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A recent article by Kari Nyland et al. (2017) highlighted the importance of non-managerial (or informal) controls for ensuring continuity, cohesion and day-to-day ‘workability’ in a Norwegian hospital.

Budgets have over time become increasingly important in hospitals. Governments are the guardians of public monies and they demand as much cost efficiency as possible in public sector organisations.

The hospital case in Nyland et al. tells a story of how different budgeting practices utilised across the organisation bring operational (literally) challenges. For example, the orthopaedic department has a flex-budget, so the more operations it carries out the more funds it receives. However, the anaesthesia department, which is paramount for any operation to happen, is controlled on a fixed budget. This situation is a clash, the context of these two departments does not match, and ‘could’ create lots of tension and break down of what happens in practice.

Accounting practices, the formal management controls in particular departmental budgets, are the problem in this hospital. Different budget techniques within the same organisation threaten to compromise the number of orthopaedic-related operations undertaken.

However, informal, non-managerial controls save the day. Informal practices, built on cross-departmental cooperation, trust and strong day-to-day communication provide the foundation from which problems created by different budgeting practices are overcome.

The Nyland et al. (2017) article is an illustration of the importance of informal, non-managerial controls for facilitating complex day-to-day organisational practices.


Reference: K. Nyland, C. Morland and J. Burns (2017), the interplay of managerial and non-managerial controls, institutional work, and the coordination of laterally dependent hospital activities, Qualitative Research in Accounting and Management, 14(4), pp. 467-95.