shackled by accounting practice. Hastings (1968) described the divergence in the attitudes of accountants who identified themselves with the industrial and commercial firms for which they worked from those who sought their identity in their profession. It may be opportune to study and compare the basic assumptions about society and about organizations which are held by accountants in different employments including those who advocate HRA. Similar studies of industrial engineers and computer systems analysts (Taylor, 1976; Hedberg & Mumford, 1975) have helped to account for the nature of the organizations which they design. Accountants are also in systems design by designing the measures of which the systems are evaluated. Sociologists who are aware of and sensitive to these developments are I suspect inclined to regard them with reserve if not suspicion. They may be justified, but it is wise to recognize that organizations are strategic points of leverage, that accountants have longer levers than sociologists and that the debate within the accounting profession is at least worth watching and in my view worth joining. With or without us, accountants will form and bring to the argument a social perspective.
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BIBLIOGRAPHY Acland, D. The Effects of Behavioral Indicators on Investor Decisions, Accounting, Organizations and Society (1976), pp. 289-300. Ashton, R. H., Deviation: Amplifying Feedback and Unintended Consequences of Management Accounting Systems, Accounting, Organizations and Society (1976), pp. 289-300. in G. Duncan Mitchel (Ed.), Sociology: An Outline for the Cherns, A. B., PP. 133-142. Intending Student (London, RKP, 1970), p. 181. Cherns, A. B., The Principles of SociotechnicaI Design, Human Relations (1976), pp. 783-792. Cherns, A. B., Social Change and Social Values, Indian Journal of Social and Economic Studies (1977a), pp. 83-100. Cherns, A. B., Can Behavioral Science Help Design Organizations? Organizational Dynamics (Spring, 1977b), pp. 44-64. Flamholtz, E., The Impact of Human Resource Valuation on Management Decisions, Accounting, Organizations and Society (1976), pp. 153-165. Gambling, T., Systems Dynamics and Human Resource Accounting, Accounting, Organizations and Society (1976), pp. 167-174. Hastings, A., The Chartered Accountant in Industry, Ph.D. Thesis, University of Birmingham (October, 1968). Hedberg, Bo and Mumford, E., The Design of Computer Systems, in Enid Mumford and Harold Sackman, Human Choice and Computers (Amsterdam, North-Holland Publishing Co., 197% pp. 31-59. Hopwood, A. G., Human Resource Accounting, Accounting, Organizations and Society (1976), pp. 131-2. Jaques, E., A General Theory of Bureaucracy (London, Heinemann, 1976), chapters 9 and 10. Johnson, F., (Ed.), Alienation (New York, Seminar Press, 1973). Marques, E., Human Resource Accounting: Some Questions and Reflections, Accounting, Organizations and Society (1976), pp. 175-178. Meyer, MarshalI and Brown, M.C., The Process of Bureaucratization, American Journal of Sociology (September, 1977). Mirvis, P. H. & Lawler, E. C., Measuring the Financial Impact of Employee Attitudes, Journal of AppliedPsychology (February, 1977), pp. 1-8. Mitchell, J. C., Theoretical Orientation in African Urban Studies, in M. Banton (Ed.), The Sociul Anthropology of Complex Societies (London, Tavistock, 1966). Parsons, T., Structure and Process in Modern Societies (New York, Free Press, 1960). Taylor, J. C., A Report of Preliminary Findings from the 1976 Work Organizations Study Pilot Survey, Center for Quality of Working Life, University of California, 1976.
pp. 105-114.
0361-3682/78/0901-0105$02.00/O
ALIENATION AND ACCOUNTANCY*
ALBERT B. CHERNS Department
of Social Sciences,
University of Loughborough
Abstract Alienation is the product of social segmentation and stratification. Increasingly organizations by invading all spheres of life, even the most private, are the engines of alienation. We know how to design organizations which themselves will be less segmented, less stratified. But organization design is constrained by the requirements for measurement. These no longer, even if they ever did, truly reflect their value to society. Recognizing this, accountants are sponsoring new approaches which can however prove manipulative. Sociologists should join the debate.
The mechanisms which relate people to one another are the same as those which isolate them one from another. That which gives us identity is a process of categorization. Our membership of a category can only be defined in contrast to the categories to which we do not belong. There are, then, two sides to identity, that which confers belonging and that which emphasizes difference, uniqueness. The identity we receive which separates us from other categories of people alienates us from them, denying us a common fate with them; our identity is defined in relationship to others in a manner which restricts our sense of sharing with them a common humanity. The sharper our own identity, the narrower are the categories of others with whom we can fully share this sense. If loss of identity is alienation in one sense, the acquisition of identity is alienation in another - a discovery which has been described as the human predicament. It is not, however, my aim to develop this theme, what I wish to emphasize is that the nature of alienation is given by the social mechanisms and processes which confer identity - the processes of segmentation and stratification. The identity which is “given” may itself be alienating or partly so. The number given to a prisoner or a military conscript is a means of identification. The individuality it confers may be
cherished but the meaning of “a number” can be profoundly alienating; the symbolic meaning of a number is indeed used deliberately as a means of separating its owner from his cultural baggage; it is no accident that it simultaneously renders him accessible to accounting procedures - a thing to be reckoned rather than a person to be reckoned with. Marking of this kind, extending to physical mutilation of captives, prisoners or slaves is a practice extending far back into antiquity; tidy numbering is merely a function of bureaucratic sophistication. the vertical divisions and Segmentation, cleavages in a society, not only divides its members into clans or moieties or dialect speakers (urban as against rural dwellers) but also divides the person into roles. The more industrialized the society, the more segmented the roles, giving rise to what has been described as “segmental relationships” (Mitchell, 1966). The psychological and social alienation implied in segmental relationships or segmental encounters is both essential and the inevitable consequence of segmentation. Stratification is the other mechanism which generates alienation. In modern societies, class is the most obvious and pervasive form of stratification, however, age and sex - the dominant forms in pre-industrial society, are still important. Of course, the stratification based on the capitalist
*A paper prepared for the Ad-hoc Group on Alienation Theory and Research at the 9th World Congress of Sociology, Uppsala, Sweden, August 1978. 105
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of production is, in the Marxist formulation, one of the principal causes of alienation. A form of alienation generated within organizations by their structure is often described under or the the term “institutional alienation” alienation of institutional relationships: mode
“ . . the experience
of alienation in institutional and bureaucratized associations is inevitable. One is both personally, and, to a certain extent, socially disconnected from the gamut of complex motives, directives, purposes, procedures, and persons involved in large social organizations. This kind of alienation - based upon the structural complexity and size of the organization - is, however, only one aspect of such alienation. This basic and inevitable estrangement is either amplified or minimized by the degree to which the individual participates in and identifies (at a symbolic level) with the overall purposes, ethics, and norms of the larger organization. If one’s status and identification within the institution are agreeable, then the experience of both social and psychological alienation would be minimized. Conversely, if one’s status is felt to be insignificant, or if one is conflicted about the goals of the institution (or finds such goals meaningless), the sense of alienation will be high” (Johnson, 1973).
Institutional alienation is the product of operation within organizations of the same mechanisms we have described as operating in society as a whole - segmentation and stratification, the essential features of bureaucracy. Organizations are also the main vehicles of the processes of segmentation and stratification within society. We must recognize that organizations are progressively invading all sectors of life. Schools, clubs, societies, institutes, advisory bodies, commercial organizations, clinics, hospitals, media, and the entertainment industry cater for each need that can be discerned or can be induced. Regulatory bodies, government and local government agencies maintain the framework within which organizations operate, providing a structure within which the individual’s life space outside of the areas occupied by organizations appears progressively to shrink. The easiest, the safest, the most approved, the authorized way of satisfying needs, indulging enthusiasms, tackling problems and managing relationships is through the medium of organization. Organizations mediate our life chances. They are not only the mediators of social segmentation, they are also principle mediators of stratification whether of the primary kind such as age, or the secondary such as class. Organizations are the principal generators and distributors of status in society. So pervasive is the
effect of occupational position, rank and classification on social status that in sociological investigations we universally use with barely an apology “occupation” as the single criterion of social status and of social class. But it is not only work organization that distributes social status. An elaborate structure of leisure organizations, sporting clubs, social clubs, political associations, professional, cultural and scientific societies select for membership, elect to office and confer titles recognized outside their own boundaries and membership. Even the distinctions conferred by private and personal characteristics and achievements are mediated by organizations which arrogate to themselves their conferment. I say this with no sense of bitterness that I have not yet been awarded the title of Best Dressed Man of 197-. Thus we must look upon organizations as mediators of social stratification and segmentation, and the alienation consequent on their particularities. We can also regard organizations for this purpose as mini-societies. We shall find within their practices, the embodiment of the principles of stratification and segmentation that operate within the society of which they are a part. Additionally we shall find the value assumptions on the basis of which they are constructed and we can take these to be the defining values of their society. Organizations in our society are essentially constructed on the basis of two principles: specialization and hierarchy. Specialization goes far beyond the simple distribution of labour which is a structural principle of all social institutions everywhere at all times. Specialization is really of two kinds: (1) specialization which accompanies the requirement for esoteric skills and (2) specialization which results from the fragmentation of simpler skills. Of course they are related in that fragmentation of simpler skills may and does lead to requirements for esoteric ones to deal with its consequences. The fragmentation of simpler skills (which may require considerable knowledge and practice but are not conceptually or theoretically based) is associated with the developments of the factory system called “scientific management”. The motivation for this development was a curious mixture of idealism and exploitation. A strong belief in the efficacy of scientific methods (at a time when atomism was triumphant) encouraged a search for the basic elements of skill which could then be put together
ALIENATION
AND ACCOUNTANCY
in various and convenient ways. This approach was especially successful in introducing into factory working people with no experience or background in industry and no familiarity with the work disciplines of the factory; little education and often little familiarity with the language of the country to which they were recent migrants. However, the fragmentation of skill served another calculated purpose. Without craft skills the worker was dependent upon his employer and could be more easily controlled. Without a skill of transferable value he has less investment in any particular technology, or way of working and was less able to resist changes in technology or in method introduced by management.’ If all the fragmented activity was to be integrated an elaborate structure of control, inspection and co-ordination had to be erected. New skills of management were required and a new theory to underpin them. The theory and practice of bureaucracy with its principle of hierarchy developed bringing with it new forms of specialization. As technology developed, as new markets and with them new market competition arose, as the requirements of government expressed in legal regulation grew, so organizations needed in their management knowledge and understanding of technology, of finance, of marketing, of the law, of production control beyond that of the manager of production. The theory of line and staff, and the practice of specialized management fitted neatly with the two principles of specialization and hierarchy. The form of bureaucracy which thus emerged embodied and required a theory of man to explain, justify and support it. The basis of such a theory was ready to hand in the model of man used in economic theory and in the developing psychology of cognitive processes influenced by the theories of evolution which had overthrown the earlier associationism. Structural theories of intelligence readily supported assumptions that the bulk of men were doers, only the few naturally favoured being capable of planning and thinking. It is no difficult task to match the shape of the hierarchical pyramid of organizational control to the distribution of cognitive abilities within the population. The final apotheosis of this theoretical construct appeared as late as 1976 in the demonstration by Jaques that the seven levels of
’ See below for the consequence
in enabling
an exchange
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management typically found in large organizations exactly corresponded, and therefore were the expression of, seven distinct layers of ability to be found in the population! With this convenient theory of the distribution of cognitive abilities goes the appropriate theory of motives: the thesis of economic man. In terms of Parsons’ (1960) pattern variables, the industrial bureaucratic value system corresponds to those in the second column of Table 1. The ideal type of pre-industrial, agrarian, traditional society is recognizable in the first column. TABLE Column 1 traditional Affectivity Ascription Particularism Collectivism Diffuseness of role
1 Column 2 industrial Affective neutrality Achievement Universalism Individualism Role specificity
Neither of these value systems are necessarily held by all classes or segments of industrial society, nor are they typical of any existing society. But column 2 is instantly recognizable as what we have come to describe as the Protestant or Puritan Ethic. This Ethic whose weakening, indeed whose demise has been prematurely celebrated as an accompaniment to the birth pangs of “post industrial society”, does, in my view, constitute the theory of man upon the basis of which organizations - and especially bureaucratic organizations - have been constructed and on whose approximation to truth, or at least acceptability as truth, the effective functioning of such organizations rests. Further, I strongly maintain that these represent the value assumptions underlying the ways in which we have chosen to assess the performance of our organizations. The principles of scientific management match closely the Parsonian column 2, resting upon instrumentalism (affective neutrality), production incentives (individualism), fragmentation of labour (role specificity), hierarchy based on management capability with career open to the talents (achievement, universalism). These principles are naturally reflected in the measures we apply to
value to be assigned
to these skills.
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organizations and the measures they consequently apply to themselves. In the most obvious form, column 2 values which shall be called by their most neutral epithet “the work ethic” accept the validity of representing outcomes in exclusively financial terms. Money is the most perfect embodiment of the value of universalism; it is of no consequence whose it is: it has the same value. If achievement is to be the basis of social status, money is the handiest way of equating its different forms. Instrumentalism implies the subordination of all other forms of gratification to the neutral guarantee of gratification to come: “assets” which again can so handily be compared in money terms. I shall revert to this thesis, but before developing it more fully two further elements in the scientific management must be established bureaucratic - and the work ethic complex. One of the achievements of scientific management was the hardening of one of the lines of stratification within organizations and in society as a whole. By transferring skill from the worker to machines, scientific management placed all power within the hands of management, and transferred these skills into a physical asset. By vesting control in machines on the one hand and in impersonal bureaucratic rules on the other, it removed the man-to-man relationship of worker to manager. The consequences for alienation have been rehearsed often enough; what has escaped notice is that each turn of the screw of alienation has simultaneously strengthened the capacity to record and to measure. Human performance is so variable that the values of human output are inherently difficult to assess. It is therefore an enormous achievement when all skill has been vested in the machine. Control over pace has been vested in the transfer line and we have at last a universal measure of the man’s input - his attendance hours because time like the proverbial tide is the same for all men.
ACCOUNTING
AS REINFORCEMENT
Man models himself; he creates his own ideals and his own straitjacket. But it is only when he has fully indulged his mania for measurement that he can complete his own enslavement. I hope to justify this somewhat sybiZZicutterance, but shall first turn to a familiar aspect of the paradox of measurement: the more we know, the more we
are constrained. With the invention of money and its growth to a universal medium of exchange we acquired a universal basis of value comparison, of measurement. The more we could value in money terms, the more useful the measurement became and the stronger the motive to express all goods in money terms. But we always recognized that some things could not be brought into the cash nexus, love and loyalty and beauty and peace among them. But we have become cleverer and cleverer at putting a cash value even on these transcendental goods. And with such new aids as cost benefit analysis we can project on to the economic axis non economic goods. But sadly the more we bring in the less importance we assign to what we leave out; thus the harder we find it to assign a money value to a good, the less value we assign it. And maybe we should do the reverse - something without value may be valueless or invaluable. If we disvalue the invaluable, we complete our alienation. We may still pay lip service to what we cannot measure, but in practice we discount it. We could regard this as egregious but inconsequential were it not for the fact that we end by destroying it. Paradoxically, we do this by our commitment to ideals, the straitjacket effect of deliberate ideal seeking. The easiest illustration of this paradox is the familiar one of GNP. We are all familiar with the fatuities of this measure - if I clean your car and charge you and you clean mine and charge me (including VAT of course), we virtuously add to the GNP. But, if I clean mine and you yours we stultify economic growth. Digging holes and filling them again adds the GNP; weeding our garden does not - and so on and so on. All this would not matter if GNP were just a game played by mad economists in asylums. Unfortunately it’s growth is an ideal to which apparently sane administrators have committed themselves, and because they recognize the pit they are digging for themselves and us, they and we look hopefully to measures of quality of life. Even if they, and we are successful in finding acceptable measures, the problem will reappear - whatever we at any time cannot measure, we will disvalue. Measurement has its own logic and its own machinery. People have to be trained to make measurements, they acquire a vested interest in the form of measurement for which they have been trained. They research into its improvement; its development becomes a high science and an arcane art. Above all it becomes ethical. Because it can be misused it is protected
ALIENATION
AND ACCOUNTANCY
by law, policed by inspection, if not inspected by police. But what if we have all changed our minds about what the measurement is all about? Too late! We may have intended that our economic and accounting measures should represent the value of products and processes to society. The forces of production developed in one way and the science of measurement in another - may be the needs of society developed in a third way, but we do not need to argue that now. Though it may be in place to point out that we find ourselves obliged to produce and to try frantically to sell goods nobody wants in order that people may earn enough income and firms make enough profit to pay enough tax to build and run the schools and hospitals we seem to want. The result of the divergence of measurement from need, of what is measured and valued from what is not measured and disvalued has been not only to enthrone the heresy of scientific management as part of the natural order, but also to crown the structure of alienation (that only is valued which is taken away from us and sold in the market place). Measurement is also control. This is especially so the case in organizations, where the same type of distortion results (formerly described as the outcome of GNP worship). In hospitals, for example, bed occupancy was taken as the measure of efficiency which from the purely financial point of view it was (Cherns, 1970). The result was to penalize hospitals for promoting the rapid discharge of patients. Distortions of this kind can be comparatively easily rectified because we can oppose one measure with another, in this case, duration of patient stay. However, alternative measures are not always, perhaps not usually, available. Even in the case where the hospital is paid by the day by or on behalf of the patients, other measures of outcome exert little control. For the economist much of this is a question of “externalities” - the costs that are borne outside the system. It is not only externalities such as environmental pollution that have until recently been externalities to those who produce it (Cherns, I977), borne by the community as a whole. Work organizations have been able to regard the “pool of labour” as a “free” good from which they can draw when demand is high and into which they can discharge when demand slackens. The cost of maintaining the pool fell on the community. As the cost of employing labour was measured - wage costs - and the cost of
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maintaining the unemployed - welfare, was not, the organization would judge itself to be efficient and well run if it varied its work force in response to demand. Of course, if it had to pay for the pool, as is now the case where redundancy payments are high, a totally different strategy may become “efficient”; for example, it may make more sense to provide a mix of goods and services which eliminates seasonal variations in demand. All depends upon what is measured, and what is measured is what has to be paid for. Behind what is measured, lie certain forgotten assumptions: (1) that the bottom line is a measure of benefits to the organization; (2) that benefit to the organization is benefit to society (“what is good for General Motors is good for the United States”). Economic theory, or at any rate, economic convention, supports assumption (1) and accounting practice accepts both assumptions (1) and (2). Together they imply that the profit made by our organization represents a surplus of the value added to its products over the value of the resources used to provide that added value. No doubt, in an ideal world that would be so. Similarly, return on capital employed is treated as a valid measure of the organization’s contribution to society, as a comparative measure ofits custodianship of society’s resources - a measure of whether those resources could have been made better use of. Now we know that these assumptions are quite false but we try to behave as if they were true. We know that the money value of a product or a service is not a true representation of social preferences. We recognize this by making public provision for what we don’t trust the market to provide. By regulation we coerce market organizations. Sometimes this is done by creating scarcity or by selective pricing; sometimes a politically desired end is achieved by widening the basis on which organizations are obliged to make their calculations of profitability - far more effective than exhortation or appeal. As we have said, polluting technologies were profitable so long as firms could treat clean air and water as free goods; the costs were borne not by the firm but by the community. When these costs were shifted to the firms, polluting technologies were no longer profitable. As the costs rose to employers of compensation to employees for
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accidental injury, so did the attractiveness of safety precautions. In, for example, the U.K. and Sweden, legislation enforcing redundancy payments to dismissed workers has been shifting the cost of maintaining a pool of labour from the community onto the firms for whom it was formerly a free good. Similar results can accrue in IJSA. from union contracts. It is true that firms can often pass the burden of insecurity onto those which operate in the secondary labour market where unions are less active. But even this means a change in the practice of firms on the basis of a changed evaluation of what is and what is not profitable. Thus, we observe piecemeal reforms all directed towards correcting for the fact that the market system does not automatically change firms for all especially by way of that they consume, communal resources. In other words, firms can consume more resources than the added value they produce with them and make a profit by doing so. The reverse is presumably possible; for firms to make a loss while returning in added value more than they consume. For example, a firm which operates an excellent training scheme whose outputs are bought up by firms which provide us training is in this plight. And indeed in the U.K. a “levy and grant” system was legislated to ensure that this did not occur. The “profitability” of training was thus drastically altered - perhaps too drastically because much training probably has little real value (whatever that means). Now there is some evidence, none of it as yet unassailably strong, that bad jobs, poor quality of working life are a cost to the community. Suppose, then, that the cost to the community of deskilled, stressed and disaffected workers were borne by the firms which produce them, what would the bottom line say? We may never know because we seem to prefer to add gimcrack pieces of legislation to redoing our economic and accounting assumptions. We are more likely to legislate to ban job cycle times of less than some magic number of seconds or minutes, the main consequence of which would be to reinforce enormously the stop watch brigade and their significance in job design, than to tackle the question systematically. In fact, almost any legislation or regulation imaginable would tend to emphasize the individual job rather than to focus attention on more truly profitable ways of tapping human resources in getting society’s work done. Regulation would lock us into our present level of
knowledge. What we know is provisional and incompetent; if sealed into law it would hinder developments based on broader and deeper understanding. I shall return later to the problem of how we can possibly remove the distortions which flow from our present measures. I have not fully implicated our system of accounting to ourselves for our activities among the major sources of alienation. If we think of the growing bureaucratization of organizational life we probably think of it in terms of a casual model of this kind: (1) growing demands of and opportunities in environment +, (2) increasing size and complexity of organizations +, (3) more formal structure +, (4) more formal measurement. We probably incorporate a few feedback loops from (4) to (2) and (4) to (3). But there is a case to be made for a model of another kind: Requirements for formal measurement + more formal structure -+ increased size and complexity. Indeed, the measurement now required by law in some countries imposes a virtually statutory minimum of bureaucratic structure which effectively and quite rapidly is raising the threshold of size below which enterprises cease to be viable. These requirements are not confined to the books which have to be maintained for purposes of taxation (with the extra burdens imposed by VAT), but extend to the increasing requirements for personnel procedures. Meyer & Brown (1977) have discussed the “Process of Bureaucratization”, showing how in public agencies undertaking similar functions the size of their administration and their (consequent) total size has reflected the requirements in force at the time of their origins and subsequently. In short, there is a case to be made for saying that organizations are large because they are forced to be bureaucratically complex by external regulation. The more formal the personnel procedures, the more they reduce the worker, or the citizen, to what is put down on the stereotyped form, the more he is boxed into his separate categories or roles as consumer, producer etc. and the more he or she becomes a bundle of measured entitlements. Finally, measurement is both a feedback loop and a reinforcement. We adopt procedures, seek measures of our compliance. The measures become surrogate goods we can only attain through
ALIENATION
the procedures demonstrating indispensability.’
ACCOUNTANCY
their importance
AND ACCOUNTANCY
and
AND HUMAN RESOURCES
Accountants recognize that the ways in which organizations are measured and evaluated, and measure and evaluate themselves, are inadequate representations of the values of their transactions with the environment. Whether they ever approximated to a “true” accounting of the value of their contribution to welfare is arguable, but it is clear that they do not do so today even within the narrow limits within which we would seek to assess only their efficiency in utilizing social resources. In particular the unequal treatment in accounting of physical and human resources has led the profession to promote the concepts of “human resource accounting”, and more recently, the “social audit”. One of the basic problems which the proponents of human resource accounting face is the difficulty of persuading people to use unfamiliar information especially when it is incommensurable with the more familiar and when the more familiar is supported by regulation. Not surprisingly these new ideas have most appeal for those organizations which already appreciate the importance of their human resources and which pursue advanced personnel policies. Firms of accountants whose stock in trade is the knowledge and skill of their staff are themselves among the most obvious targets for the proponents of the new approach. And indeed accountants who would advocate their use in others while hesitating to apply them to themselves would merit the reproach of “physician heal thyself ‘. Another difficulty, in the long run the more serious, is the change that it requires in the model of the organization and its relationships with society. Acland (1976), Flamholtz (1976), Mirvis & Lawler (1977) have conducted experiments which show that under certain conditions organizations can handle human resource data for internal decision making; this still leaves a gap before external valuation can incorporate the use
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of such data although Acland (1976) shows that investment analysis can weigh human resource indicators. More fundamentally, Gambling (1976) gives an outline of the kind of model of the organization that would be needed to render human resource accounting usable at a more general level. Significantly the urge to develop such a model is the “practical demand” for a form of “stewardship accounting” in justification of personnel policy to outside bodies like the Race Relations Board, the Department of Employment and the TUC. Paradoxically, this very urge to the practical contributes to drawing the teeth of human resource accounting. Its use in legitimizing to the outside critic the present framework of accounting theory and practice undermines its revolutionary potential. At its most ineffectual it becomes cosmetic; at its worst, dangerously manipulative. Studies frequently adopt what can only be described as a manipulative view of “job satisfaction” as a resource with trading value. Hopwood (1976) pointed to this when he commented: “With accounting being seen as a social process through which society, or more accurately, powerful groups in society, articulate their views of the significant, just what is implied by accounting for the human resource? ... shouldn’t . . . we be more concerned with the development of resourceful humans than with the management of human resources? . . . Some critics . , . point to the contrast between ideological systems which focus on the investment component of the human being and those that focus on the human component of investment”. And even more “Are people a resource for the fundamentally, enterprise or is the enterprise a resource for people?” (Marques, 1976). Some of the fundamental questions are being asked, if not yet answered, not only within the accounting profession but within the human resource accounting movement itself. “. . _most on-going (human resource accounting) research implicitly presumes (classical capitalistic) objectives. Indeed it justified the term “human resource”. When Flamholtz studies the individual’s expected realizable value to a formal organization,
*An account of how measurement and accounting systems actually amplify instead of damping deviations is given by Ashton (1976). This helps to explain a strange paradox. If accountancy were really doing its job, the large unwieldly organization could not survive. But the distortion amplification mechanism together with the distortions to the market brought about by regulation deflect accounting from its true function. It then becomes a tool for the justification of sectional interest and a provider of information used as much for antisocial as for social behaviour.
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he implicitly introduces the notion of contibution to a strictly capitalist objective (Marques, 1976). Despite the potential of accounting developments the questions raised by Hopwood and Marques remain. As sociologists we could perhaps be doing more to help answer them or at least to offer help to determine whether they are meaningful questions.
CAN ORGANIZATIONS CONTRIBUTE TO REDUCING ALIENATION? If organizations have become the principal agents of social segmentation and stratification then they should represent strategic points of leverage for introducing change into these processes and their consequences for alienation. Firstly, with reference to the Parsonian pattern variables. The work ethic corresponds closely to a blueprint for alienation, and as I have shown the model of organization based on bureaucratic and scientific management principles fits this ethic very closely, lacking only a greater emphasis on entrepreneurship to make the fit perfect. In fact many organizations have diverged considerably from the model; indeed some of the distortions brought about by measurement have actually helped this process along, producing some of the cosy administrative feather-bedding which lie to the red-in-tooth-and-claw gives the commercial image. The cost savings of scientific management seldom take into account the cost of the time and motion study, the costs of the bureaucratic hamper that must be erected to put together the fragmented operations of the shop floor workers. They rarely include the costs of turnover and the accumulated costs of the repeated induction and even minimal training that are its consequence. This style of managing involves the hiring of new and expensive specialists
to meet each new turn of the environmental wheel. By focusing our measures on the short term and ignoring externalities we allow the accumulation of expensive overheads in the form of specialist departments and services located not only in the organization itself, but in its environment - in commercial services, community services and government. As organizations provide for what the individual is no longer in a position to provide for himself, so he is lulled into a cosy dependence. This cosiness is, however, the product of more not less segmentation and stratification; the individual may be less isolated but is more firmly held in the boxes provided by a benevolent organization and its network of supporting institutions. The growth of “services” and their increasing preponderance even within production organizations are a familiar feature of what has come to be called the Post Industrial Society. Fundamental to this concept is the belief in the decline of the work ethic. Much has been written on the theme of “post industrial society” and its values. Elsewhere (Cherns, 1977a), these values as a non-linear extension of the shift from traditional to industrial society have been traced. On this basis, we may insert a new column 3 in the previous table, see Table 2. The post industrial value pattern rejects the deferment of gratification and instrumentalism demanding the right to express individuality in every activity, to be oneself. Rather than emphasizing achievement as the basis of status, it both democratizes the concept of achievement, and rejects the legitimacy of status differentials the only status is that of human being. A bland universalism which outlaws discrimination emphasizing equality of opportunity is rejected as inadequate to right historic wrongs and particularism” is replaced by a “compensatory which aims at equality of outcomes.
TABLE Column 1 traditional
2
Column 2 industrial (work ethic)
Column 3 post-industrial
Affectivity Ascription
Affective neutrality Achievement
Particularism
Universalism
Self-expression (Equality of achievement) (Denial of status) Compensatory particularism
Collectivism Diffuseness of role
Individualism Role specificity
Neo-communitarianism Assertion of identity
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Neither old collectivism nor new individualism is favoured. In their place we see a reassertion of the primacy of community, but community with a difference; not the collectivity into which we have been born or assigned but the community we choose to belong to. Finally, the concept of role is rejected in favour of “identity” - a phenomenon with its counterpart in sociology itself. The Post Industrial values rejecting both stratification and segmentation except as matters of personal choice, and, breaking their links with life chances, insisting on personal identity as the basis of relationships can fairly be described as a non-alienating value system. To avoid misunderstanding I must stress that I am not claiming that Utopia has arrived or is on the point of arrival in the form of a “post industrial society” or in any other form. Nor am I claiming that the post industrial values are anywhere dominant; rather that they have made their bow especially among educated youth in Western societies in the late 1960s. I suspect we have by no means seen the last of them. Their impact has been felt very widely in organizations in the advanced industrial societies of the West whose response would have been even more obvious than it has been were it not for the ready availability of immigrant populations enthusiastically embracing the work ethic. Under the goad of the post industrial values and the occasional recognition of the shortcomings of the bureaucratic scientific management model in achieving adequate and timely responsiveness to environmental vicissitudes, a number of organizations in many countries have evolved new forms. In fact, we now know enough about these new forms to be able with some confidence to describe their design principles (Chems, 1976, 197713). These organizations embody a different set of assumptions about the nature of man from those of scientific management and a different theory of control from that of bureaucracy, thereby seeking to place all the necessary resources of information, material and authority in the hands of the workers - either in groups or as individuals - who have the responsibility for the task to be performed. While in most cases these organizations can acquit themselves creditably enough on existing measures, the latter do not include those on which their advantages would be most obvious. Consequently, diffusion is slow and the new forms insecure. On “human resource” measures their
advantages would be far clearer but for their full benefits to be apparent we shall need a more realistic basis for evaluating the exchange between the organization and society.
CONCLUSION Alienation in society is the product of segmentation and stratification. Organizations have become the principal agents of both. Incorporating the values of the “work ethic” and the principles of bureaucracy and scientific management, manufacture alienation. they Theories of the relationship of organizations to society based on the same values and principles of measurement based on the uniqueness of monetary exchange value reinforce and further distort by amplification these principles of organization. These macro and micro economic theories underpin both accounting practice and the regulations which constrain them. New forms of organization exist incorporating values closer to those described as post industrial. They are demonstrably less alienating but are shackled by accounting practice. Hastings (1968) described the divergence in the attitudes of accountants who identified themselves with the industrial and commercial firms for which they worked from those who sought their identity in their profession. It may be opportune to study and compare the basic assumptions about society and about organizations which are held by accountants in different employments including those who advocate HRA. Similar studies of industrial engineers and computer systems analysts (Taylor, 1976; Hedberg & Mumford, 1975) have helped to account for the nature of the organizations which they design. Accountants are also in systems design by designing the measures of which the systems are evaluated. Sociologists who are aware of and sensitive to these developments are I suspect inclined to regard them with reserve if not suspicion. They may be justified, but it is wise to recognize that organizations are strategic points of leverage, that accountants have longer levers than sociologists and that the debate within the accounting profession is at least worth watching and in my view worth joining. With or without us, accountants will form and bring to the argument a social perspective.
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B. CHERNS
BIBLIOGRAPHY Acland, D. The Effects of Behavioral Indicators on Investor Decisions, Accounting, Organizations and Society (1976), pp. 289-300. Ashton, R. H., Deviation: Amplifying Feedback and Unintended Consequences of Management Accounting Systems, Accounting, Organizations and Society (1976), pp. 289-300. in G. Duncan Mitchel (Ed.), Sociology: An Outline for the Cherns, A. B., PP. 133-142. Intending Student (London, RKP, 1970), p. 181. Cherns, A. B., The Principles of SociotechnicaI Design, Human Relations (1976), pp. 783-792. Cherns, A. B., Social Change and Social Values, Indian Journal of Social and Economic Studies (1977a), pp. 83-100. Cherns, A. B., Can Behavioral Science Help Design Organizations? Organizational Dynamics (Spring, 1977b), pp. 44-64. Flamholtz, E., The Impact of Human Resource Valuation on Management Decisions, Accounting, Organizations and Society (1976), pp. 153-165. Gambling, T., Systems Dynamics and Human Resource Accounting, Accounting, Organizations and Society (1976), pp. 167-174. Hastings, A., The Chartered Accountant in Industry, Ph.D. Thesis, University of Birmingham (October, 1968). Hedberg, Bo and Mumford, E., The Design of Computer Systems, in Enid Mumford and Harold Sackman, Human Choice and Computers (Amsterdam, North-Holland Publishing Co., 197% pp. 31-59. Hopwood, A. G., Human Resource Accounting, Accounting, Organizations and Society (1976), pp. 131-2. Jaques, E., A General Theory of Bureaucracy (London, Heinemann, 1976), chapters 9 and 10. Johnson, F., (Ed.), Alienation (New York, Seminar Press, 1973). Marques, E., Human Resource Accounting: Some Questions and Reflections, Accounting, Organizations and Society (1976), pp. 175-178. Meyer, MarshalI and Brown, M.C., The Process of Bureaucratization, American Journal of Sociology (September, 1977). Mirvis, P. H. & Lawler, E. C., Measuring the Financial Impact of Employee Attitudes, Journal of AppliedPsychology (February, 1977), pp. 1-8. Mitchell, J. C., Theoretical Orientation in African Urban Studies, in M. Banton (Ed.), The Sociul Anthropology of Complex Societies (London, Tavistock, 1966). Parsons, T., Structure and Process in Modern Societies (New York, Free Press, 1960). Taylor, J. C., A Report of Preliminary Findings from the 1976 Work Organizations Study Pilot Survey, Center for Quality of Working Life, University of California, 1976.