Abstract
Inconsistent regulatory objectives may cause persistent noncompliant behavior among regulated actors. Yet, little is publicly known about when, where, and how inconsistencies get solved by regulated actors. The authors tracked the norms and interventions of multiple regulatory oversight bodies trickling down the hierarchy of three utility companies. The authors interviewed and observed managers, planners, operators, and staff studying their responses to regulatory inconsistencies from the perspective of value conflict. Patterns of coping behavior have been identified across the three companies. In conclusion, the authors argue to account for coping behavior in the regulatory mind-set and they recast how coordination may further improve the effectiveness of fragmented regulatory regimes.
Hard trade-offs are common in public service delivery and are essential in the domain of public policy (e.g., Rein, 1976; Viscusi, 1992; Wagenaar, 2002). Utility provision, in particular, involves tough choices as it concerns services like energy, drinking water, and telecommunications in real time to millions of customers, 24 hr a day, 365 days a year. Choices revolve around who should (or should not) be served, what performance level is sufficient, what cost is acceptable, and who ought to pay. In practical terms, service delivery compels to constantly interpret and balance multiple public values, in relation to quality standards, worker and user safety, accessibility, affordability, environmental sustainability, and more.
Yet little is known about the way trade-offs are made among public values in infrastructure operations. At the same time, strategies used by utility companies to address trade-offs seem key to business optimization and relevant to safeguarding public values (e.g., Bozeman, 2007; de Bruijn & Dicke, 2006). This article examines the way in which trade-offs are made within three liberalized Dutch utility companies operating in a fragmented and demanding regulatory context. Within the companies, strategic planners, managers, and operators are shown to have characteristic ways of coping when friction arises between public values. These frictions tend to be deflected through the companies’ planning and management systems—often to emerge as full-blown conflicts on the work floor, where little managerial guidance is available for solving them.
Oversight bodies, for their part, each tend to focus on the specific public value they are mandated to protect, while trusting in the ability of the system as a whole to maintain the integrity of public service provision. Political and scientific debates on regulatory inconsistencies have proposed joining regulatory bodies or introducing coordination among regulators to overcome the downside of fragmented oversight. However, by filling in some of the unknowns and uncovering patterns of actual coping in response to regulatory inconsistencies, this article questions the utility of such attempts at coordination.
This study starts from two related central questions. First, how do utility companies cope with (potential) conflicts between public values in daily operations? Second, what implications does the discovered pattern have for the effectiveness of (fragmented) regulatory regimes?
Regulatory Inconsistencies, Public Values, and Practice
Two Examples of Conflict
Water is a typical public utility. Water companies provide water for multiple uses, from drinking to extinguishing fires. For healthy drinking water, underground pipes need a relatively small diameter. Larger diameters exponentially increase the amount of water stored in the pipes, quickening deterioration of water quality. Firefighting, however, requires immediate access to great quantities of water. Large diameter pipes are preferable for this purpose. Thus, the optimal pipe diameter is not merely a technical judgment. It also depends on the weight given to two public values: public health versus reliable firefighting. It further depends on how the involved organizations approach the trade-off in their dynamic day-to-day processes, given factors such as local network configurations, specific demands, historical agreements, past events, and a variety of time-specific uncertainties.
Another example is that of rail networks, which the public demand to be operated efficiently, reliably, and above all safely. More trains enable more passengers to be served and more connections to be made. However, the risk of collisions rises with more trains on the tracks. Furthermore, a lack of excess capacity undermines reliability. On a congested network, a small delay can quickly escalate into a large disruption at the system level. Ultimately, the trade-offs are made on the ground that depend on local, time-specific conditions and the operational skills of controllers. In this example, like that of the water company, the trade-offs made in the public’s interest do not represent a static optimum. No one pipe diameter or train density is always ideal.
The Regulatory Catch-22
The economic reforms of the 1990s liberalized and privatized utility companies in Europe while at the same time subjecting them to more regulation than ever before (Majone, 1996; ten Heuvelhof, De Jong, Kars, & Stout, 2009). Hence, when conflicting demands emerge today, both sides of the conflict are often regulated. For example, water quality norms might demand the use of certain water pipe diameters, but water companies are also obliged to provide fire brigades with an adequate water supply. Rail companies may be required to run at least a certain number of trains and be constantly pushed for more. However, they are also bound to strict performance norms regarding minimal delays and minimal accidents. A question is how regulatory bodies overseeing these competing public values influence the way utility companies make such operational trade-offs.
Utility companies face not only extensive regulation but also a diverse oversight environment. Ministries, local and regional governments, inspectorates, international actors, and multiple other agencies might have a say in which public values are to be pursued. Moreover, when states withdrew from providing utility services, they often invented new organizations of public oversight, each overseeing compliance for a different public value. This specialization of oversight poses a systemic risk of fragmentation and regulatory unreasonableness (e.g., Bardach & Kagan, 2002; Verhoest, Bouckaert, & Peters, 2007).
Resolving irreconcilable regulatory demands is often left to the regulated organizations. A specific oversight body, however, may interpret the resulting behavior as noncompliance. This may trigger new regulatory interventions, further complicating the set of trade-offs and generating additional forms of noncompliance. Thus, legalistic forms of oversight may be born, sometimes accompanied by a loss of legitimacy for regulatory bodies (Haines & Gurney, 2003).
Efforts to increase regulatory effectiveness run up against two unknowns: (a) What trade-offs underlie noncompliance? and (b) What effects does enforcement have on the underlying trade-offs?
Specialization and Coordination Among Regulatory Oversight Bodies
Verhoest et al. (2007) attribute the fragmentation and proliferation of government—which we also witness in oversight of liberalized utility industries—to the broad horizontal and vertical specialization of tasks advocated by New Public Management (NPM; see also J. G. Christensen & Yesilkagit, 2006; Power, 1997; van Waarden, 2006). In line with classic organization theory (Mintzberg, 1979; Thompson, 1967), Verhoest et al. (2007) suggest the trend toward specialization will require new—and renewed—coordination capacity and distinguish three types of coordination mechanisms: a hierarchical type, such as a structural coordinating authority; a network type based on trust, like a spontaneous cooperative network; and a market type of coordination based on competition between agencies.
Using concepts such as “joined-up government” and the “whole-of-government approach,” attempts have been made to counter the disaggregating effect of NPM and its many single-purpose organizations (Bogdanor, 2005; T. Christensen & Laegreid, 2007; Pollitt, 2003). Various initiatives for interagency collaboration have been studied (e.g., Gregory, 2006; Halligan & Adams, 2004). Acutt and Elliott (1999) conclude based on their theoretical model that regulatory cooperation in the electricity-generation industry could produce welfare improvements in England and Wales. Creation of a formal joint regulator group to oversee public infrastructure services has been proposed in the United Kingdom as well as in the Netherlands (Dutch Council for Government Policy, 2008). The extensive and renewed interest in coordination (see also Kapucu, Arslan, & Collins, 2010; Laegreid, Verhoest, & Jann, 2008) emphasizes the need to resolve the problems caused by fragmented regulatory oversight.
A common assumption is that if the oversight regime imposes inconsistent norms, it loses control to the regulated (Haines & Gurney, 2003). The literature on “multiple principal problems” offers ideas on how an “agent” might make trade-offs between inconsistent regulatory demands (e.g., Black, 2008; Dixit, 2002; Francois, 2000; Jordan, 2006; Martimort, 1996; Mattli & Büthe, 2005; Miller, 2005; Pandy & Wright, 2006; Waterman & Meier, 1998). Multiple principal problems are said to accidentally trap agents into inevitable failure, bringing them into a position to prioritize as they prefer. Waterman and Meier (1998) hypothesize that cross-pressures turn agents into political institutions. Coen (2005) argues that thinly spreading regulatory tasks over multiple institutions stimulates agents to hold back more information and play principals off against each other. Miller (2005) makes a similar argument, discussing the work of Moe: “[I]n the context of warring principals, the ability of bureaucratic agents to use information asymmetries to their own advantage is enhanced” (p. 211). These arguments urge us to look closer at the effects of a multiplicity of regulators (the “principals”) on the trade-offs made by utility companies (the “agents”).
Fog Around Concrete Trade-Offs
To learn what may drive the trade-offs occurring within regulated utility companies, it seems appropriate to look beyond mere norm (non-)compliance to the underlying public values. We define these values as the ultimate ends of public policy, so not just as means to some other end (Thacher & Rein, 2004). This perspective on values is significant, as it problematizes trade-offs at a theoretical level. Extensive scholarly work on values stresses the impossibility of balancing conflicting values, because ultimate ends by definition have no overarching scale to make them commensurate and thus to establish a thoughtful trade-off (e.g., Chang, 1997; Espeland & Stevens, 1998; Jensen, 2001; Thacher, 2001).
Paradoxically, value trade-offs are at once a philosophical impossibility and an inevitable daily practice (e.g., Tetlock, 2000). This means that any study of value trade-offs must delve into the empirical detail of daily practice. After all, the only sensible understanding of priorities among values is that emerging in concrete choice situations (Lindblom, 1959, p. 82).
The inevitability of trade-offs also problematizes the above definition of values as ultimate ends. Values are more than “clouds of goodness” around abstract concepts such as safety, universal access, and environmental sustainability. The true meaning of values may only appear in a concrete choice situation, where values may be realized or, perhaps more often, transformed, skewed, or compromised.
Coping Behavior in Response to Conflicts
Organizational behavior in response to concrete value conflicts has been studied in depth in the area of street-level bureaucracy. Not coincidentally, this research area is also occupied with the delivery of public services. Studies of the operation of public service organizations have identified “coping strategies” as a key organizational response to value conflicts (Hupe & Hill, 2007; Lipsky, 1980; Loyens & Maesschalck, 2010). We build on this idea by investigating coping strategies to understand agents’ responses to inconsistent demands from their principals. However, first we map the literature on coping, extending it beyond the boundaries of street-level bureaucracy.
Coping is widely used, particularly in psychology, to describe a response to an external stressor. In the current study, we focus narrowly on coping behavior in response to conflicts. By means of the ISI Web of Knowledge citation index, we searched for articles on coping published between January 1999 and March 2008. We honed our search to fields relevant to organizational behavior, sociology, political science, and public administration. This resulted in 500 articles that, in turn, referred to more articles and books on coping. In most cases, the coping behavior documented relates to uncertainty, change, cognitive dissonance, or rival objectives. We selected articles on this last subject, rival objectives.
This literature uncovers a range of coping behaviors. Examples are local rationality, sequential attention to goals (Cyert & March, 1963), creaming off, triage, routinization (Lipsky, 1980), double talk, hypocrisy, decoupling (Brunsson, 1989), smokescreens, buck-passing, procrastination, bolstering, sacralizing values (Tetlock, 2000), cycling, firewalls, casuistry (Thacher & Rein, 2004), incrementalism, bias, and hybridization (Stewart, 2006). To illustrate, “creaming off” refers to a situation in which agents face too many principals and start selecting those principals that yield the most in terms of bureaucratic success criteria. Furthermore, institutionalizing “hypocrisy” enables an organization to deal with inconsistent demands by satisfying one demand in speech and another by concrete actions. “Cycling” is when an organization alternates between both sides of a value conflict, trying to realize each value separately over time. Steenhuisen (2009) discusses more than 40 coping strategies in depth.
The literature on coping reveals a broad repertoire for resolving conflicts. Nonetheless, the literature on public choice and the multiple principal problem continues to be dominated by the rational actor model. Herein, decision makers seek the outcome with the highest utility by weighing and comparing different trade-offs—for example, employing cost-benefit or multicriteria analysis.
Empirical studies on coping demonstrate that actual behavior is typically less “rational” in a Weberian sense of the word (Thacher & Rein, 2004). Some coping strategies enable decision makers to avoid comparing values altogether. This is especially true when painful trade-offs appear too perplexing to be effectively managed (e.g., Bozeman, 2007; Tetlock, 2000, p. 239). One general way for decision makers to relieve this burden is by decoupling competing values from each other, for example, by allocating them to separate parts of the organization (e.g., “local rationality”). A second way to escape the balancing act is to avoid deliberate responses, for example, by obfuscating conflicts (e.g., “smokescreens”). Trade-offs then still occur, but they are the emergent outcome of disaggregate behavior, rather than the explicit product of decision making.
These two deviations from the rational actor model help us to more systematically conceptualize coping strategies along two dimensions: “coupling versus decoupling” and “deliberate versus emergent” (Table 1). The rational model conceptualizes coping as deliberate and coupled. Our framework generates three additional types of coping. This structuring of currently known coping strategies captures their variety.
Framework of Responses to Value Conflicts.
To recapitulate, coupling means dealing with multiple values simultaneously in relation to one another. Coupling is a necessary condition for balancing values within a conflict, but it is not a sufficient condition for optimization. Coupled coping may also mean giving attention to multiple values simultaneously but eschewing any rule-based decision on how to balance them. Decoupling means to address values separately, for example, distributing responsibilities for multiple values over as many dedicated departments. The aim of decoupling is to buffer values against conflicts, even unanticipated ones. In short, we may call coupling a multivalue response and decoupling a mono-value response to conflicts.
The difference between deliberate and emergent conflict responses is a more classic one. Deliberate coping requires an intentional act, for example, a conscious optimization of safety and affordability when budgeting for a project. Emergent coping produces trade-offs in spontaneous or indirect ways. An example is alternating interventions for two values separately without recognizing their reciprocal relation.
Effects of Coping
This framework on coping links to scientific debates on the desirability of dealing with conflicts in decoupled or coupled ways (Dörner, 1996; Gregory, 2006; Thacher, 1999; van Eeten & Roe, 2002) and in deliberate or emergent ways (Espeland & Stevens, 1998; Mintzberg & Waters, 1985; Tetlock, 2000). A major insight in these debates is that other coping strategies besides a “rational,” deliberately coupled response can be effective (Thacher & Rein, 2004). Decoupled coping does not directly seem to be a sensible arrangement for trade-offs. Maximizing one value is obviously suboptimal from a trade-off perspective. In fact, it is a basic pattern of failure for organizations to ignore complex causal relationships between the objectives (Dörner, 1996). However, in emergency situations, when human lives are at stake, decoupled coping is often the default response and coupled coping is sometimes considered an unethical way of messing around with a value that is supposed to be nonfungible, like saving lives.
Three (related) mechanisms, common in organization theory, help to further explain how “nonrational” coping strategies can actually be effective responses to conflict. First, various forms of buffer may allow organizations to systematically correct for decoupled or emergent trade-offs before their side-effects show up in performance figures. Physical assets partly safeguard many values. Relationships with oversight bodies based on trust offer organizations discretion. Values may manifest themselves sequentially over time, offering organizations room to maneuver also. Physical redundancy, discretion, time, and other general resources in profusion may allow companies to deal with competing values sequentially, to resolve conflicts without directly balancing values (Cyert & March, 1963), and to correct for undesirable trade-offs in retrospect.
Second, forms of coordination may exist between multiple decoupled or emergent coping responses. From an organizational perspective, multiple organizational members may, for example, simultaneously approach conflicts by decoupling parts of it, and together forms a coupled response (Brunsson, 1989).
A third mechanism is variety. The organizations we study need to combine high input variance (dynamic oversight pressures, changing physical conditions, emergent conflict situations) with low output variance (reliable performance without hiccups). Applying straightforward systems thinking indicates a need for high process variance (Roe & Schulman, 2008). All coping strategies have their downsides and all conflicts their particular circumstances. Applying a diverse repertoire of coping responses may allow organizations tailor made responses and compensation for the potential faults of each individual coping response category.
Hypotheses on Coping
From this theoretical discussion so far, we derive expectations on how utility companies may live with regulatory inconsistencies and value conflict. First, we assume to find trade-offs, because the companies cannot escape the fact that their values and goals are partly inconsistent (Cyert & March, 1963). Second, we assume that increasing external demands push these companies to organize their processes in such a way that trade-offs have minimal impact on performance. Third, we expect a variety of coping strategies and not merely optimization of each conflict. Fourth, if we do find a large amount of “nonrational” coping strategies, we presume certain mechanisms (e.g., buffer, coordination, variety) allow organizations to be effective in terms of performance. Fifth, we expect that the “multiple principal problem” offers regulated companies extra opportunities to exploit their daily trade-offs in their own interest, hampering the overall effectiveness of a fragmented regulatory regime.
Method: Tracing Values Through Organizations
This study examines coping behavior within three Dutch utility companies using a semiethnographic approach. We gathered data through 126 semi-structured interviews and 25 half-days of “go-alongs” (Kusenbach, 2003), joining organizational members in their daily work, mostly in control rooms or out in the field and sometimes during staff meetings. When combining conversation and observation going along with respondents at their workplace, “the strengths and advantages of participant observation [and] interviewing ( . . . ) accumulate” (ibid.).
The companies studied were all recently liberalized providers of a public utility service: the Dutch Railways (NS) is a national provider of train services, rail infrastructure manager ProRail controls the flow of rail traffic and oversees track maintenance, and the energy company Enexis manages regional electricity and gas networks. In each company, we focused on a core operational process: driving trains and transporting passengers for NS, rail traffic control for ProRail, and maintaining regional energy networks for Enexis.
These companies share several defining features. First, they manage large-scale technological systems. Second, they do this within a heavily regulated and increasingly fragmented oversight environment. This environment consists of inspectorates, regulators, ministries, public shareholders, licensers, consumer agencies, certification agencies, and international bodies, as well as local fire brigades and police forces, among others. Third, intense public and political debates constantly interpret and reinterpret the public values these companies are obliged to serve (Veeneman, Dicke, & de Bruijne, 2009). As the research got into the details of service delivery, rich clusters of interpretations arose for these values in light of the reciprocal relations between them.
Our main data source on coping behavior within these three companies was our field notes and the full transcripts of interviews, which describe respondents’ daily perceptions and activities. Besides official interviews and observations, chance encounters, small talk, conversations about the research findings, and our experiences of organizational life in general added a significant angle to data interpretation.
The interviews were systematic and open-ended and conducted with directors, strategic managers and planners, middle managers, general staff, and operational workers. To reveal their daily experience with responding to value conflicts, respondents were invited to speak freely about their daily work with regard to (a) their most important objectives, (b) how they realized their objectives on a daily basis, and (c) whether they encountered obstacles in doing their job. These indirect questions frequently triggered a stream of anecdotes containing valuable data. In contrast, asking directly about trade-offs generally triggered denial, silence, or counterquestions. Most respondents were unable or unwilling to think about their work in terms of value conflicts—a point to which we return in the next section.
As soon as respondents articulated or suggested the possibility of a value conflict, follow-up questions were asked to zoom in on the exact situation, its causes, the respondent’s response, its effects, and the involved other organizational members. We complemented and validated this interview data with direct observation on-site and a degree of participatory observation (Macionis & Plummer, 1997). At the end of the data-gathering phase, we held four presentations at the companies and six meetings at oversight bodies to validate and discuss our findings.
We started with the formal, publicly available documents and put together a list of the main public values underlying oversight objectives for each organization. Starting with this list of oversight objectives/public values per company (Table 2), we tracked how they moved across the organization. This resulted in chains of interviews and observational go-alongs. The first respondents were near the strategic top of the organizations. These managers intuitively linked value trade-offs to core strategic planning departments. Accordingly, we then interviewed planners and managers whose daily job was to translate external demands into internal specifications, rules, norms, and procedures to be realized in the operational processes. The next group of respondents consisted of operational workers. These were the people who in real time set to work with these plans and instructions geared toward simultaneous achievement of multiple oversight objectives. Afterwards, we interviewed the middle managers and other staff overseeing these operational processes on a daily basis and incidentally responding to the realization of plans and norms in retrospect. With our interviews, we then ascended the hierarchy of middle managers in the operational departments up to the top of the line. To see the full effects or causes of value conflicts, these interviews now and then provided reason to go back to the planning departments or to approach departments and staff members we had not met before. Interviews of various positions were doubled where possible, for verification.
Main Oversight Objectives/Public Values per Company.
As we traced public values through these three organizational stages—planning, operation, and monitoring—we met roughly the same values but cloaked in different guises and circumstances. We questioned respondents on their own objectives and interpreted their answers within an overarching set of public values being operationalized. Some respondents equated the values they pursued with the norms they worked toward. Others believed these same norms undermined the values they were intended to serve. Reliability, for example, was often strictly operationalized at the planning stage but fell apart in a variety of inconsistent heuristics at the operational level. Some of these operational realities might be regarded as goal displacement, others as means to an end. Which of the two descriptions was the most accurate largely depended on the situation at hand. Our focus on values led us to critically examine whether the various objectives pursued at the different stages did indeed add up to the same end.
After gathering extensive and elaborate data on coping in three organizations, we report on similar patterns encountered across the cases. These patterns of coping happened to differ strongly between the three organizational stages (planning, operation, and monitoring) and showed manifest similarities across the three studied organizations. Given the large differences in the systems’ underlying technical complexities (de Bruijn, de Bruijne, & Steenhuisen, 2008), three cases seemed enough to suspect that the encountered patterns may also be relevant to other sectors involved in public service delivery.
Coping at Three Organizational Stages
Our approach was to traverse utility companies in search of public value trade-offs. First, we sought where and when do multiple, potentially competing objectives of oversight bodies actually conflict. It turned out that conflicts were generally hard to recognize at the upper managerial levels, in the planning and monitoring stage, but they were evident at the operational level. Second, we inquired into how managers and operational workers cope with conflicts. Here we found a tendency toward emergent trade-offs with decoupled checks-and-balances in retrospect.
In each organizational stage, respondents demonstrated specific ways of operationalizing multiple oversight objectives and coping with frictions. In this section, we summarize the data gathered on trade-offs and coping. Next, we conceptualize this by means of our framework (Table 1). We close with discussing the implications and explanatory factors of the coping encountered. This leads to a full cross section of the organization revealing how regulatory demands (Table 2) get affected by competing demands, from the moment they “enter” the organization, through all organizational stages—before, during, and after realizing them.
Coping Responses in the Planning Stage: Where Are the Conflicts?
At first, it was hard to see any friction between oversight objectives, because planning appears predominantly oriented toward the separate realization of the prescribed public values. At the planning stage, strategic decisions produce a yearly list of targets, budget allocations, and projects. With these, the organizations satisfy, seemingly smoothly, a range of urgent demands emanating from their environment without foreseeing much conflict with respect to core operational processes. Subordinate departments then work out the high-level decisions into more detailed plans, norms, and protocols.
Many of the planners and managers involved in this operationalization process seemed to resist directly answering questions about trade-offs in their daily work. When asked to explain how they dealt with conflicts between objectives, many instead explained how their procedures and standards safeguarded objectives. We met many respondents at the planning stage responsible for a single value: just safety, just reliability, just customer interests, and so on. Moreover, they worked relatively isolated from those in charge of other values. Few respondents dealt explicitly with multiple values. Many in the planning stage claimed that oversight objectives do not conflict. “We do not trade off quality,” several managers said. “Legal compliance is a prerequisite,” said another. “Safety is priority zero,” yet another staff member claimed. Such assertions rather implausibly deny the very occurrence of trade-offs. To put it rather bluntly, the only conceivable way for rail operations to be 100% safe is to not operate at all.
From a coping perspective, the totality of planning processes implicitly decouple conflicts up front, despite the integral central planning systems of the companies studied, as planners systematically isolated attention for separate values to separate departments, managers, and procedures, instead adopting a more holistic approach. Decoupling mechanisms found to underlie the planning logic were (a) clear, split up responsibilities; (b) mono-value protocols; and (c) conflict-free plans. Thus, the complicating context of multiple values remained structurally overlooked and unaddressed.
In effect, this setup deflected conflicts to the sphere of operations. For example, at the time of our study, a rule in the train conductors’ handbook was “always depart on time.” Because chronically late trains had led to public outcry in the past, NS had ordered all of its conductors to depart as scheduled, on the dot, no matter what. But this rule ignored any possibility of desirable trade-offs between punctuality and, say, holding connections for transferring passengers, providing information services, or dealing with safety concerns not captured in the formal procedures.
The energy distribution company under study had one department for health, safety, and environment and another for ensuring the quality of the network. These departments operationalized the values they were mandated to protect in SMART terms (specific, measurable, achievable, realistic, and timely). Along similar lines, strategic management assigned some mechanics to work on quality issues, whereas others were made responsible for safety. The logic behind this specialization was to prioritize safety at all times and to organize out conflicts.
Therefore, central planning processes initially set out to cope with competing public values in a coupled way. With their dominant orientation toward decoupling, however, they succeeded in organizing out conflicts—at least at the upper managerial levels. In fact, this often pushed conflict forward into the sphere of operations.
Coping Responses in the Operational Stage: Improvisations
Only in the operational stage did it become clear that friction between public values trickles down from the planning stage to emerge again as unplanned real-time conflicts. Operational workers encounter acute dilemmas with diametrically opposed risks on a daily basis. The choice may suddenly emerge, for example, to either turn off a gas tap in a room full of gas before escaping or to evacuate immediately and leave the gas tap on; to either depart from an overcrowded platform or to run an overcrowded train. It is hard to discern a logic underlying operational responses to such conflicts. Most workers seem to cope without prescribed instruction.
In general, operator strategies initially tended to be geared toward deliberate coupling of competing values, though this was fragile. Workers abandoned coupled responses, deliberate or not, as conflicts and pressures to cope increased. Then, they either began decoupling or see their intentions to couple disaggregate into emergent coping.
To further illustrate this, we distinguish two types of operational conflicts. First, there are quality-related conflicts, for instance, when managerial instructions for a situation are mutually exclusive. In our energy case, an electrical technician was required to do a safety test before fixing an installation, but the device used to do the test had been labeled “unsafe” by the company. In other words, two inconsistent imperatives for safety existed, which excluded any coupled response by the mechanic. A second type of conflict is quantity-related and arises from, for instance, the large amount of work pressure generated by managerial imperatives as well as self-perceived imperatives to maintain various public values. For example, at ProRail when too many train drivers called a rail traffic controller, the controller had less time to oversee the logistic puzzle and optimize traffic flow. Controllers then had to trade-off time spent on the logistic puzzle against being responsive to the train operators. Yet in doing so, they risked both dissatisfying the clients of their organization and lapsing into logistic chaos.
For both types of conflict, it appears difficult to cope in coupled and deliberate ways. Poor quality of instructions often induces workers to choose between them, decoupling the conflict. Instructions for train punctuality, as said, often conflict with instructions for other values. Conductors may just choose delays without considering the consequences. However, they may also abandon all instructions and find coupled ways to address both underlying values, violating rules on both sides of the conflict. This more improvised response is often based on rather personal heuristics developed through experience. A conductor explained how he personally chooses between train punctuality and other values:
There are many reasons not to depart on time . . . Looking at the signals [of other platforms] tells me if I can make a train connection by waiting an extra minute or two . . . [W]hen it is extra cold outside I may wait some more.
In another example, rail traffic controllers said they use common sense to maneuver through conflict situations. Controllers are instructed to make sure delayed trains give way to punctual trains, but there are many exceptions in practice. They explain these by saying they have to make the exceptions “to keep the flow of trains steady.”
Therefore, many coupled responses are emergent, consisting of improvisations and last-minute solutions to neutralize friction between public values. However, they are hardly supported by formal forms of organization or structural information support. Instead, operational workers formulate their own vague, difficult-to-verify operationalizations of values, which couldn’t be adequately captured in words. Hence, the frequent use of phrases like “what looks good,” “what fits,” or “to keep the flow steady.”
Regarding quantity-related conflicts, as instructions and imperatives might suddenly mount, the exact point and context of coping is typically unpredictable. Under the cross-pressures of various requirements, workers often indicate that the unspecified but dominant imperative of “continuity of operations” precludes compliance with any one specific norm above others, forcing them into painful trade-offs without the conflict being clearly articulated up front.
Most of this coupled coping tends to be implicit and fluid. “We just use common sense” is a typical phrase workers used to describe how they handled situations. One operator made the almost metaphysical observation: “What we actually do is not that concrete.” This coupled coping repertoire, though welcome for many unplanned conflicts in normal day-to-day use, proves unstable when crisis situations or sequences of deteriorating events take workers by surprise. Then, the initial effort to couple deliberately frequently overburdens workers with responsibility, as trade-offs arise from the very attempts of workers to couple multiple imperatives for multiple values. Workers might lose control of the conflict situation, as they lose themselves in the details of a particular part of either a severe rail traffic disruption or an acute maintenance problem in the energy network. They lack the time to cope properly. Workers indicated being uncomfortable with the coping that emerges during crisis situations, partially because they cannot rationalize how the trade-off was made. They underlined this with phrases such as “priorities emerge,” “safety is a gray area,” and “sometimes doing something is better than doing nothing.”
A more comfortable solution often is to decouple the imperatives associated with the conflicting values—a more “bureaucratic” response. Many operational workers learn to use so-called “mono-value” constraining rules to guide them through the more demanding quantity-related conflict situations. By following just one specific rule associated with a specific value, their actions are rationalized and legitimized, even if it implies ignoring other values. When coping pressures rise, operational workers might lapse into such decoupled coping, again as an emergent strategy. Decoupling then helps them to regain control over the situation. As a result, more unintended or implicit trade-offs occur.
In sum, conflict in the operational stage is much more acute, in contrast to the planning stage. There is an initial tendency deliberately couple, that is, to optimize actions in relation to different conflicting values. However, in the face of mounting pressures or contradicting imperatives, this local optimization develops into other forms of coping. Deliberate coupling seems preferable from an optimization perspective, but the disadvantage is that current heuristics to optimize remain vague, underarticulated, unverifiable, and unsupported. Moreover, substantial time and effort is required to identify the right response. Both decoupling may save time, but decoupled coping like coupling nonetheless risks slipping into emergent coping if operational workers do not succeed in responding in time on the basis of enough information on the conflict at hand. Overall, the pattern of coping is much more diverse and unstructured in contrast, again, to the planning stage.
Coping Responses in the Management Stage: Sanitizing Feedback From Conflicts
The performance effects of operational trade-offs are overseen by middle managers who provide, when necessary, checks and balances. They generally prioritize values that, in retrospect, appear to have been neglected in the operational process. Such corrective management is systematically triggered by single values: a norm that hasn’t been met, a rule that was deviated from, or an extra external demand that was imposed. From a coping perspective, this managerial response is not only decoupled but also gives rise to emergent coping, as the trade-offs themselves remain unrecognized.
Middle managers receive feedback on operational processes in an aggregate (quantitative) way and in a casuistic (qualitative) way. In the aggregated feedback, value conflicts and trade-offs get systematically “sanitized” before middle managers even begin coping. Performance monitoring systems produce aggregate and generalized information, mostly geared toward the externally prescribed norms and standards. These systems do not enable managers to understand the emerging conflicts and coping strategies in operations. Rather, aggregate performance figures filter out conflicting imperatives and detailed interpretations of values in relation to trade-offs. “We see no conflicts” or “there are no conflicts” was often heard among middle managers. What these managers structurally respond to is the requirement to give precedence to specific values in the face of a discrepancy between norms and performance.
Middle managers often create projects or set up working groups in response to mono-value signals. A disillusioned middle manager at the rail infrastructure company acknowledged that he and his colleagues “pay more attention to projects than to the operational processes themselves.” “Starting working groups has become a knee-jerk response,” a working group leader in the energy distribution company complained. Somehow, in these mono-value oriented projects, “creativity does not get off the ground,” managers concluded. Managers also struggle to get the operational core to pay adequate attention to their projects. Both problems derive from the fact that most projects do not recognize, let alone engage, the coping that is going on in operational practice.
A substantial number of managers said they do not use performance targets to judge operational workers. Instead, they said to value the “stories” of their operational workers more than the numbers. Middle managers learn a great deal more about conflict situations by means of the casuistic, anecdotal feedback they receive through face-to-face contact with operational workers. After the fact, managers might give workers feedback on how to sidestep or optimize their daily improvisations, given company objectives and priorities. However, an alarming number of operational workers, about a third in each of the studied organization, indicate they never receive feedback on the way they solve conflicts. Some operational workers have, therefore, “unlearned” to expect guidance when they talk about their dilemmas.
The feedback cycle is constantly started but structurally fails to come full circle. Several reasons help to explain this pattern. First, managers attach a very different meaning to these “stories” than operational workers do. Unique dilemmas in operations prove statistically irrelevant from a strategic perspective. They are often emotion-laden, which leads to cynical managerial interpretations. The most important function of hearing these stories, managers say, is to enable their operational workers to vent their emotions. The need for feedback is considered low. Managers often tend to perceive story-telling workers as black sheep talking about black swans.
A second reason why the feedback cycle fails to come full circle is that managers generally have little leeway to contribute in the search for reasonable responses to unplanned conflict situations. Traffic controllers, for example, say they give right-of-way to certain trains, compromising formal rules but safeguarding “the overall continuity” of train traffic. Operational workers’ coping stories, in all studied organizations, explain their coping in terms of “complexities,” “impossibilities,” and “chaos” without pinpointing the conflicts underlying the trade-offs that occurred. Many managers say they do not feel equipped to judge these trade-offs, at least not better than the operational workers can judge them. Managers lack the hands-on experience to show how rules should be applied in messy conflict situations. Developing protocols to codify desired coping responses generally requires such a bulky handbook that it is typically outdated as soon as it is implemented. “There simply are no rules for conflicts,” one manager admitted.
Third, operational workers face many disincentives to share their coping experiences. Coping behavior often compels workers to violate rules and instead follow illegitimate norms with messy heuristics. Disclosing this behavior makes operational workers vulnerable to criticism. Some may fear losing their job. Sharing experiences with managers, staff, or researchers, moreover, takes time and generally provides little help in dealing with conflicts. Decoupled coping in particular offers little or no incentive to ask managers for feedback on trade-offs.
In sum, conflicts in operations are structurally resistant to attempts that make them tangible in the monitoring stage. Formal monitoring systems sanitize conflicts from feedback before middle managers can make sense of how values should have been balanced. Informal, anecdotal stories told by operational workers tend to lose relevance as well, if they even make it to the monitoring stage at all. The feedback workers then receive from their managers, if any, is often devoid of validity in conflict situations. When middle managers recognize the necessity to cope in operations, they often consider instructions unnecessary or undesirable. Prescribing certain trade-offs, moreover, may reduce flexibility and sidestep the situational intelligence required to optimize competing values in practice. As a consequence, management usually seems to overlook the reciprocal relationships between values and keeps pushing the challenge of coping back to the operational stage.
A Normative Discussion of Current Coping Behavior
Our findings empirically show how utility companies cope with value conflict in daily operations. Value conflicts mainly emerge in operations and little managerial guidance is offered to resolve them. The decoupled coping strategies in the planning and monitoring stage allow frictions to remain in the operational stage. Operational workers experience major difficulties in addressing conflicts and switch to different types of coping as pressures rise.
Is there a problem? Performance figures related to all public values, by and large, have improved simultaneously in all three studied organizations. In other words, public values do not seem to have been traded off over the years. Though reciprocal relationships between values have tended to be overlooked within the companies, aggregate performance indicators show no direct trade-offs, yo-yo effects, or other hiccups. Although workers in the energy case say increased attention to safety and efficiency directly hampers them in fulfilling customer demands, and managers in the train operating company say, “Emphasis can change from year to year, from quality of service to punctuality and back to quality of service,” these interdependencies are not clearly evident in the performance statistics. There are exceptions. For example, in two recent years, safety and punctuality in the rail sector seemed to show a direct trade-off. However, wider manifestations of competing public values are remarkably absent from the performance data (see also Steenhuisen, 2009).
Of course, not all public values get fully measured, less articulate values can be pushed out. There is ample evidence of strategic behavior and gaming behind the indicators. Nonetheless, the contrast between coping and performance remains remarkable. Thousands of people work together in these companies with greatly deviating ways of speaking and thinking about the values they share and how to prioritize them. Nevertheless, the organizations produce relatively stable outcomes—or more precisely, relatively stable indicators.
Therefore, we expect certain organizational mechanisms (e.g., buffer, coordination, variety) to be able to explain why seemingly counterproductive patterns of coping, in fact, prove effective. If we examine these mechanisms more closely for each organization, they appear brittle on the long run, because organizations structurally lack view of conflicts and feedback on coping.
The mechanism of buffering may allow, as well as hide, counterproductive coping patterns. Years of lower investment and lower quality maintenance may impact system reliability in the longer term, without being announced beforehand in rising interruption figures.
The coordination mechanism seems implausible, at least in any deliberate sense. Perhaps a system of checks and balances emerged in all three cases, without a central authority overseeing it. It remains unclear what holds this system together and how it remains stable on the long run.
The variety mechanism is more plausible. At least, we found diverse and unstructured coping strategies in the operational stage in all three cases. How the organizations find and maintain the right mix and the right level of operational variety remains unclear. As coping pressures rise, and may do so relatively unnoticed and unmitigated, the tacit variety of coping may degenerate. The utility service may then survive more and more on decoupled and emergent responses, undermining itself in the long run. Operational workers, as well as their managers, lack feedback on how changes in their conflict responses may imperil the currently intelligent variety of coping.
In short, the good news is that the current patterns of coping do not produce an overt problem in terms of aggregate performance. The bad news is that the organizations seem oblivious to how they currently enable themselves to neutralize the adverse effects of inconsistent oversight by means of redundancy, coordination, intelligent variety, and possibly other organizational mechanisms.
Implications for Regulatory Effectiveness
After our fieldwork within the regulated organizations, we wanted to follow the effects of coping with value conflicts further up the line to the level of external oversight. We held six meetings at oversight bodies to let them draw the implications from our findings first. These bodies were interested in the topic. They were also reluctant to consider the trade-offs and the encountered patterns of coping within utility companies as meaningful for oversight effectiveness. Respondents at oversight bodies generally explained that prioritizing among public values was outside their mandate and their competence.
A safety regulator, for example, defined the task as being “as sharp as possible on safety.” Another respondent said, “It is not up to us to establish trade-offs. Our task is laid down by law and we execute it.” Similarly, a consumer representative said, “We almost never make a trade-off in which we let down some customers to serve others or to gain new customers. That is not our role. Just let us criticize.”
A staff member in the energy case described a similar “mono-value” attitude of external oversight. In the case of working with a live wire, new technologies allow energy distribution companies to mitigate the related safety risks and reduce planned power outages significantly. The inspection authority on safety issues, however, was not prepared to talk about taking the related safety risks.
From a coping perspective, the relation between oversight bodies and the companies they oversee is remarkably similar to the relation between management and the operational core within the companies. Oversight bodies evaluate their performance in decoupled terms as well, ignoring trade-offs among the separate elements. The systemic risk is that neglecting the trade-offs caused by disparate oversight interventions obliges some form of noncompliance, thereby triggering further future interventions, like a dog chasing its own tail.
Meanwhile, the wider consequences of a seemingly simple norm for energy distribution companies to reduce costs or maximizing the use of capacity for a rail infrastructure company go unrecognized. Say, this external requirement for Value A initially instigates companies to revise their protocols or policies. Given our findings on coping, only after a while will managers discern the decline of Value B and strengthen a procedure to counteract this. Much later, it comes to light that both Value A and Value B have flourished at the expense of Value C. Another oversight body comes into the picture, intensifying enforcement of compliance for Value C and so on. As such, a swell of attention to, say, cost efficiency, safety, or train punctuality might trigger an overreaction within the company.
This has in fact occurred. In 2008, a strategic analyst at NS calculated that if all punctuality measures delivered the expected improvements, performance would theoretically add up to 140%. Yet, punctuality performance continued to fluctuate around 85% (at that time, an on-time train was defined as one leaving no more than 3 min behind schedule). This implies that 55% of punctuality disappears in resource-consuming operational conflicts.
We conclude that oversight effectiveness is challenged by our findings in two ways. First, oversight may overshoot its objectives by causing unintended effects—an instance of what Bardach and Kagan (2002) call regulatory unreasonableness. Second, continued overshooting could ultimately overtax the coping organizations to a breaking point. Rising coping pressures de facto decentralize to the operational processes triggering increasingly capricious priorities or bureaucratic coping responses as the pressures silently accumulate. This is difficult to deal with. After all, the critical point does not clearly announce itself to the demanding oversight bodies. The process of decline is gradual. Early manifestations of overtaxing might only appear in the many stressful operational dilemmas, in more emergent coupling, and in more forced decoupled responses. In fact, workers did say they increasingly “see no way out” in concrete conflicts. They perceived their daily work as “increasingly disorganized.” A repeatedly heard conclusion on conflict situations was “we just need to do something.”
Ironically, if overtaxation showed itself in disappointing performance figures, it might trigger oversight bodies to intensify their decoupled interventions. This would exacerbate the problem, rather than solve it. The oversight environment would increasingly incite the companies to find effective ways to improve performance instead of stimulating them to monitor, maintain, and support their current ability to cope. Under the influence of oversight then, deviant but professional coping may gradually erode, leaving behind a more brittle, if not unworkable, utility sector. If this is true, the current oversight systems are heading for a point of regret, when they discover that heavily regulated organizations have for too long neglected—and perhaps lost—their ability to cope with value conflict.
Although we argue that inconsistent oversight objectives may jeopardize public service provision, coordination among oversight bodies is not an obvious remedy. Our findings show that oversight bodies do not receive actionable evidence on unproductive conflicts, much like the managers in the companies did not get such evidence from the operational workforce. As the coping in regulated organizations tends to be implicit and unrecognized by its own managers, oversight bodies face even greater obstacles in discerning and deliberating on the intricate interdependencies of oversight objectives. Oversight pressures in all probability help to erode professional coping behavior, though oversight bodies are unlikely to recognize their own complicity on time.
Conclusion
Based on extensive fieldwork, this study explored how utility companies in a liberalized environment cope simultaneously with diverse public values. As expected, we encountered a large amount of (latent) value conflict and a high variety of coping strategies. We found two connected general patterns of coping: decoupled coping (protecting values against conflicts) at the management level and coupled coping (optimizing) at the operational level. Prioritizations among public values in concrete decisions on the work floor seem driven by rather vague, deviant, or even absent heuristics. At the same time, organizations seemed rather successful in neutralizing the many intricate areas of friction between public values. This is how the value trade-offs, which we found to be rather paradoxically described in the literature, get solved in practice. In the long term, however, the dominantly decoupled and retrospective nature of management and oversight may increasingly restrain coupled coping. The organizational mechanisms, we considered conditional to allow for systematic decoupled and emergent coping, seem unstable in absence of sufficient feedback on trade-offs.
More generally, we conclude that the concept of trade-offs is underdeveloped within the organizational settings of public service delivery. Values are systematically treated as nonfungible, particularly outside of operations. The three organizations studied manage their systems without paying much attention to optimization of operational processes. Instead, they treat competing objectives sequentially, identifying and appraising trade-offs retrospectively, expressing regret when their neglect becomes most evident.
These insights have repercussions for the effectiveness of regulatory oversight. Studies on multiple principal problems generally hypothesize that an inconsistent oversight system loses control to the regulated organization, which could exploit information asymmetry to arrange trade-offs strategically. Our findings, in contrast to our expectation, show that these regulated organizations do not structurally exploit day-to-day trade-offs. Instead, they suppress and displace their multiple principal problem, solving it in large part without even their own consent. In fact, there is a shared information deficit on the occurring trade-offs. Oversight bodies, with their inconsistent demands, do not necessarily lose control to the regulated organization but tend to lose control all together.
Coordination among oversight bodies has often been pushed forward as a corollary design principle in response to increasingly fragmented regulatory environments. Yet, progress can be said to be made only when oversight bodies have become sensitive to the coordination challenges that they impose. Our findings reveal that effective coordination at the level of oversight bodies is very limited, because these organizations do not receive—or seek—relevant information about the conflicts that occur in the delivery of public services. The intricate interdependencies among public values only become visible in operations. Oversight bodies, as well as the regulated organizations themselves, lack feedback on the (un)productive coping behavior that is provoked by their mono-value, norm-driven oversight. The systematic lack of feedback oversight bodies receive on regulatory inconsistencies makes that to prevent or coordinate them is, ironically, not really a task for the many public organizations overseeing public service delivery.
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research has been funded by the Next Generation Infrastructures Program.