Magazine article CMA - the Management Accounting Magazine

Measure It to Improve It

Magazine article CMA - the Management Accounting Magazine

Measure It to Improve It

Article excerpt

Measurement is an integral part of improving quality and productivity. In fact, it's often said if you can't measure it, you can't improve it.

Measurement is often associated only with production floor activities and many companies incorrectly believe white collar and knowledge workers can't be effectively measured. As accountants, we often support this notion by failing to measure our own efforts.

The fact is, the performance of accounting functions can be measured. Several years ago, the American Productivity & Quality Center published an important work entitled "The Master Measurement Model of Employee Performance," which specifically included accountants and accounting departments. Companies contributing to this work included the Hertz Corporation, ITT and Northwest Airlines. Findings of this model included the following:

Accountants' services/products

Accountants traditionally perform five distinct services: financial reporting and records; cost accounting; cash management (including payables and receivables); auditing, and tax management.

There are basically two types of products: routine reports and special reports.

Accountants' customers

Company executives are the major customers. Different kinds of accountants, however, serve different kinds of "clients."

Cost accountants provide reports to operating management. Cash management accountants deal with lending banks, key material suppliers and outside customers. Financial reporting specialists work with shareholders and investment bankers. Tax specialists furnish reports to government agencies.

Accountants' objectives

Examples of objectives include:

* Deliver accurate information.

* Deliver relevant information for decision making.

* Complete assigned reports on time.

* Reduce the cycle time of routine reports (the time from receipt of information to issuance of the report).

* Reduce costs of routine reports (indicated by the number of reports completed by the targeted group of accountants).

* Improve both the response time and the quality of special reports.

* Improve the thoroughness and relevancy of audits performed by internal audit groups.

* Bring documentation of reports closer to company standards. …

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