Management Controls and Crisis: Evidence from the Banking Sector

Purpose: This paper investigates the use of management controls when environmental uncertainty and hostility increase abruptly. Specifically, it explores this in the context of the 2008 financial crisis in six banks located in two countries.
Design/methodology/approach: The paper is based on 26 qualitative interviews with selected managers employed by the six banks. Eight interview guides were developed based on the typology of controls in Malmi and Brown (2008). Respondents explained which changes in management controls occurred after the crisis.
Findings: Both organic and mechanistic management controls were mobilized at the same time to deal with the change. The use of controls played three main roles: (1) guide and control behavior, (2) change internal and external perceptions and (3) discharge accountability. Finally, control use during a crisis evolves as individual managers design and implement controls. There is no “grand design” rationally guiding the design of the overall system of controls.
Originality/value: The use of management controls in dealing with an increase in uncertainty and hostility cannot be labeled either organic or mechanistic, but will depend on the specific type of change in environmental characteristics. Management controls evolve by interaction with outside actors, as well as internal techniques.