Økonomisk styring via klyngeledelse – og dilemmaet

Diana W R Jensen

Student thesis: Master executive thesis


In Copenhagen Municipality the year 2011 saw a new way of structuring the daycare institutions (for children aged 0-13 years). Several institutions were merged into one institution called a “cluster.” At the same time the budgeting was reformed into a more transparent system. This meant, first, one layer of leaders were removed, at a new came, called “clusterleader.” Secondly that there were substantial cutbacks in the institutions budget. The thesis concentrates on how the clusters are managed by budgetting from different levels of the hierarchy using Zimmermans theory as the anchorpoint. He says that budgets are a three-legged stool that should 1. show decision rights, 2. establish a system to measure and control performance, and 3. have a system that rewards or punishes performance. His argument is that agents will manipulate the system if they can as all human are optimize for their own good, and since there is asymmetrical knowledge in an organization, this is possible. So the contents of the three-legged stool should take this into account to secure the correct behavior which is to optimize the organizations goals and not one own goals. Therefore an organization must also consider the split between decision management and decision control as well as try to avoid distortion, and it must create incentives. This thesis is centered around the clusterleader; how she deals with the budget she is given to the cluster by the municipality, and then how she from this creates a budget for the individual institutions. Also the thesis shows how there is a possibility for manipulation in the budgeting system in regard to goaldistortion. In Copenhagen Municipality the budget given to the clusterleader is done according to theory, and there are constraints in regard to decision control as there are different kinds of divisions within the municipality, that has the decision rights of several areas e.g. in regard to taking more children into the cluster. This can only be done in agreement with a Capacity Office. This could potentially be ground for manipulation as each child means an amount of resources, and then the clusterleader would perform over standard in regard to meeting her budget. This could be important for her reward as an organizational goal is keeping within the budget. So the organization has measure to avoid this manipulation Another goal is focus on the core service of the institutions: quality in the pedagogy. As this is hard to measure there is an opportunity to distort this goal by employing more un-educated than educated, as this would optimize the spending, but it does not necessarily mean a high quality. In this regard the clusterleader has the decision control, and she could distort her performance as the performance and controlling system only measures financial parameters. This does not seem to happen according to the interviews this thesis is based on with two clusterleaders. In this respect there seems to be a professional wish to secure the best for the children as a constraint. As the clusterleader is managed by a budgeting system, she has to use this to make sure the individual leader at the institutions also respect the financial constraint. This she does typically by giving only a small portion of the budget for their decision control where as they have a decision management over the rest of the leadership at the institution – but if this involves further resources the decision control lies with the clusterleader. Thereby it seems there is very little opportunity for manipulation or distortion. Neither of the two clusterleaders have thought much of reward and punishment, both in regard to their own and in regard to how to reward or punish their institution leaders. Both the budget design from the municipality and the clusterleaders budget design toward the institution leader seem to disregard extrinsic motivation and to favor intrinsic motivation. The thesis proves this to be a good strategy because it is very cost-efficient for the organization and because both goals are achieved without extensive extrinsic incentives. The goals are achieved not by using financial measure but by using professional narratives about the good service to the children; the core service. This puts the clusterleaders in a dilemma, as they are managed by financial parameters but must lead by professional parameters, which is a clash of two paradigms that are incompatible, and which puts the clusterleaders in an intolerable situation with much frustration following. So the conclusion is, that the budget design has some effects which are first, that it achieve the goals it has set for the out-put, and secondly that it is only possible to reach these goals because the clusterleader lead by narratives.

EducationsMaster of Public Governance, (Executive Master Programme) Final Thesis
Publication date2012
Number of pages57