1/2015

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Danish Journal of Management & Business

Vol. 79, no. 1, May 2015 Formerly published as Ledelse & Erhvervsøkonomi

1/2015

Editorial

Passing through organizational death Women in top management positions – why so few? And does it matter?

A survey of recent empirical results for Danish companies

Prioritisation of marketing investments in different types of marketing functions Sourcing excellence: A strategic framework of understanding Editors’ Corner

Danish Journal ofManagement & BusinessDjøf Publishing 137 GothersgadeDK-1123 Copenhagen Danish Journal of Management & Business1/20

Djøf

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3 Editorial

Per Nikolaj Bukh

9 Passing through organizational death

Anna Gerstrøm

27 Women in top management positions – why so few? And does it matter?

A survey of recent empirical results for Danish companies

Nina Smith and Valdemar Smith

45 Prioritisation of marketing investments in different types of marketing functions

Anne Martensen and Jan Mouritsen

71 Sourcing excellence: A strategic framework of understanding

Michael Klausen, Ole Stegmann Mikkelsen & Morten Munkgaard Møller

95 Editors’ Corner

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Editorial

Per Nikolaj Bukh

Only few companies, or organisations in general, exist forever, and all organisations undergo changes of various kinds throughout their existence. Some changes take place incrementally and some can be very radical; common to most changes is that they confront individuals and demand personal transition. A sudden merger and the announcement that key employees will have to compete for senior posts in the new organisations will, for instance, raise many questions in the minds of those affected about what the future will bring. This is but one example of how change poses serious challenges to the individual’s assumption worlds (cf. Parkes, 1971).

The most radical organisational change is probably when the organisation ceases to exist without much notice in a sudden bankruptcy. The suppositions about the organisational world, that a definite work world can be severely disrupted and that the collective world can be destabilised and collapse, is fundamentally upset. This is theme of Anna Gestrøm’s (2015) study in the first article in this issue: »Passing through organisational death: How Organizational members narrate the fall and rise of their work world.«

Fortunately, when organisations, die people do not die with them. Instead, they move on to find new organisational life. In Gerstrøm’s (2015) study, the question of how workers undergoing death understand this phenomenon is answered through an inductive case study based on narrative interviews with organisational members of a bankrupted bank. The analysis shows how members understand the bankruptcy as a series of events and phases that compose a story of a fall and a rise of their entire work world. Based on Sutton’s (1987) model of how dying organisations transit to death through a sequence of events, the article illustrates how workers pass through these events and phases.

The analysis gives us rare and welcome insight into what goes on among the employees in an organisation that is dying and it offers insight into the reactions of employees confronted with radical changes challenging their world assumptions. Although many changes are less radical, outliers on the continuum pose possibilities for learn- ing also how more incremental change processes might be experiences by employees.

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Danish Journal of Management & Business nr. 1 | 2015

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The next article, »Women in top management positions – why so few? And does it matter?« (Smith & Smith, 2015), is written by Nina Smith and Valdemar Smith. The article surveys recent research and discusses why it may not be easy to change the patterns and behaviour of firms with respect to having women in top management positions as well as in terms of the career choices of men and women and whether gender diversity matters for a firm’s performance. A majority of graduates from Dan- ish universities are women; and since the 1970s, most women who left the educational system have been full-time members of the labour force. Nevertheless, Danish women seldom reach top executive positions and boards of directors. The underrepresenta- tion of women in top management positions in Denmark like in most other countries has fuelled a heated political debate about the existence of apparent barriers for women, consequences of having women in top management positions, and political measures to increase female board representation.

In the article Smith & Smith (2015) first describe the present position of Danish women in top management positions in private sector companies and compare Dan- ish figures with international figures. Secondly, theories and empirical findings with respect to why there are so few women in top positions are discussed. Further, the article presents an overview of international and Danish policy regulations concerning gender diversity in private sector companies. The authors discuss whether these policy instruments, quotas or family friendly initiatives, etc., are optimal and condu- cive to getting more women into top management positions.

In the third article, »Prioritisation of marketing investments in different types of marketing functions« (Martensen & Mouritsen 2015) the authors, Anne Martensen and Jan Mouritsen, explore the roles of the marketing function and study how the roles may be used to divide marketing functions into types depending on how they work. Mar- keting’s role has received attention in the academic literature and the popular press;

and the general conclusion has been that the marketing function is losing its influence in many organisations and that most marketers are being engaged in more tactical de- cisions like advertising, sales support and public relations (Verhoef & Leeflang, 2009).

To gain influence, the marketing function should add value; and, consequently, on the basis of an empirical study among 395 marketing managers, Martensen & Mourtisen examine how different marketing functions add value to their companies through different marketing roles. The study identifies four types of marketing functions based on the efforts they dedicate to seven generic marketing roles. The four types of marketing functions all directly influence the company’s results, but there is considerable variation in the composition of the roles within each type of marketing function, their use and their impact on the company’s results. The findings of the article imply that there is a need for prioritisation of the marketing roles with a view to maximise the

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Editorial – Performance Management

marketing function’s impact on the company’s results, but also to decide if the marketing function would benefit from shifting between different types of marketing functions by prioritising some roles differently.

With the fourth article, »Sourcing excellence: A strategic framework of understanding« (Klausen et al., 2015), we change focus from marketing to the other end of the supply chain, i.e. sourcing, but the focus on the role of how the sourcing function creates value is the same. Danish industry is facing many challenges in these years.

The increasing globalisation and the trend towards outsourcing gradually increase the importance of the supply chain, and it is important to explore sourcing activities thor- oughly to determine what it means to be competent or even excellent at sourcing.

The article, which is written by Michael Klausen, Ole Stegmann Mikkelsen and Morten Munkgaard Møller, examines what it means to be competent or even excellent at sourcing. Based on a study of five Danish industrial companies, the authors identify a number of elements that need to be considered to fully understand what sourcing excellence is. Klausen et al. (2015) group the elements into four aspects: The client aspect, the organisational aspect, the provider aspect and the industry aspect; and the results demonstrate that sourcing is a cross-organisational discipline and that there are many challenges associated with the organisation of the procurement function under the organisational aspect.

Finally, the »Editors Corner« (Bukh et al. 2015) in this issue asks why Big Data and the consequent analytics revolution in management has not changed managerial practise.

We suggest, that universities should take a responsibility in bridging the gap between promising ideas and practice by translating research based findings into practitioners’ language. Thus, we hope to see more research being submitted to DJMB showing innovative uses of data.

References

Bukh, P.N., K.K. Klausen, D. Minbeava & N.P. Mols. 2015. Big Data: It takes two to tango. Danish Journal of Management and Business 79(1).

Gerstrøm, A. 2015. Passing Through Organizational Death: How Organizational members narrate the fall and rise of their work world. Danish Journal of Management and Business 79(1).

Klausen, M., O.S. Mikkelsen & M.M. Møller. 2015. Sourcing excellence: A strategic framework of understanding. Danish Journal of Management and Business 79(1).

Martensen, A. & J. Mouritsen. 2015. Prioritisation of marketing investments in different types of marketing functions. Danish Journal of Management and Business 79(1).

Parkes, C.M. 1971. Psycho-social transitions: A field for study. Social Science and Medicine 5(2):101-115.

Smith, N. & V. Smith. 2015.Women in top management positions – why so few? And does it matter? A survey of the recent empirical results for Danish companies. Danish Journal of Management and Business 79(1).

Sutton, R.I. 1987. The process of organizational death: Disbanding and reconnecting. Administrative Science Quarterly 32(4):542-569.

Verhoef, P.V. & P.S.H. Leeflang. 2009. Understanding the marketing department’s influence within the firm.

Journal of Marketing 73(3):14-37.

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The Danish Journal of

Management and Business

The editorial board of the Danish Journal of Management and Business has gone through a few recent changes. In 2014 the board was supplemented with professor Dana Minbaeva from Department of Strategic Management and Globalization at Co- penhagen Business School and professor Niels Peter Mols from Department of Eco- nomics and Business at Aarhus University. Further, from this issue the Journals Editor- in-Chief, professor Flemming Poulfelt from Department of Management, Politics and Philosophy at Copenhagen Business School, will be stepping down from the editorial board and Per Nikolaj Bukh from Aalborg University will take over as Editor-in-Chief.

On behalf of the Editorial Board and the publisher we will take this opportunity to thank Flemming Poulfelt for his effort in many years. Especially since 2003 where Flemming took over as Editor-in-Chief after professor Axel Schultz-Nielsen. Flemming joined the Editorial Board back in 1998 and has been a driving force ever since. Not least because due to his involvement in the Danish Academy of Management.

Originally the journal was published in Danish as Erhvervsøkonomisk Tidsskrift (i.e.

Journal of Managerial Economics). Later, in 1987 the name was changed to Ledelse &

Erhvervsøkonomi (i.e. Management and Managerial Economics) and finally in 2014 the journal was transformed into the current English language journal. This transition has very much been Flemmings achievement and we will be missing him at the Editorial Board.

The new editorial board

Dana Minbaeva: Her research interests concentrates on strategic international human resource management, HR’s role in global strategy making and implementation, and knowledge sharing and transfer in multinational corporations. She received her Ph.D from CBS in 2004 and has been a faculty member there since 2006. Her research has appeared in international journals as Journal of International Business Studies, Journal of Management Studies, Human Resource Management, and many others. Dana is an Associate Editor of Human Resource Management and on Editorial Boards of Journal of World Busi- ness, Human Resource Management Journal and Journal of Organizational Effectiveness, People and Performance. She received several national and international awards for the excep-

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tional research efforts, including the prestigious JIBS Decade Award 2013. Dana was appointed to Editorial Board in 2014.

Niels Peter Mols: His main research interests are theories of the firm, marketing channels, e-business, sourcing, and business- to-business relationships. He has been professor in marketing and strategy at Aarhus University since 2001 where he received his Ph.d. in 1995. Niels Peter has been a visiting scholar at University of Upp- sala and Centre d’Èconomie de la Sorbonne. His research has appeared in journals such as Industrial Marketing Management, Journal of Marketing Channels, Journal of Purchasing and Supply Management and many others. At Aarhus University he is affiliated with The Tuborg Research Centre for Globalisation and Firms. He has previously served as director of studies for the cand.oecon program at Aarhus University.

Niels Peter was appointed to Editorial Board in 2014.

Kurt Klaudi Klausen: His research interests focus on public sector reforms, organisa- tion and management, including strategic management. Empirically he has focussed on regional and local government studies. Kurt received his Ph.D. from the Copenha- gen Business School in 1990 and has been with the Department of Political Science and Public Management at the University of Southern Denmark since 1989. In 1996 he was appointed as professor in political science and public management. Further, he has previously served as both head of department and director of studies for the Flexible Master of Public Management and the Master of Public Management at the University of Southern Denmark. Kurt has been at the Editorial Board since 2006.

Per Nikolaj Bukh: His research interest includes budgeting, intellectual capital report- ing, benchmarking and the design of incentive based management control systems and performance based budgeting models. He received his Ph.D. from Aarhus Uni- versity in 1995 and was in 2000 appointed as professor at Aarhus School of Business.

Since 2006 he has been professor of management accounting and control at Depart- ment of Business and Management at Aalborg University. Per Nikolaj has authored or edited more than 20 books and published numerous papers, including 50 articles in peer-reviewed journals. Further he has consulted on the design of performance management systems for a large number of private and public sector firms. Per Nikolaj has been at the Editorial Board since 2012.

Per Nikolaj Bukh Kurt Klaudi Klausen

Dana Minbaeva Niels Peter Mols

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Passing through

organizational death

How organizational members narrate the fall and rise of their work world

Anna Gerstrøm, ph.d., Forskning/Formidling/Facilitiering, Aarhus

Abstract

While organizational death is a natural part of organizational life, the global financial crisis has brought this phenomenon even more front and center. Fortunately, when organizations die people do not die with them. Instead, they move on to find new organizational life. In this study, the question of how workers undergoing death understand this phenomenon is answered through an inductive case study based on narrative interviews with 20 members of a bankrupted bank. The explorative analysis shows that members understand the issue as a series of events and phases that compose a story of a fall and a rise of their entire work world. The findings are theorized in a model illustrating how workers pass through these events and phases. The study matters for the few theorists researching the neglected but increasingly relevant phenomenon of organizational death and for the many practitioners struggling with the fatal but increasingly normal issue of bankruptcy.

Introduction

The Danish banking sector is under restructure: the number of banks is declining and many observers find that the instability of the financial markets will endure and that reductions in the number of Danish banks will continue. The aim of the study presented in this paper is to understand such issues of bankruptcy from the perspective of the people who undergo them.

The paper is based on a single case study of a bankrupted bank where members of this case are asked to narrate how they experience the bankruptcy. To guide the analysis I draw on the relevant but limited literature on organizational death introduced by Sutton in 1987. Initially Sutton developed a model illustrating how dying organizations transit to death through a sequence of events that its members go through as they perceive their organization first as permanent, then as temporary, and finally as defunct. Since Sutton’s work, organizational death has been used as a label to describe a variety of terms including bankruptcy (Hamilton, 2006), failure, decline (Shepherd,

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2009), closure (Wigblad & Lewer, 2007), downsizing and mergers and acquisitions (Bell & Scott, 2011).

Although research on organizational death has increased since Sutton’s preliminary theory, knowledge on the death process from the perspective of the people who undergo it is scant. Little interpretive research on organizational death exists. Moreover, studies of the death often end with the termination of the organization. Fortunately, however, when organizations die, people do not die with them. Members of dead organizations live on and find new organizational life in other work settings. In fact, researchers have found that several years after an organization has died, it is still very much alive (Walsh & Glynn, 2008: 262). Such »afterlife« (Walsh & Bartunek, 2009) is not unusual – but it is understudied. Although knowledge exists on the beginning of the death process; how members move from a permanent entity to a defunct entity (Sutton, 1987), little is known about the subsequent ‘resurrection’ process; how members transit from a defunct entity to another permanent entity.

Knowledge on how the entire transition process is understood by the people who undergo it is important if we want to support the increasing number of people struggling with such transitions. With this study I aim to close the gap of knowledge on this area. Therefore, the research question of the study is how the phenomenon of organizational death is understood by the people who undergo it. The study contributes to theory by showing how bankruptcy is understood as a series of events that members go through as they struggle to survive and pass through organizational death. Showing how bankruptcy is narrated as a story with a beginning in a normal world and an end in a normalized world, the study contributes with a framework that integrates separate literatures on first step theories to organizational death; from a permanent entity to a defunct entity (Sutton, 1987), and second step theories to organizational (after)life; from a defunct entity to a living organization (Walsh & Glynn, 2008; Walsh & Bartunek, 2012).

In the next section, I elaborate on the limited but relevant literature capable of inform- ing the study. After a brief discussion of this literature, section three gives a short presentation of the methodological considerations behind the study including a case presentation and an explorative analysis. The fourth section outlines the findings of the analysis and summarizes them in a theoretical framework. At the end of the paper, theoretical contributions and practical implications are explicated and avenues for further research are mentioned.

Understanding organizational death

The study is based on the interpretive (Burrell & Morgan, 1979) assumption that organizational life (Weick, 1995) including death and resurrection is socially constructed

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Passing through organizational death

(Berger, Luckman, 1968) by the people working in the organization. Therefore, the answer to the research question lies in the eyes of the organizational members.

While acknowledging the multiplicity of interpretations in and of organizations (Mar- tin, 2002; Meyerson & Martin, 1987), this study focuses on common realities (Isabella, 1990) as it aims to explore how a collective understanding of the death phenomenon is shared among and across the organization’s members.

Moreover, the study embarks on the concept of a »work-world« or a »world of work«

which is one segment or sub-universe out of several that the lifeworld of modern people is divided into as pointed out by Luckman in 1978 (Czarniawska, 2012).

When an organization goes bankrupt, the organizational assumptions; suppositions about the organizational world, that guide the provinces of meaning defining the work world can be severely disrupted and the collective world can be destabilized or even collapse. Such an inference is supported by Bridges (1986) who argues that »destruction«

and »the end of the world« are common metaphors describing transitions like organizational death: transitions from a permanent organization to a defunct organization (Sut- ton 1987) – from life to death. According to Bridges (1986: 28), such transitions often include meaninglessness: »Things don’t make sense any more — or they make only some terrible and inadmissable kind of sense…« Therefore, members of a bankrupted organization can be expected to lose sense and struggle to regain it. Such loss of sense is only one out of several extensive losses that members undergoing organizational death are experiencing (Shepherd, 2009). According to Walsh and Glynn (2008), organizational death is one of the most extreme instances of collective loss in organizational life. The consequential disbanding and reconnecting processes (Sutton, 1987) are often associated with negative emotions that may reduce members’ ability to re-establish the taken for granted assumptions (Shepherd, 2003) values and norms (Cunningham, 1997) that have been disrupted. According to Bell and Taylor (2011), traditional research claim that the mourning period will end when the mourner reaches the conclusion that the lost object of attachment no longer exists. Organizational sense breaking from past forms can facilitate such acceptance (Walsh & Glynn, 2008). Following these lines, members can be expected to understand bankruptcy by breaking and making sense of the dis- rupting issue. Such sense work can be facilitated by collective narration of a story that can account for the origins and impact of the phenomenon (Plowman & Beck, 2009) and facilitate an understanding of it. Such stories are crucial for sensemaking (Weick, 1995):

for members’ understanding of organizational life and death.

Based on this review, organizational members can be expected to understand organizational death through narration: through a story in which their constructions of the organization change from permanent to defunct while their negative emotions associ-

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ated with their loss hinder re-construction of their disrupted assumptions until they accept their loss through sense braking and making facilitating transition to a new work world.

Although such hints to how organizational death is understood can be found in extant literature, no theory exists that clearly outlines how the people undergoing organizational death narrate and make sense of their experiences. This study is designed to elevate such an understanding. The methodological considerations behind this design are specified in the next section.

Methodology

As little knowledge exists on the phenomenon of organizational death from the point of view of the people who undergo it, the methodological design of the study is explorative.

In order to develop an in-depth understanding of how organizational death is con- strued by the members undergoing it, the analysis is based on a single case study presented in the next section.

Case

The case organization is a bank founded in the late 1800s in a remote part of Den- mark. The foundation was a result of a commitment to serve the local community. The organizational members and most of the bank’s customers lived in or near the local community which was greatly sponsored by the bank. The bank, perceived as being solid and robust, had managed without any severe problems or failures throughout its nearly 150 years of existence.

Despite the bank’s long and successful history, the global financial crisis took a hard toll, especially concerning the negative influence it had on the bank’s exposure in the real estate market. Half a year after a national newspaper pointed this weakness out, the manager of private business customers was dismissed, followed by the director of the bank a few months later. Then, a couple of weeks later, the bank declared bankruptcy and was taken over by Finansiel Stabilitet, a governmental bank liquidation company established in response to the financial crisis.

Approximately one month after the bankruptcy, the bank and its members were divided into two groups: a healthy part and an unhealthy part. The members belonging to the unhealthy part were offered temporary positions with Finansiel Stabilitet re- sponsible for liquidating the unhealthy part of the bank while the members belonging to the healthy part were offered positions with the regional and slightly larger bank which acquired the healthy part of the bank and took over its premises and customers.

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At the time of data collection, no one in the unhealthy group worked for Finansiel Sta- bilitet, but half of those in the healthy group continued to work for the acquiring bank serving the same customers in the same buildings in the same community.

This case presentation is primarily based on the data outlined in the following section.

Interviews

Following the study’s phenomenological approach (Arbnor & Bjerke, 2009; Burrell &

Morgan, 1979; Guba, 1990), the answer to the research question lies in the eyes of the organizational inhabitants. Therefore, the study is based on interviews with these members. To gain an in-depth understanding of the phenomenon from their point of view, the case study is based on qualitative interviews (Kvale, 2008). As organizational life (and death) is only understood in hindsight, the interviews are retrospective (Czar- niawska, 2012; Weick, 1995; 2009). They have a narrative nature as narrative accounts can yield rich information on the way issues like organizational death are understood, comprehended and made sense of (Arbnor & Bjerke, 2009; Weick, 1995). Organiza- tional members were therefore encouraged to retrospectively reconstruct the bankruptcy in their own ways two years after it unfolded.

Saturation (Glaser & Strauss, 2008; Kvale, 2008) was reached after interviews with 20 members. The interviewees worked within different functional areas and represented all hierarchical levels within the organization – from (10) front line employees, to (4) managers, to the (1) director and the (4) board members including the (1) head of the board. Both men and women were interviewed and tenure ranged from less than 1 year to more than 40 years. Half of the interviewees were members of the healthy and acquired part of the bank and half of the interviewees were members of the unhealthy and liquidated part of the bank.

When allowed all interviews were recorded, transcribed and coded following an inductive coding process: all codes emerged out of the data and no codes were pre- determined. In accordance with the aim of exploring the phenomenon as part of the organization’s dominant reality, the coding was designed to elicit common constructions: to tease out a collective interpretative pattern of the bankruptcy – shared across the organizational members. This does not mean that there were no variations in members’ narratives: rather it means that such variation was not the primary focus of this study. This preliminary coding was the starting point of the analytical process elaborated upon in the next section.

Analysis

In the analysis of members’ understandings of their organization’s death, I explored their reconstructions of the bankruptcy and found that members narrated their expe-

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riences as a transitionary story with a beginning and an end (Weick, 1995). In recre- ating the bankruptcy, members referred to a set of events and phases that created a chronology that allowed for a story (Czarniawska, 1998; 2012; Weick, 1995) in which members anchored their understanding of the bankruptcy.

The events were labeled »key events« according to the premise that events are significant if they are significant to the subjects undergoing (Van de Ven & Poole, 2005) and narrating (Czarniawska, 1998; 2012) them. As I explored these events in more detail I found that each event was associated with a meaning. These events including their inherent meanings are summarized in table 1.

Table 1. PASSING THROUGH ORGANIZATIONAL DEATH: EVENTS

1 2 3 4 5

Event

The bank’s exposure is addressed in the

media

The bank’s director is dismissed

The bank is declared bankrupt

The healthy part of the bank is acquired

The unhealthy part of the bank is relocated

Quote

»[Media] they don’t talk about anything else but America about to go bankrupt

– and now they believe it’ll spread to Denmark. ‘Argh!’

we said and … laughed.«

»I was informed that the director was dismissed – and I thought: ‘Then it’s over.’ Because I knew that then we

wouldn’t survive as an independent financial institution.«

»Worlds have crackled … It suddenly looks completely different – the work

day and the safety net you believed you

had. Suddenly, it is completely gone.«

»Somebody wanted us … It was a relief

… There was light at the end of the

tunnel.«

»It was not before they were out of the house that we could allow ourselves to be happy … It was such a relief! … The sky

became a little bit more clear.«

Meaning

Pre Alarm

Post Alarm

Collapse of old world

Emergence of new world

Settlement of new world

The chronology of the events create an underlying process of lived experience that is punctuated (Weick, 1995) into phases by the events. As I explored these phases in more detail I found that in members’ narrations each phase was associated with a challenge and a solution. These phases including their inherent challenges and solutions are summarized in table 2.

Thus, analyzing members’ narrations of the bankruptcy, I found that their reconstructions were anchored in a story with a set of events and phases.

In the next section, I outline the analysis of each of these phases and events and present the findings of the study.¹

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Findings

The following section is divided into the phases and events that constitute members’

narration of the bankruptcy. To begin and end the story, the beginning section (living a normal world) describes the situation prior to the first event and the ending section (normalizing a new world) describes the situation after the last event.

Beginning: Living a normal world

Prior to the pre-alarming media coverage, members were parts of an organizational world where things were positive and everyday life evolved as expected. The bank was perceived »a story of success« and being a member of the bank was like being a

»part of a success.« In sum, organizational life prior to the first event was described Table 2. PASSING THROUGH ORGANIZATIONAL DEATH: PHASES

1 2 3 4

Phase

from popular organization to unpopular organization

from revered director to discredited director

from troubled organization to dead organization

from inside colleagues to outside strangers

Quote

»As we didn’t believe it and as our director also explained that everything was okay and under control … the art became to convince customers that it

was all just a persecution from the media against

the bank.«

»At this point, my great illusion about

the bank and my illusion about what my

director represented, and our entire story of success fall apart.

I can feel: now, it falls apart.«

»For a long time, I choose not to see radio or television. It was just

agony … Even though you had been down here [in the bank] all day and been in the wildest reality

– it was very different seeing it on television… It was that un- reality: when it appeared right into

your face in the evening – it just became so real.«

»You were happy but it wasn’t a useable happiness … We saw how sad they were … If there was something that we were

really happy about we couldn’t make ourselves

say it. So we were restrained in that duvet longer than necessary.«

Challenge

Preserve old world

Realize change in old world

Accept termination of old world

Escape old world

Quote

»The [specific threats] are mentioned at the morning meeting and you get an

answer … ‘There’s so much coverage and there

are no problems …’ We defended ourselves tooth and nail – from what we

were told.«

»Fine – the director is gone … There’ll be a solution to this. There has to be a solution.

We’re not going to collapse completely.’

… We still hoped that we could continue as an independent bank

in some way.«

»I was surprised to see – it sounds completely crazy- that life goes on: that everything looked normal.

I wondered – because there was complete chaos in our lives – that

everything on the streets looked completely normal … I just scanned the whole square and I just thought … Wauw …! There’s

life – and things are happening and there’s normal life! When I thought everything was dead – it wasn’t. So that was a huge relief.«

»We became able to say:

It’s the middle managers in general. Off course, we could understand that now, we become part of a larger organization so they

don’t need them.«

Solution

Defend Whole

Maintain Parts

Appreciate endurance

Justify Transition

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as »positive« and »perfect«: as »a world of success« where »everything was possible«

and critical »questions« where seldom asked.

Event 1: Pre alarm

Untroubled life in a successful organization continues until it is interrupted by a national newspaper addressing a set of banks, including the specific bank, for being negatively exposed to the effects of the global financial crisis on the national real estate market. Members describe how the media coverage »wasn’t taken serious« and how everybody believed that »there was nothing to worry about«. The picture drawn in the newspaper is perceived far from reality. As table 1 summarizes, the first event is interpreted as an alarming bell that rings without members hearing it: the world picture proposed by the media does not resemble – but actually contradicts – members’ definition of their organizational world, and the alarm is neglected. Therefore, the immediate media coverage is theorized as a pre-alarming event.

Phase 1: From popular organization to unpopular organization

The negative media coverage persists and the situation intensifies. Members recall how they find themselves on a path leaving a popular bank on a »bed of roses« and approaching an unpopular bank struggling in »head wind«. The media coverage chal- lenged the »positive« and »perfect« work world picture in which the organization was one of the most successful local banks in the country. Members’ subsequent reaction to the threat was a construction of a picture in which the media had begun a persecution against the bank: »In principle, it’s only a financial crisis on the paper – or in the press. Actually, it’s a press persecution. Because nothing has happened.« Members reach for past experiences to guide their present action, and as their past is »a positive story of success« it supports their trust in their director who assures them that

»everything’s alright«. Summarized in table 2, the task of preserving the old world is solved by continiously defending the bank against the media accusions to convince doubtful stakeholders that the old world as they know it is still valid and that the picture drawn by the media is an unlikely and improbable senario.

Event 2: Post alarm

The downplaying of the pre alarming event continues until the members are informed that the director of the bank is dismissed. Table 1 illustrates how members’ interpretation of the event is that a disaster has happened and that it is too late to do anything to prevent its fatal consequences from unfolding: »I was informed that the director was dismissed – and I thought: ‘Then it’s over.’« The dismissal was a shock. The period up until the dismissal had been worrisome but few had imagined that the situation would turn out this way. Summarized in table 1, the second event is interpreted as an alarming bell that rings too late: the old world picture where the director is a revered leader is teared apart. Therefore, the dismissal is theorized as a post-alarming event.

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Phase 2: From revered director to discredited director

In the phase following the dismissal, members find themselves on a path leaving a bank with a respected and revered director and approaching a bank with a discredited and abandoned director: »This great, nice and kind [man]… he was a king of the city…

He was the defender and the one who always stood and led the way… and continually said: ‘You just take it easy – everything is under control.’ Suddenly, he was just gone.«

The drive that had moved members forward in a period characterized by doubts and skepticism fade away and a culmination of beliefs sparks in: beliefs about the bank and its successful history, about the director and the truth of his words, about the members’ own career and the professional identity associated with the status of their job transform into illusions. The challenge becomes acceptance of the inevitable change in the old work world. In this »weird period« in »no man’s land« where there is no leader to provide meaning and direction, members recall how »it’s everyday this huge insecurity… We’re like in a sleeping dream – just waiting for what’s going to hap- pen.« As they struggle to make sense and answer questions like »What’s going on?, What have we gotten ourselves into?« and »How do we get through this?, What does it mean?«, members begin to build a new definition of the situation: »We had a lot of hope – because we thought: ‘They would queue to acquire this bank.’« Hope for the future enables members to draw a picture in which the bank is acquired and the customers’ savings are not lost: it’s a different future – but a manageable future. As table 2 summarizes, the second phase is characterized by members realizing that their old world will not endure: as they come to accept it has changed, they struggle to define a new situation in which parts of it can persist.

Event 3: Collapse of old world

Members’ construction of a situation where the bank pertains in some form continues until they are informed of the bankruptcy. »The day we were told, it came as a very big shock.« Members’ worlds are torn apart and the magnitude of the disaster seems fatal: »it couldn’t get any worse«. Members describe how the »safety net you believed you had is completely gone« and how their »worlds have crackled«, »fallen apart« and

»collapsed«. Summarized in table 1, the bankruptcy is theorized as a collapse of an old work world.

Phase 3: From troubled organization to dead organization

In this phase, members find themselves on a road that leaves a troubled but alive organization and approaches a dead organization. The picture of the bank as a dead organization seem so distant from members’ perceptions of the bank that their immediate reaction is denial. Members describe the situation as »unreal« and compare it to »a distant movie« or »a nightmare«. »It was terrible! … We didn’t know at all what was really happening… It can’t be true!« Their denial offers a way out of the unbear- able state. This way, however, is short-termed and the denial is difficult to sustain as

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stakeholders continue to claim the opposite. In short, members struggle to handle the challenge of accepting the termination of their previous work world. Identifying and appreciating positive elements that endure and survive the work world collapse helps.

Among other things, these elements are social relations with family, friends, customers and members of the community. Table 2 summarizes how members, in the third phase, face the cognitive challenge of accepting the bankruptcy and the termination of their previous work world. They find themselves in a surrealistic world – a world that cannot be true – captured on a middle ground between an old and positive world that has collapsed and a new and negative world that is emerging. They solve the challenge by identifying and appreciating positive elements from their old world that endure.

Event 4: Emergence of new world

Members narrate how a period of substantial »insecurity« and »waiting« in »no man’s land« is over when they are informed that an agreement has been made with a regional bank acquiring parts of the local bank. This event means that members are divided into two groups. The »healthy and green winner group« is offered a new world in the acquiring bank, while the »unhealthy and red looser group« will have a limited and insecure future in the governmental liquidation company. Summarized in table 1, the announcement means that members of the green group are offered a new work world – making them capable of drawing future work pictures with more certainty.

Therefore, the fourth event is theorized as emergence of a new work world.

Phase 4: From inside colleagues to outside strangers

Following the fourth event is a period of resistance to change. Members express huge ambivalence and struggle with settling down in the new world. People who used to be close colleagues become »strangers« on »forbidden territory«. The separation implies that members are divided into »two completely different worlds.« The green world is characterized by development and progress while the red world is characterized by failure and termination. For a period, the inhabitants of these worlds lived under the same roof. This phase was »fucking tough«. The green members experienced an internal conflict. On the one hand, they were relieved because their future was now less uncertain. On the other hand, they felt sorrow for their colleagues who were left behind as »losers«. Empathy and sympathy for the red group rest on many years collegial solidarity. Especially the past challenges enforced the group’s coherence. Among the green members a norm of respectful treatment of the red people emerged and it became »wrong« to show interest in or happiness with the new situation. Thereby the presence of the red group kept the green group in the old collapsed world and hin- dered them from moving on. To handle this challenge, members of the green group struggle to make sense of the situation in a way that allows them to let go and move forward. As table 2 illustrates, an acceptable rationale behind the »cruel« separation eventually emerges and helps members justifying their adaptation. In summary, the

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acquisition constitutes an opportunity to move into a new work world. A committed move, however, requires separation from old colleagues which is difficult due to an emotional barrier of collegial empathy. Table 2 summarizes how members solve the challenge by emphasizing the logical rationale behind the separation.

Event 5: Settlement of new world

After what seems like a very long period, the red group leaves the premises. The final separation marks a significant point in time – the end of an »ambivalent« period. »We could finally begin to look forward – without feeling guilty if you were happy about something that the acquiring bank did for us.« The disappearance of the red group means that the emotional barrier that kept the green members in the collapsed world is out of sight. »We could begin to be immersed in and talk about all the [new and exciting] things.« Finally, they could begin to see and appreciate the progressive elements of the new world and to talk it into a positive mode of existence. In sum, the final separation of the two groups stands out as a turning point. As table 1 illustrates, it means that »the sky become more clear.« Therefore, the last event is theorized as settlement of the new world.

Ending: Normalizing a new world

After the final event, members begin to enact the new world. In this organizational afterlife, members try to balance the need to move on and not get stuck in the past with the need to recognize and talk openly about prior failures. In one way, »things are back to normal« and »business as usual«. In another way, »it’ll never be the same«.

Incidents that remind members of what happened keep reoccurring when the bankruptcy is mentioned or insinuated. As time goes, such incidents occur less often – but they still occur and »they probably always will«. Years after the acquiring bank took over, the bankruptcy is not forgotten history – it probably never will be: »it’ll never end, never.« In sum, the new world builds upon the old: the story nears an end when members move into organizational afterlife and normalize their new world.

Discussion

Summarizing the findings of the analysis presented above, it is clear that members understand bankruptcy as a story with a beginning and an end. Breaking up this narrative into the distinct events that separated the different phases, I found that each event had an underlying meaning and that each phase was associated with a challenge and a solution. These findings are summarized in table 3 which integrates the events and phases from table 1 and 2.

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Table 3. PASSING THROUGH ORGANIZATIONAL DEATH: EVENTS & PHASES

1 2 3 4 5

Event The bank’s exposure is addressed in the media

The bank’s director is dismissed

The bank is declared bankrupt

The healthy part of the bank is acquired

The unhealthy part of the bank is relocated Meaning Pre Alarm Post Alarm Collapse

of old world

Emergence of new world

Settlement of new world

1 2 3 4

Phase

from popular organization

to unpopular organization

from revered director to discredited director

from troubled organization to dead organization

from inside colleagues to outside strangers Challenge Preserve old world Realize change

in old world

Accept termination of old world

Escape old world Solution Defend Whole Maintain parts Appreciate endurance Justify Transition

Figure 1 theorizes the events and phases and illustrates members’ narrative transition from organizational life through organizational death to organizational afterlife.

Figure 1. THE FALL AND RISE OF A WORK WORLD

Pre alarm

Post alarm

Collapse old worldof

Emergence new worldof

Settlement new worldof

Living a normal world

Preserve old world Defend -

whole

Realize change in old world

Maintain - parts

Accept termination of

old world

of old world Appreciate- endurance

Escape old world Justify - transition

Normalizing a new world

Figure 1 clearly shows how members’ dominant reconstruction of their experiences of organizational death takes form as a transitionary narrative with a beginning and an end: a story of a departure from a normal work world that collapses and an arrival at a new work world that emerges and settles.

More precisely, members narrate bankruptcy as a story beginning with a pre alarm that rings too early. The pre alarm is followed by a challenging time where the task of preserving an old work world is solved in struggles to defend the whole of it. The story continues with a post alarm that rings too late. Following the post alarm is a challenging time where the task of realizing the change of the old work world is solved by struggles to maintain parts of it. In the middle of the story, the old work world

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collapses. Following this collapse is a challenging time where the task of accepting the termination of the old work world is solved by appreciating the enduring parts of it.

Towards the end of the story a new work world emerges. This emergence is followed by a time where the task of escaping the old work world is solved by justifying the transition to the new. The story ends with a settlement in and of the new work world.

In sum, the analysis shows how members understand organizational death not just as a transformation from a permanent to a temporary and defunct organization (Sutton, 1987) but as a transformation from organizational life to death and back to life. Thus, as opposed to Sutton’s model that ends with the termination of the organization, figure 1 elaborates on the premise that members of a dead organization do not die with the organization but find it important to narrate how they make a transition to afterlife (Walsh & Bartunek, 2009) in a new organizational world thereby completing the story with a different end (Weick 1995) and making it one of survival instead of death.

Conclusion

Like death is a fact of life, failure is a fact of business. Fortunately, when organizations die people do not die with them but transit to organizational afterlife. I wondered how workers undergoing death and resurrection understand such phenomena and I did an inductive case study to find out. The research presented above shows that organizational members understand such issues as a series of events and phases that compose a story of a fall and rise of their entire work world. Members narrate their experiences as a series of events and phases that they pass through as their old work world collapses and a new world emerges and settles: as they survive death and move towards afterlife.

This section outlines the significance this study has for theory and practice by provid- ing a discussion of the analysis in terms of its theoretical contributions and practical implications. Finally, in addition to addressing some of the paper’s limitations, potential avenues for further research are presented.

Theoretical contribution

The paper adds to the important but under researched area of organizational death (Hamilton, 2006; Shepherd, 2009; Sutton, 1987; Wigblad & Lewer, 2007) by provid- ing a theoretical framework theorizing how organizational death is understood by the members who undergo it and construct it as part of their organizational life.

The generated theory illustrates how members understand organizational death as a series of events and phases that constitute a transitionary story with a beginning and an end: a narrative of events with inherent meanings and phases with inherent challenges and solutions. The inductive framework is grounded (Glaser & Strauss, 2008) in an

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empirical case of a bankruptcy and illustrates how this phenomenon is experienced by the people who undergo it. By eliciting how members’ narrations of bankruptcy do not stop with organizational death (Sutton, 1987) but continue to include organizational afterlife (Walsh & Bartunek, 2009), the paper addresses the premise that members do not die with the organization but live on and make transitions into new organizational worlds. By including transitions to new life in the conceptualization of bankruptcy because it proves important to the members undergoing it, the study contributes with empirical knowledge that can serve as a grounding for bridging the separate literatures on first step theories to organizational death; from a permanent entity to a defunct entity (Sutton, 1987), with second step theories to organizational (after)life; from a defunct entity to a living organization (Walsh & Glynn, 2008; Walsh & Bartunek, 2012).

Practical implications

The study opens the door to a deeper understanding of the large and increasing number of people undergoing bankruptcy.

Despite the »normality« of organizational death, practitioners often maneuver through death with a lack of relevant experience to draw upon (Sutton, 1987; Wigblad & Han- son, 2006). This study can provide such practitioners with knowledge on how other people have handled bankruptcy and survived organizational death. Knowledge on the possible solutions to the challenges that bankruptcy brings is a prerequisite for supporting members of dead organizations to come to form and perform satisfyingly in new organizational contexts. Knowledge on possible organizational transitions from life to death and back to life is beneficial to practitioners who wish to move through death or help other people do so. In this way, the study is relevant to two groups: the people undergoing bankruptcy and the people aiming to support the people undergoing bankruptcy.

Further research

The paper has limitations. It is based on a single case study, and therefore it suffers from the usual limitations of case study research where generality is exchanged for richness.

It is important to explicate that the theory that emerged from this study illustrates how members of a specific case in question understood death and resurrection and that the findings behind the theory are based on the specifies of this case. Bankrupt- cies are different and therefore, the way the members of this bank understood death may be different from the way members of other banks understand death. Accord- ingly, the findings of this case cannot be generalized to all bankruptcy cases. There- fore, I am convinced that more insight can be gained from future research on this issue. Following these lines I wish to end this article by calling for work that takes se-

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rious the problematic issues of contemporary society characterized by the disastrous consequences of the global financial crisis in a significant number of peoples’ local lives – including instances of challenging bankruptcies as well as radical liquidations and massive layoffs.

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Wigblad, R., & Lewer, J. 2007. Organisational Closure: A Critique Of The Literature And Some Research Propositions. Proceedings of the 21st Conference of the Association of Industrial Relations Academics of Australia and New Zealand, The University of Auckland, New Zealand.

Notes

1. For more information on the primary interviews including questions, setting, language and sensitivity, as well as the secondary data of the study, please see the author’s dissertation entitled World Disruption:

How Bankers Reconstruct the Financial Crisis – essays on interpretation.

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Women in top management positions – why so few?

And does it matter?

A survey of recent empirical results for Danish companies

Nina Smith, professor and Valdemar Smith, professor, Department of Economics and Business, Aarhus University

Abstract

In recent years, the reasons for the small share of women on the boards of directors and in top executive positions as CEOs, CFOs, etc., in Danish private-sector companies have been widely discussed. Another important aspect is the relationship between gender diversity and outcomes, i.e. would an increase in the female share of top executive positions or of the boards of directors improve firm performance? The article first surveys recent empirical results from studies on mainly Danish companies and the results found from the Norwegian quota-regulation before it discusses some of the potential implications for Danish companies.

Introduction

About 60% of all graduates from Danish universities are women; and since the 1970s, the majority of female graduates have been full-time members of the labour force.

Nevertheless, in Denmark, women seldom occupy top executive positions and boards of directors. In 2012, only 17% of the members of the boards of directors in C20-OMX companies were women. This is the same proportion as the average share of women across the 27 EU countries (EU Commission, 2013a). While Denmark was clearly in the lead with respect to introducing women into the labour force decades ago, Denmark only occupies an average position in relation to women in top positions. If women are as qualified for management positions as men, it may seem strange why they are not recruited to top positions as it may lead to a profit loss for the companies. Further- more, it may result in a huge loss of talent and educational investment at the macro level. There may, of course, also be fairness and equal opportunity arguments in fa- vour of political regulations and affirmative policies; however, in this article, the focus is restricted to the economic impact of women in top management positions.

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The small percentage of women in top management positions in Denmark and in most other (European) countries has given rise to a heated political debate about the existence of apparent barriers for women, the consequences of women in top management positions and political measures to increase female board representation. In this paper, we first describe the present position of women in top management positions in Danish private-sector companies before we make a comparison with international figures. Secondly, we discuss theories and empirical findings that shed light on the reasons for the small share of women in top positions. We discuss whether it is a result of discrimination, old-boys network or of Danish women not wishing to un- dertake top management responsibilities. Danish, and to some extent international, empirical evidence concerning gender diversity and firm performance is discussed.

Furthermore, an overview of international and Danish policy regulations concerning gender diversity in private-sector companies is presented. We discuss whether these policy instruments, quotas, family friendly initiatives, etc., are optimal or effective instruments in ensuring more women in top management positions.

2. Women in top management in Denmark

The female share in top executive positions in Denmark is low. Figure 1 shows the female share of CEO positions and top executive positions just below CEO-level (i.e.

CFO, COO, HR etc.), which is here denoted Vice-President (VP)-level. The data set cov- ers the more than 2,000 Danish ‘real’ private-sector companies with at least 50 employees, i.e. it excludes holding companies, etc. These companies are on average much smaller than the OMX companies, which are often used in the statistics on female representation in top management positions. As seen in Figure 1, in 1997, 4% of CEOs were women; a percentage that had grown to about 10% in 2009.¹ At the VP level, the share of women is larger, i.e. 8% in 1997 and 17% in 2010. Thus, the tendency is clear:

With time, more women are reaching top executive positions, but the share remains low at the CEO level.

The picture is the same when looking at the female share on boards of directors (i.e.

supervisory boards) in Danish companies with more than 50 employees. In 1997, the female share of board members was 9%, and this share increased to 13% in 2010.

When looking only at women who are elected at the general assembly, i.e. excluding board members who are elected among the staff in the company, the female share is lower as seen by the fact that the share among staff members of the boards is larger than the female share among non-staff board members. However, the share of female board members elected at the general assembly has also increased from 7% in 1997 to 11% in 2010. Finally, 4% of the chairmen of the boards are women; a figure which has doubled during the period.

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Women in top management positions – why so few?

Figure 1. The share of women at the CEO level and the level below CEO (Vice-President) in Danish com- panies with more than 50 employees

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Female Proporon

CEO Vice-President

Source: Own calculations based on data from Statistics Denmark.

Figure 2. Female share of board members in Danish companies with more than 50 employees

0%

2%

4%

6%

8%

10%

12%

14%

1996 2010

Female Proporon

All Board Members Board Members excl.

Employees Chairmen

Source: Own calculations based on data from Statistics Denmark and Experian.

Table 1 shows the number of boards with 0, 1, and 2 or more women in 1997 and 2010, respectively. During the period of 1997-2010, the share of companies with only men on their boards (excl. staff members) fell from 78% to 65%, and the share of companies with one woman elected at the general assembly rose from 17% to 25%. This result may reflect token behaviour among Danish companies as companies who feel pressur- ised by the public or others to have more diversity with respect to a given character- istic (gender, age, ethnicity, etc.) tend to hire only one individual which is considered a representative for the given minority (see Parrotta and Smith, 2013). However, the share of companies with more than one woman has also increased, from 5% to 10%,