Learning Objectives
- If your organization has ABM, you will learn why the ABC model is an important source of performance measures for scorecards, and how feeding the scorecard enhances ABC’s sustainability and value.
- If your organization has performance management, you will learn how ABC helps complete and balance scorecard performance measures, leading to organizational alignment and focus.
- You will learn how a real world organization successfully linked ABC and performance management despite numerous challenges.
Program content
Until now ABM and Performance Management (the Balanced Scorecard) have followed successful but largely independent paths. In this web seminar, Dr. Peter Turney explains the value of linking these two methods. He explains how linkage eliminates weaknesses in each method and enhances their collective value. He provides examples of successful linkage, and shows how linkage was accomplished.
Linking ABC and the Balanced Scorecard creates significant opportunities for both methods, and enhances their collective value.
- The Balanced Scorecard benefits in two key areas:
- The internal business process dimension benefits from the use of ABC measures of the cost of activities and their outputs. Experience shows that there is no accurate and reliable source of cost measures other than ABC. Typically, ABC measures for the internal business process dimension provide 20% or more of all Balanced Scorecard measures.
- ABC measures will also benefit the customer dimension of the Balanced Scorecard. ABC provides measures of product, customer, segment, and channel profitability. Without ABC it would not be possible to measure the net profit of these objects.
- ABC benefits in the following ways:
- Linking ABC to the Balanced Scorecard helps ABC transition from a project tool to a sustainable reporting system. To keep the scorecards up-to-date, ABC should be updated monthly. This requires transforming ABC into a monthly reporting system. Imagine—accurate, useful and up-to-date activity costs flowing into the scorecards every month!
- Managers will care much more about ABC when they review—and are accountable for—the cost numbers every month. Rather than making periodic analyses using ABC, managers will now evaluate (and be evaluated on) using ABC measures on a monthly basis.
Participant level of understanding
This program is intended for participants with a basic or intermediate level of understanding on the topic.
About Dr. Peter B.B. Turney
Dr. Peter Turney is the President and Chief Executive Officer of Cost Technology, and also Adjunct Professor at the Darden Graduate School at the University of Virginia. He has published numerous works on management including Common Cents, the world's best-selling book on ABC and ABM, and articles in the Harvard Business Review, Sloan Management Review, Journal of Cost Management, Management Accounting, Target, Controller, and other journals. Dr. Turney is a frequent presenter to management groups, and has led successful implementations of performance management in government, manufacturing and service organizations worldwide.
