Organisational change and the introduction of activity based costing in a UK clearing bank

This research examines the nature of the organisational change that has taken place in the UK Clearing banks over the last fifteen years. It draws from and informs organisational change processes to help understand the effects of environmental disturbance, that is, the changes in the regulatory framework. The effect of environmental disturbance is assessed in terms of the levels and impacts of the changes on values (culture), organisational structures, management, accounting and control systems. The key objective is to critically evaluate the role of a changing accounting system within the framework of organisational change in a UK Clearing Bank, acknowledging that accounting can play powerful roles in the processes of organisational change. This research locates the development and introduction of the new accounting system (ABC) in the context of organisational change and the changes that have taken place in both this single case study and in the wider organisational context of the financial services industry. Organisational change is considered on two levels: The first level looks at organisational change in relation to the Clearing banks in general. The changing nature of the banking organisation is depicted over three decades using Laughlin's (1991) model of organisational change. This research shows that the UK Clearing banks were ill-equipped to deal with the changes they faced in the 1970s, 1980s and 1990s. From the more general perspective, the thesis shows how the different levels of the banking organisation became out of balance and how in the 1980s and 1990s efforts were made to re-gain that balance. At the second level, attention is focused on the introduction of a new accounting system in one of the UK Clearing banks. The development and implementation of the ABC system is traced over a period of two years in relation to the specific organisational context. The research shows that the ABC system was both a response to, and, a facilitator of organisational change, helping ultimately to shift perceptions and understandings of the notion of cost, and create new visibilities in relation to cost in the Clearing department. Laughlin's (1991) model is used again to show how as a response to the kick, there were changes in the organisation structure and decision processes. The research traces the accounting system change, (as part of the change in the design archetype), detailing the organisational members' perceptions of the new accounting system, from its development through to its implementation. The research shows how the introduction of this new accounting system created change of a second order nature in the Clearing department. A 'middle range' thinking approach, (Laughlin 1995) has been adopted. Skeletal theoretical models were used in order to enhance understanding of the empirical data of the case study. In turn, the theoretical framework is extended and enhanced by the empirical situation in which it is applied.