A Behavioral Model for Implementing Cost Management Systems

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A behavioral model for implementing cost management systems Shields, M. D., and S. M. Young. 1989.. Journal of Cost Management (Winter): 17-27. Summary by Hanna Morales
Master of Accountancy Program
University of South Florida, Summer 2002
Behavioral Issues Main Page | CAM-I Main Page | Cost Management Main Page In an attempt to help firms plan and control the costs of advanced manufacturing technologies (AMT) like, Just-In-Time, Total Quality Control, robotics, and computer integrated manufacturing (CIM), Computer Aided Manufacturing-International, Inc. (CAM-I) developed a new conceptual model referred to as a cost management system (CMS). (Note: CAM-I changed its name since this article was written to Consortium for Advanced Manufacturing - International). The main idea of this new model is to develop a strategy that focuses on behavioral issues rather than technical, mainly from recognizing the significant role human behavior plays in cost management. It "requires firms to change their philosophy from managing by the numbers to managing by a commitment to continuous improvement" (27). Therefore, the main goal "is to identify opportunities for, and monitor progress toward, continuous improvement" (17). The behavioral aspect mainly focuses on people and culture, of which are means of managing the activities and behavior that cause costs. "The Seven Cs Model" is used to manage the cost-generating activities. The seven Cs are: culture, champion, change process, commitment, controls, compensation, and continuous education as illustrated in the exhibit below.

Culture. "Corporate culture is the mindset of employees, including their shared beliefs, values, and goals" (18) together with trust, collaboration, and honesty. The three types are functional, dysfunctional, and ill defined. Functional culture is supported by high worker involvement and participation, goal congruence between employees and management, andteamwork. This type supports a healthy...
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