Reviewed by Roxanne T. Johnson University of Baltimore
Philip Bougen has successfully described the complex interaction between an accounting system and the organizational components dependent on the information resulting from such a system. Bougen evaluates in exhaustive detail the interaction between an accounting system and the management and labor constituencies within the Hans Renold Company of Manchester, England, as reflected in a profit sharing plan. In the process, Bougen has constructed a complex picture of the interaction between company management, employee populations and the accounting numbers that were used to tie the two constituent groups together.
In the course of his research, Bougen wanted to consider:
(i) some of the factors which led to the emergence of accounting in the structure and practices of industrial relations in one particular company over a substantial period of time.
(ii) the roles accounting numbers and systems were called upon to play in the conduct of industrial reactions.
(iii) the consequences of the interweaving of accounting and industrial relations [p. 1].
Bougen’s study explores these three themes by analyzing the complex environmental and institutional circumstances within which the Hans Renold Company attempted to introduce the profit sharing plan. Thus, he evaluates events internal to the firm within the context of the economic and societal conditions affecting the country as a whole. In the process, he accomplishes his goals and objectives quite effectively.
In Chapter Two, Bougen traces the general history of the company, and introduced the primary participants in the profit sharing scheme. The founder of the firm, Hans Renold, believed firmly in the advantages of accounting information, and had introduced cost accounting techniques early in the firm’s existence. He and his son, C. G., managing director from 1919, also espoused scientific management techniques. Bougen describes the elder Renold’s management style as a combination of “autocracy, paternalism and a search for organizational efficiency” [p. 13], techniques adopted by his son as well. These factors were extremely important in the relationship between management and labor that evolved while the profit sharing plan was in operation. The plan was introduced in 1920 as a response to a complex set of management concerns with respect to the employee population. Bougen traces the development, growth and denouement of the plan over the following ten-year period.
Chapters Three through Six track in detail the evolution of the plan using as a primary source the minutes of the Profit Sharing Committee composed of employee and management representatives. Of particular interest in these chapters is the interaction between management and labor during discussions in the Committee concerning the accounting numbers presented as part of the profit sharing scheme. Foremost in these discus-sions was the continued effort on the part of management to “educate” the employees using accounting information. Not only did management want to garner labor support for their decisions using accounting information, but the accounting in-formation was also used to encourage employees to increase efficiency and productive output. This effort to imply a “coop-erative venture between Labor and Capital” [p. 101] was not successful. It rapidly became evident that the profit sharing scheme maintained the status quo between management and labor. The scheme was devised, introduced and maintained by firm management. Although masquerading as a cooperative effort, labor was still excluded from company decision making despite opportunities to comment on and question the account-ing information presented to justify the profit sharing or, as was more frequently the case, the lack thereof. Over time, the num-bers lost credibility with the employee representatives as the perception of management prerogative regarding company per-formance, profit sharing distributions and the accounting infor-mation presented as justification grew. Management concerns were also growing “in that an exercise which was designed to promote mutual trust and agreement in the conduct of industrial relations, could have the very opposite effect” [p. 185].
Chapter Seven details the efforts to alter the scheme and make it more acceptable to all concerned. In an effort to circumvent labor’s increasing interest in company decision making, less accounting information was made available to the Profit Sharing Committee and fewer and fewer committee meetings were called. Even though the accounting information was withheld, however, employee representatives still questioned managerial prerogatives and actions. The questioning may have disturbed management, but it did not interfere with the maintenance of the managerial prerogative. This is evident in the decision to merge with a competitor, a decision which excluded the employee population although of significant importance to the profit sharing scheme. At the end of this period, the scheme was terminated. This sketch of the events, concerns and changing attitudes of participants in this scheme cannot possibly impart the rich texture of this research. The interaction between company management and employees generated by the extensive use of accounting information in a situation of extreme interest to both parties cannot be minimized. Bougen has written an extremely well researched, documented and interpreted volume which transcends the mere chronicling of events. In the process, he has most effectively explored the three themes he identified at the outset.
The only slight drawback to this work occurs in the writing style of the author. In many cases, he has incorporated three or four different ideas into one sentence when three or four separate sentences would serve the reader more favorably. This is not a fatal flaw by any means and certainly does not diminish the value of the work. Further, additional editorial review would have identified the typographical and grammatical errors which again are not fatal flaws but unfortunately detract from the undeniable value of the research.
