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Its’ Greek or Geek to Me : ICMS – Success is NOT Logical
Its’ Greek or Geek to Me
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9 August 2013 - 23:28, by , in Activity-Based Cost Management, No comments

Church attendance of American men is steadily declining. According to Barna Research Group, the 43% who went to church at least once a month in 1992 dropped to 28% by the end of the 20th century. Barna’s study revealed that most unchurched men believe church involvement does not offer any value. When asked to define what they want from a church, they responded with three primary desires:

  • I want practical solutions to my daily problems.
  • I want a church that will help me understand the Bible without reverting to “church-speak”, e.g. righteous, salvation, etc.
  • I want to meet like-minded peers in a non-threatening setting.

The resistance to Activity Based Management (ABM), especially by administrative functions, stems from the same three basic desires. Managers from overhead functions such as Human Resource, Legal, Marketing Research, Treasury, and Information Services often question the benefit of participating in an ABM implementation. They view ABM as either “Greek” (not understandable) or “Geek” (not relevant).

To successfully implement ABM and integrate them into an enterprise-wide ABM measurement system requires actions that address the three needs:

  • I want practical solutions to my daily problems. 
Support department managers rank the statement “Hi. I’m from the ABM Team and I’m here to help.”right up there with “I’m from the I.R.S. and I’m here to help.” When it comes to ABM, managers want to know that you care before they care what you know. I’ve never met a manager who didn’t have a problem of some sort. But they don’t want to be “sold” ABM. Instead, they want solutions to their daily problems. If ABM is one of those solutions, they’ll listen and participate.
Before scheduling an activity analysis interview, hold a “pity party”. Ask questions such as:
    • “Are you experiencing any repetitive problems in your department?”
    • “What information do you lack that would make your job easier?”
    • “Do you have any goals this year that seem unachievable?”
    • “Do you have daily or weekly performance measures that confirm your department is on
    • target?”
    • “What is your biggest frustration with the current budget and accounting system?”
The answers to these questions and others will open the door to defining their needs. Your role is to help them, if possible, implement a solution to those needs.
  • I want relevant, easy-to-understand decision-making information without “ABM-speak”.
Activity Based Management software vendors, consultants and authors have developed their own vocabulary, e.g. activities, cost drivers, Bill of Activity, cost pools, non-value added cost, etc. Support department managers, like most non-accountants, want the benefits of an ABM system without the ABM lingo. Here are three methods to convert “ABM-speak” into common, everyday
terms:a. Activities… To answer the question, “What is an activity?”relate it to everyday life. Ask support department employees if they use a Day Timer(TM) or a daily To-Do List. Most will answer “Yes”. Both these documents account for “activities”. Dennis Rainey, in the July/August 2000 issue of Life@Work journal, listed the activities of his typical day:
Non-Negotiable Time for Work (in hours)
Commuting…………………….. 1.0
On Job (includes lunch)………….9.5
TOTAL…………………………10.5Non-Negotiable Time for Home (in hours)
Body maintenance………………..1.0
Prayer & Bible Study…………….0.5
Mandatory/Unplanned duties……….0.5
TOTAL…………………………10.5Negotiable Time for Work or Home (in hours)
Spouse, children, read…………..3.0

A “personal” ABM activity analysis shows how we consume our most precious resource…time. It emphasizes the importance of being good stewards of our time. Use this “personal” example to explain to employees that “professional” ABM will analyze the 5-10 significant activities that consume the 9.5 hours on the job. By understanding our limitations and making priority-based
activity choices, we can be more productive and satisfied, both personally and professionally.
 Drivers… Instead of using the terms “cost driver” or “activity driver”, ask support departments for their output measures or workload measures. The term “driver” was created by accountants for accountants. Driver terminology may be imbedded in your ABC software product, but don’t feel compelled to use it in your everyday conversations, training materials or ABM reports. Drivers are measures. Therefore, call them measures, not drivers.
c. Value… Instead of the using complex definitions for value or non-value added activities, simply ask support department employees, “Which of your activities would you like to spend more time doing next year?” Their answer will typically list their value-added activities. Conversely, activities that they hate to do will be their non-valued time.
  • I want to meet with like-minded peers in a non-threatening setting. 
Many support department managers either think or say, “I bet I’m the only Legal Department in the world that’s being asked to implement ABM!”To them it seems true because most ABM articles, books and case studies have in fact focused on manufacturing organizations. But this is no longer true. For the past four years, there actually have been more ABM implementations in the service and government sector than manufacturing. To create a friendlier implementation of ABM in support functions, try one or more of the following:a. Encourage support departments to benchmark their activities with people outside the company. Challenge them to convince you that they are the best in the world. For example, web sites such as BenchmarkReport.comwill link you with suitable activity benchmarks and partners. Or post your benchmarking interests for free on thewww.ICMS.net benchmarking web page.
b. Contact the Institute of Management accountants at www.IMANET.org. They have numerous industry discussion groups that can put you in touch with people who have implemented ABM in support functions.
c. Ask managers that have successfully implemented ABM to share their experiences with departments that have not done so yet. Encourage the parties involved to have an open dialogue. Discuss the principles, uses and benefits of ABM. Define what has worked and not worked. Dialogue leads to information. And information leads to action.
d. Ask ICMS to add your support department managers to our e-mail article distribution list. Send your list totompryor@icms.net. Our articles will potentially pique their interest or be a catalyst for hallway discussions.
e. Purchase one or more of the new ABM books that contain support department ABM examples.
  • Show managers that they are not the only people being encouraged to implement ABM. I have listed book recommendations in previous e-mail articles and on the ICMS.net web site.

Eliminating unfamiliar terminology (The Greek) and irrelevant uses (The Geek) brings a resurgence of results. Churches are beginning to proactively address the needs of both men and women. A conversational-style Bible titled The Bookwas a huge success in 1999. And Sunday School
classes on personal finance, marriage and single-parenting are growing in popularity because they meet people’s needs. Eliminate unnecessary “ABM-speak” in your organization. Tailor ABM data gathering, reports and training to the needs of all employees, not just the ABC product costing crowd. You’ll likely experience a revival of positive results.

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