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If You Can’t Measure It You Cant Manage It college application essay help Music online class help

Everything in order to adequately manage it was Richard Demings Total Quality Management. Quality costs include the costs of preventing quality problems, the costs of findings quality problems, the costs fixing quality problems that are found when the product is still in the manufacturer’s hands and the cost of fixing quality problems that are found when the product is in the hands of customers (Kaplan, Atkinson, 1998). Deming taught top Japanese executives to measure and continuously improve these costs.

Budgeting plays an extremely important role in performance easurement which help managers to make sound decision as the comparison of budgeted with actual results can be made. Cash budget, sales budget, production cost budgets, capital overhead budget, capital expenditure budgets, and etc. need to be measured properly in order to manage the entire system towards the goal of organisation as budgeting affects all areas and it is vital to know where weaknesses lie so they can be managed to an acceptable condition with due priority.

A way of measuring against an accepted standard is needed in providing reliable information hat assures us that what we are doing is right. If there is no measurement, it makes it difficult for us to Justify any increases in expenditure or change. However, budgeting is widely critised (Hansen, Otley, and Van der Sterde 2003; Jenson, 2001 ; Hope & Fraser, 2003). Using budgets in performance measurement “creates gaming, dist trust and ill will. Distorts incentives, motivating people to act in ways not consistent with the overall best interests of the firm” Oenson, 2003).

Budgets are an example of how using measurement to manage can move the emphasis from the nderlying objective the measure is trying to gain to the measure itself. The use of measurement for control in budgets can be contrasted with Intellectual Property which cannot be measured accurately like more tangible assets. The task of managing intellectual property and using it to the create shareholder wealth is difficult when a firm cannot borrow against them, insure them, or even audit them properly. This is a significant problem when intellectual property is becoming such a valuable part of business.

Many firms will choose to spend significant funds on ctivities such as employee training when they are unable to measure the outcome, however this does not mean that firms should ignore the importance of intellectual property. This is similar for organisational culture, which is a vital part of organisational success (Barney, 1986; Heck & Marcoulides, 1993; and Denison & Mishra, 1995) yet it is hard to measure in quantitative terms. Through recruitment, training, mission statements, social activities and branding organisation’s create a corporate culture that they think will help them be successful.

By focusing on these mmeasable items firms can manage there outcomes, however, it requires more insight into underlying economic factors than quantitative measures. The ability of firms to measure many items can also distract managers from what is truly important or bombard them with to much information to process. If managers only focus their attention on the things which can be measured then important aspects of business will go unnoticed and unimproved. Some management accounting tools have gone part way to counteracting these problems.

Kaplan & Norton’s balanced scorecard rovides a way to integrate non-financial measures, drawing managers attention to some aspects of business which previously went unmeasured and often unmanaged. interact. Risk is an important factor that organisations face, managers need to be proactive in their attitude to risk management and come up with tools to mitigate as much of the identified risks as possible to maximise future gains. Risks need to be managed, however the measurement of some risks present a difficult task. For example litigation risk, political risk, or risks caused by natural disasters.

Organisations may be able to come up with some hypothetical assessment or know they are more susceptible to this risk now than they used to be but there can be no true measurement of many types of risk. How are you to measure the chance of some future event beyond your control, especially in todays rapidly evolving business world? Despite the inability to measure some types of risk they still a need to be managed through internal controls. Conclusion The premise that “If you can’t measure it you cant manage it” is certainly a contentious one that covers many aspects of management and accounting.

Although many areas of business certainly benefit from close measurement and monitoring, the changing nature of business to a knowledge based economy with less traditional processes which can be reliably measured has meant that managers need to be careful to also manage areas of their business which cannot be measured in traditional ways ensuring they are not over emphasising measurable items so that the underlying purpose of there measurement it not forgotten or distorted. Bibilography Barney, J. , (1986). Organizational Culture: Can It Be a Source of Sustained Competitive