Management controls and modern slavery risks in the building and construction industry: Lessons from an Australian social housing provider

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Abstract

Modern slavery presents a complex risk for organisations worldwide, with perpetrators continually adapting practices to maintain a veil of secrecy. While management controls may reduce modern slavery risks, little is known about how they optimally function across industries and organisational forms. To advance the state of knowledge, we examine an Australian not for profit housing provider using an interventionist research method. We draw on a combined conceptual framework of management controls and expectancy theory to analyse participant observations and document data collected over 24 months. Our findings show that despite constraints, the organisation reduced modern slavery risks. This outcome, informed by a social purpose within the organisation, was facilitated through the introduction and adaptation of cultural, personnel, action, and results controls. By discussing the changes this housing provider made, we add to the literature on management controls and modern slavery and provide theoretical insights into why they were adopted. We also highlight limitations in what the organisation could achieve that point to areas for future research.

Introduction

Modern slavery is a significant organisational risk for business in the 21st century. Modern slavery includes illegal workplace practices, such as trafficking in persons, [traditional] slavery, servitude, forced marriage, forced labour, debt bondage, [the worst forms of] child labour, and deceptive recruiting for labour or services (Christ & Burritt, 2021b). Approximately 40.3 million adult people are in modern slavery globally, including 24.9 million in forced labour conditions (International Labour Organization and Walk Free Foundation, 2017). No one is spared the ravages of modern slavery, with 160 million children worldwide also involved—four times the number of adults (International Labour Organization and UNICEF, 2020). Despite the knowledge that organisations can reduce modern slavery risks through management controls (Antonini, Beck, & Larrinaga, 2020; Passetti, Battaglia, Testa, & Heras-Saizarbitoria, 2020), scholars and practitioners lack an understanding of how to achieve this across industries and organisational forms (Christ, Burritt, & Schaltegger, 2020).

To advance knowledge regarding this phenomenon, we examine a non-government organisation (NGO) in the social housing sector. Social housing includes organisations that construct and rent accommodation to people who would otherwise be excluded from the private housing market due to their income or social status, such as people with disabilities (Hegedus, Lux, & Teller, 2013). Social housing is prevalent worldwide, including in OECD (2022) countries, where this form of housing applies to 28 million dwellings or 7% of housing stocks. This setting provides a compelling case not just because of the sector's size but also because it essentially comprises NGOs with a hybrid nature. In part, they are not-for-profits with a social purpose that would not support modern slavery. In part, they operate in a competitive market where modern slavery is rampant (Mullins, 2006; Pawson, 2006).

In Australia and the UK, the activities of these types of NGOs are often (although not always) subsidised by the government (Mullins, 2006). The performance of NGOs operating in this sector is thus beholden to a range of stakeholders, including government funding agencies, building companies and suppliers, philanthropic investors and the general community who provide a social licence to operate (OECD, 2022). Little is known about how this sector responds to the emerging risks associated with modern slavery (Thandi, 2020). This omission is compelling given that the broader literature on management controls in NGOs shows many failures to effectively reduce organisational risk via management controls (Agyemang, O'Dwyer, & Unerman, 2019). Further work is required as existing research focuses primarily on how NGOs support other organisations to reduce modern slavery risks (see Benstead, Hendry, & Stevenson, 2021) rather than how NGOs themselves can reduce the modern slavery risks pertinent to their operations.

NGOs who construct and maintain social housing warrant particular attention. Modern slavery is widespread in the building and construction industry, with 18% of reported modern slavery cases occurring in this sector alone (KPMG, 2020). This is due to a reliance on low-skilled labour (Australian Human Rights Commission, 2020) and raw materials (such as bricks) that are produced in countries notorious for human rights violations (Crates, 2018; Mellon, 2018). For this reason, NGOs in the social housing sector are particularly vulnerable to the risks of modern slavery. Hence, we ask: How can an NGO operating in the building and construction industry use management controls to reduce the risk of modern slavery occurring within its organisation and supply chains?

Based on the nascent state of the literature on management controls and modern slavery (Christ et al., 2020) and the dearth of literature at the intersection of social housing and modern slavery, we used an interventionist research approach (Baard & Dumay, 2020), informed by expectancy theory (Vroom, 1964) to answer our question. Australia was chosen as a setting because of recent interest in the topic by the Australian Government (2020b) (as evidenced by the National Action Plan to Combat Modern Slavery 2020–25), which calls for significant action by all pillars of the community to do more to eliminate modern slavery.

Expectancy theory was selected given the need for greater agency in our setting. This theoretical perspective purports that employee action (including managerial action) is driven by expectancy, instrumentality, and valence (Estes & Polnick, 2012; Hitt, Black, & Porter, 2012). Expectancy refers to the employees’ beliefs about their role and ability to perform a task (Hitt et al., 2012; Latham, 2012), instrumentality concerns employee perceptions regarding whether such actions will result in a favourable outcome (Heneman & Schwab, 1972; Van Eerde & Thierry, 1996), while valence relates to the value of the perceived reward (Locke & Latham, 2004; Worth, 2018). Despite some alignment between the central tenets of expectancy theory and management controls, little research has examined this interplay.

We look at this issue by drawing on the objects of control framework developed by Merchant and Van der Stede (2017). This framework was selected because, at the beginning of the research project, we did not have much detail on the organisation's culture. Therefore, it was difficult to ascertain the appropriateness of any framework, such as Kraus, Kennergren, & von Unge's (2017) ideological control, which focuses on the role of belief systems to inspire and direct organisational action. Instead, and as required by the case, the framework of Merchant and Van der Stede (2017, p. 222) starts by identifying control problems, including a “lack of direction”, “motivational problems”, and “personnel limitations”, which then informs the selection of appropriate controls. Through our interventions, we explored all four forms of controls: cultural controls, which relate to behaviour-based organisational rules, encompassing but not limited to organisational culture and strategy; personnel controls, such as training, recruitment initiatives, informal coaching, and mentoring; action controls, which relate to frameworks designed to encourage or prohibit behaviour (including written organisational policies and procedures associated with rewards or sanctions); and results controls related to review and performance measurement.

We draw on expectancy theory to depart from (and thus extend) existing theoretical explanations in the management control literature, noting that existing studies primarily examine management controls from the perspective of contingency and new-institutional theory (Tucker & Parker, 2013). A theoretical extension of the management controls literature through the lens of expectancy theory is appropriate given the characteristics of modern slavery. Several scholars illustrate that weak management controls enable modern slavery (Wang, 2020) and provide examples of how it occurs in different industries and across the world, including through supply chains (Antonini et al., 2020), health and safety management (Passetti et al., 2020), and enterprise bargaining agreements (Yang, Dumay, & Tweedie, 2020). History also shows that implementing management controls to reduce or avoid modern slavery is difficult (Gallhofer, Haslam, & Van Der Walt, 2011; LeBaron & Rühmkorf, 2019). This is because modern slavery is poorly understood (Barna, 2018; Monciardini, Bernaz, & Andhov, 2021), and perpetrators continually adapt their practices to maintain a veil of secrecy (Christ & Burritt, 2021a; Mellon, 2018; Zielinski, 2019). Indeed, research in the for-profit sector suggests that cultural controls are insufficient in isolation and that organisational performance requires complementary personnel, action, and results controls (Akroyd, Kober, & Li, 2019). Hence, if organisations wish to reduce modern slavery risks, they must first understand what they want employees to do. They must examine employee motivations to act and assess whether they have the skills and knowledge to complete what has been asked of them. A theoretical understanding of how this can be achieved in our research setting is lacking (Christ et al., 2020).

Over 24 months, we worked with an Australian NGO, Tier1CHP,1 to identify and explore how it improved management controls to reduce modern slavery risks. Tier1CHP is an Australian social housing provider with extensive connections and contacts within the Australian building and construction industry. The first author (hereafter ‘the researcher’) attended and planned meetings, reviewed organisational documents, and ultimately aided in developing and implementing management controls, all of which form the primary data sources analysed.

Our results extend existing research in three ways. First, we broaden work regarding NGO management controls (Chenhall, Hall, & Smith, 2017; Kraus, Kennergren, & von Unge, 2017) to provide the first examination of how management controls can reduce modern slavery risks using the four objects of control as outlined by Merchant and Van der Stede (2017). Specifically, we show how cultural and personnel controls reduced modern slavery risks. We also show how these controls helped other actions and results controls to be accepted within the organisation so as to reduce the risks of modern slavery. Second, we provide new theoretical insights that illustrate how the central considerations of expectancy, instrumentality, and valence help to change and improve management controls—insights that advance prior research on management controls (Tucker & Parker, 2015) and modern slavery (Christ et al., 2020). Third, we advance the social housing literature (Mullins, 2006; Power & Bergan, 2019), demonstrating that, while tensions might exist between the social and economic goals of NGOs operating in this sector, in our case, the focal organisation remained committed to upholding social good.

The balance of our paper is structured as follows. Section 2 summarises the literature on modern slavery risks and management controls pertinent to the research setting. Section 3 outlines our research methodology. Section 4 contains the results, followed by a discussion of their implications in Section 5. We offer concluding remarks addressing the limitations of our study and future research opportunities in Section 6.

Section snippets

Modern slavery risks and management controls

To ground the need for this research, the next section provides a brief overview of the contemporary state of knowledge regarding modern slavery risks. This includes those risks specific to the building and construction industry and to NGOs more generally, including social housing providers. The section concludes with an overview of the conceptual framework that informed this research.

Methodology

We adopted an interventionist research (IVR) approach, which prior work shows is well suited to academic research (Dumay & Baard, 2017), including studies on management controls (Chenhall et al., 2017). As Dumay and Baard (2017, p. 5) define it, IVR is a methodology

… based on case study research whereby researchers involve themselves in working directly with managers in organisations to solve real-world problems by deploying theory to design and implement solutions through interventions. IVR

Findings

As an IVR team, the researcher and senior management assisted Tier1CHP in developing cultural, personnel, action, and results controls. The following section outlines the controls that were in place before the IVR and how the intervention results relate to both the theoretical framework and the four objects of control, but it is worth noting that the process of developing controls was not linear. Thus, the insights presented reflect an etic interpretation of the key events and interactions that

Discussion

Our case study provides novel insight into how and why an Australian social housing provider reduced modern slavery risks through management controls. Specifically, while other scholars illustrate the effectiveness of management controls in other NGOs settings (Chenhall et al., 2017; Kraus et al., 2017), to our knowledge, we are the first to expand on how management controls can reduce modern slavery risks using the four objects of control by Merchant and Van der Stede (2017). While our

Conclusion and limitations

This study provides new insights into how management controls can reduce modern slavery risks in the context of an Australian social housing NGO. Through an in-depth case study, we show cultural controls before the organisation embarked on improving practices to mitigate modern slavery risks and highlight how these smoothed the way for staff to accept other organisational controls. We illustrate how a culture in which employees felt a strong attachment to the organisation's vision, including an

Acknowledgment

The authors wish to thank the special guest editors, managing editors, and anonymous reviewers for their helpful feedback through the revision process.

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