This article focuses on organizational and social accountability reforms and employee behaviour in an Australian local authority. Using the institutional theory and behavioural literatures, it sought to understand how recent local government reforms in Australia influenced a local city council authority to restructure its internal practices, which in turn caused employees' motivational and morale problems. Our findings suggest that the organization implemented two management control designs: (1) accural-based budgeting; and (2) the Balanced Scorecard type performance management system in order to appear modern, rational, and legitimate. The findings suggest that when employee behavioral issues are not addressed adequately changes tot he internal practices of an organization may have far reaching impact on its employees, which in turn may foster a strong employee resistance and de-motivation. Several social, organizational and behavioral issues are generated for policy makers and practitioners.