The costs of activity-based management

Páginas: 63 (15638 palabras) Publicado: 29 de abril de 2011
Accounting, Organizations and Society 27 (2002) 99±120

The costs of activity-based management
Peter Armstrong*
Department of Management, University of Keele, Sta€ordshire ST5 5BG, UK

Abstract Activity-based costing and management are now the stock-in-trade of a lucrative industry, with at least one Big Six consultancy operation devoted wholly to theirpromotion. Both techniques represent a major extension of accountability in the modern corporation, into a zone previously de®ned in accounting terms as ®xed overhead. The mechanics depend on treating the sta€ department as a mass-producer of repeated acts of routine service (`activities') performed `for' particular cost-objects, usually products. By treating these activities as performanceindicators, payroll budgets can be linked to activity volumes thus creating pressures for the casualisation of sta€ employment. The activity frame of reference, particularly when linked with `value analysis', also encourages the stripping-out of all sta€ work which cannot be accommodated within its de®nition of activities. This threatens a dumbing-down of sta€ departments in which non-routine initiativesaimed at competitive advantage in ®elds such as human resource management or marketing may be sti¯ed because they cannot be accommodated within the language of accountability imposed by ABM. These arguments are concretised through an examination of the ABM treatment of one of its favoured targets: the purchasing function. The contrast between this and the supply chain management approach advocatedby practitioners and academics who take the function seriously is a stark illustration of the limitations of ABM as an approach to the management of sta€ activity. # 2001 Elsevier Science Ltd. All rights reserved.

1. Introduction: ABC and the politics of ®xed overhead 1.1. Fixed overhead as an employment shelter Writing in the 1970s, against a background of rising unemployment, increasedcasualisation and escalating industrial unrest, Freedman (1976) found it useful to visualise the working population as engaged in a ``search for shelters''. The shelters she had in mind were of two kinds: the systems of employment protection created by trade unions and professional associations and internal labour markets within the capitalist corporation itself, which

existed as a result of theincomplete development of its systems of accountability and control. Where manufacturing operations were increasingly subject to the disciplines of budgetary control and standard costing,1 sta€ departments, such as marketing, personnel management and accounting itself, remained accountable only through the discursive medium of the management committee. The result was a marked contrast betweenconditions inside and outside the regime of management accountancy. On the one hand, the wages of the production worker, and to some extent, those of
1 The time-scale of these developments varies enormously from company to company. On the one hand companies such as Renold Chains were experimenting with standard cost systems before the First World War (Bougen, 1989). On the other hand, some prominentUK motor companies were still operating in ignorance of their unit labour costs as late as the 1970s (Armstrong, 1989).

* Tel.: +44-1782-583601; fax: +44-1782-584272. E-mail address:

0361-3682/01/$ - see front matter # 2001 Elsevier Science Ltd. All rights reserved. PII: S0361-3682(99)00031-8


P. Armstrong / Accounting, Organizations and Society 27(2002) 99±120

the supervisor and junior manager were treated as variable costs of production, to be adjusted in line with output, so far as was permitted by trade unionism and government regulation (Armstrong, 1994; Armstrong, Marginson, Edwards & Purcell, 1996, in press). Employment in the sta€ department, on the other hand, remained relatively secure, depending on the abilities of its...
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