Accounting to Enhance Organizational Productivity
| Date | 01 April 1992 |
| Published date | 01 April 1992 |
| Pages | 26-28 |
| DOI | https://doi.org/10.1108/02635579210012278 |
| Author | Steve Mills,Brian H. Kleiner |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
26 INDUSTRIAL MANAGEMENT & DATA SYSTEMS 92,4
Accounting to
Enhance
Organizational
Productivity
Steve Mills and Brian H. Kleiner
Industrial Management & Data Systems, Vol. 92 No. 4, 1992, pp. 26-28,
© MCB University Press Limited, 0263-5577
T
here is a renewed commitment among
American corporations to increase
productivity.
The accounting profession is playing a major role in
promoting or enhancing productivity in
organizations.
This
article
will
present
ways in
which accountants are fulfilling
that role. Accountants enhance productivity through
various means. They report on the results of operations
for the business entity as well as report directly on
productivity. The proper execution of the control function
also serves to enhance productivity. The accountant does
other things to enhance productivity, such as establishing
accounting and operational control systems and advising
management on methods to improve productivity.
The problem of productivity in the United States is of
primary concern to most
corporations.
In the years following
the Second World War the US had the strongest economy,
far out distancing all foreign competitors in measures of
productivity. In the last ten to 15 years, we have seen
European and Asian industrialized countries surpass the
United States in growth of
overall
productivity. The effect
of this has been a renewed commitment among many
corporations in America to find and implement methods of
improving productivity. The accounting profession is playing
a major role in the quest for methods of achieving this as
well
as establishing systems which should serve to promote
or enhance productivity in organizations.
The ways in which accounting enhances productivity are:
(1) through its feedback or reporting role;
(2) through its control role;
(3) through its advisory role; and
(4) through its role in establishing systems.
Reporting Role
The reporting or feedback role is the one most familiar
to the majority of
people.
Accountants prepare financial
statements which report the results of operations for the
business. These reports take the form of income
statements, balance sheets and statements of
changes
in
financial
position.
Many other summarized reports are also
prepared by accountants which provide information to
various segments inside and outside the business. Those
responsible for production need to know how they are
doing
in
order to maintain or improve productivity. Some
may refer to this role as "scorekeeper". According to
management consultant, Daniel R. Murray:
Scorekeeping is underrated. Scorekeeping
is
important, and
it is not simply a matter of tallying points and publishing
results.
Good
scorekeeping
entails skills at
selecting
the
right
information and presenting it in a manner that results in
effective action by those who have line management
authority[1].
The reporting of results does not have to be dull and
mundane. For instance, at Dayton Power and Light
Company, the accounting department presented a
television news programme on videotape. The show had
employees acting as anchor persons, reporters, writers,
directors, and producers. The stories involved a meter
reader
on his
rounds,
an employee discovering power theft,
and safety and health reports on problems which could
lead to absenteeism. The anchor team then reported the
month-to-date and year-to-date statistics on corporate
goals,
as if they were game scores[2].
Cost accounting is another area of accounting which can
be used to enhance productivity. By reporting variances
from pre-established standards, cost accounting gives
useful measures to production personnel. Certain
innovations are taking place in cost accounting which
should make it more effective as a tool to enhance
productivity. An organization called Computer Aided
Manufacturing International, comprising members from
some 30 manufacturers such as Rockwell, Eastman
Kodak, and General Electric, is developing a conceptual
framework to update cost management systems. This
involves allocating overhead to products
in a
manner more
reflective of the true costs which go into a product[3].
Accurate cost information can give a company a
competitive advantage. At IBM, new production layouts
have enabled cost accountants to identify most overhead
charges to particular products. They have managed to
reduce the percentage of overhead which has to be
allocated from 75 per cent to 25 per
cent[3].
This allows
for better pricing decisions as well as better resource
allocation.
Another way in which accounting aids productivity is by
providing data on usage of resources. It is necessary to
know the amount of resources employed
in
any endeavour
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