The Most Popular Management Tools

Source: The CPA Journal

This article reports on a survey of 101 MBA students, 70 percent of whom were in management at the time of the survey. The survey asked whether companies for whom respondents worked used the following management tools:

ABC (activity-based costing)—A more accurate (than traditional GAAP) method of assigning costs to the activities that create them.

ABM (activity-based management)—Using ABC, this tool tries to eliminate or improve activities that don’t add value.

Balanced scorecard—Measures factors contributing to financial performance, e.g., motivation, training, and client satisfaction.

Benchmarking—Comparing processes to those of other entities and adopting their best practices.

Process reengineering—A reconstruction of business processes to effect sweeping improvements.

TQM (total quality management)—A process of discovering better ways to meet internal and external customer needs. TQM differs from process reengineering by seeking improvement rather than sweeping restructure.

Strategic planning—Synchronization of activities with goals.

Supply chain management—Efficiency in managing the flow of merchandise and services from origins to end-users.

Shareholder value management—Increasing the value of shareholders’ equity.

The survey measured differences in use of the tools depending on size of the organization. Small entities employed fewer than 1,000 employees, with more than half having 100 employees or less. Large companies ranged from 1,800 to 500,000 employees. The difference between small and large entities in terms of adoption of management tools is less than one might expect—an average usage of 4.2 tools for small entities, v. 5.2 for large entities.

Following is the percentage of adoption by small entities:

Also see the following article in CPA Leadership Report - Management Tools and Culture.

From The CPA Journal, A Publication of the New York State Society of CPAs, August 2007. For the complete article click here, then select the article Management Tools.