Controllers and their brains – Frank Hartman

brains controller

Controllers and their brains

By professor Frank Hartmann

Over the last decades the controller has become a functional name that spans several organizational responsibilities. Controllers are typically responsible for maintaining and the internal financial management system. They are responsible for budgeting, planning and forecasting,  and for reporting. They also support local line managers in decision making and keep a close eye on the development of organizational performance in line with strategy. Controllers are typically well versed in business economics, accounting and finance. Their major role is to safeguard economic rationality. When exposed to forces that may obstruct this rationality, controllers are expected to stand up and serve the larger interests of their organization rather than any narrow interest by their local manager.

This is the typical normative picture of controllership, which appears in textbooks and determines the way we students and professionals to become controllers. The norms of rationality and ethicality are also endorsed and proclaimed by professional organizations of controllers, such as the American IMA (Institute of Management Accountants), the British CIMA (Chartered Institute of Management Accountants) and the Dutch VRC (Vereniging van Register Controller).

A question that has received an increasing amount of interest in the academic literature is how controllers actually behave in circumstances. The frequent incidence of ‘accounting scandals’ in particular have spurred this interest. Ex post analyses of such scandals often reveal that overambitious or overoptimistic line managers try to get things their way despite the harm this inflicts on the organization. Classical cases are those involving ENRON, AHOLD and Parmalat, while a current case is that of Wirecard. In these cases it seems clear that line management pushed for decisions while overestimating or overstating their true economic benefit. In all these cases, we must assume, controllership failed, but how?

To answer this question we need to understand better the dynamics of controller roles. Are controllers able to temper unwarranted ambition and optimism by their line managers? We need to take into account that controllers are may be trained and motivated to counter such ambition and optimism with realism, but that they may be unaware of inappropriate pressure. A strong case for this was made in the aftermath of the ENRON crisis. A Harvard Business School paper argued that auditors without any bad intentions could produce bad audits. The authors pointed to the social complexity of the professional setting in which auditors functioned, in which they were subject to all kinds of silent forces they may not be aware of.

In several studies we therefore explored the situation for controllers. In a study on budget overestimation (Hartmann and Maas 2010), we discovered an important role for controller personality but also for the extent they felt emotionally connected to their units and their manager. When emotionally connected, controllers might simply not be able to provide objective evaluations. More recently we have extended this line of research by looking at the concept of empathy. Empathy is considered a psychological characteristic of people that signifies the extent to which people can put themselves ‘in the shoes of others’. Empathetic people are people who easily feel sorry for another, and who feel another person’s joy and pain as if it was their own. Empathetic people are also able to evaluate situations and proposals from the perspective of another, and automatically take another person’s interest into account. Our focus on empathy also enabled us to make a step towards neuroscience, in which empathy has been studied already. This step towards neuroscience was an important one to make, because empathy is likely to be one of those ‘silent forces’ that controllers may not be consciously aware of. Our expectation was that controllers might fail to safeguard organizational rationality, not by some conscious desire to please their managers, but rather the unconscious influence of empathy. In a recent paper we investigated this claim.

We invited controllers into our lab and showed them movies of emotional faces. We also asked them their responses to short cases that described situations in which managers asked controllers to cooperate in misreport. Such misreporting would serve managers, who were afraid to otherwise lose their bonus or job. We found that controllers who showed greater EEG (electroencephalography) responses to the emotional faces, indicative of greater empathy, were also more inclined to engage in misreporting.

This suggests an important role for ‘silent forces’ in the working environment of controllers, but it still leaves open many questions. The most important question is probably what we can do to make controllers more aware of these forces, especially since they seem to operate outside conscious experience. At the very least, however, studies like this strongly motivate to pay attention to controllers’ social skills on top of technical and professional abilities.



Bazerman, M. H., Loewenstein, G., & Moore, D. A. (2002). Why good accountants do bad audits. Harvard business review, 80(11), 96-103.

Eskenazi, P. I., Hartmann, F. G., & Rietdijk, W. J. (2016). Why controllers compromise on their fiduciary duties: EEG evidence on the role of the human mirror neuron system. Accounting, Organizations and Society, 50, 41-50.

Hartmann, F. G.H. & Maas, V. S. (2010). Why business unit controllers create budget slack: involvement in management, social pressure, and machiavellianism. Behavioral research in accounting, 22(2), 27.

Hartmann, F.G.H, Kraus, K., Nilsson, G, Anthony, R. & Govindarajan, V. (2020). Management Control Systems, McGraw-Hill.


Word of thanks

Once a month there will be published an article written by one of our teachers economics at the Radboud University. We really appreciate the contribution of the economics department a lot. This month we may thank Frank Hartmann, professor of Business Economics, for his article about controllers and their brains.