PerformanceManagementEdge.com has posted the first of our four-part series on “Raising Your Cost Consciousness”. In the first instalment, Mitch Max examines some of the root causes of difficulty in managing costs in organizations. When budget-based controls are the most critical cost management tool, it’s difficult to truly empower the organization to effectively understand and truly manage costs. Most managers are hard-wired to manage costs based on budget accountability; is it any wonder that truly managing costs is difficult to do? Building on our earlier blogs and the writings of Bjarte Bogsnes, we demonstrate that the key to achieving true “Cost Consciousness” is to develop strong cost analytics, and then to create a culture that empowers managers with the ability to make decisions based on factors broader than “what’s in the budget”.
Future episodes will examine the most effective types of cost analysis, and look at how to integrate it into your culture.