Cost allocation often takes up a significant amount of time and effort in planning and management accounting. Therefore, a methodical and robust cost management system that has buy-in across the enterprise can be an effective way to reduce the cost of these activities.
Management accounting aims to understand the critical expense and revenue drivers to enable better decision-making for all parts of the business. More broadly, this means that cost allocation and management accounting should not be isolated from the rest of the business but should be integrated into the overall business strategy.
It’s essential that organizations foster a culture of collaboration for effective and efficient cost allocation.
Here are some proven ways to build a culture of collaboration:
- Making collaboration an explicit organizational value mentioned alongside any other values and your mission statement.
- Acting as a role model for collaborative practices: Lead the way to show everyone that leaders value breaking down silos and working together.
- Aligning collaboration with your human capital management practices. For example, make collaboration an expectation for functional leaders and include measures that track collaboration in their performance reviews.
- Setting aside time and space for employees to collaborate.
- Working with your internal communications function to create messaging that reinforces collaboration as a value.
Explore the average cost of planning and management activities in APQC’s Collaborate for More Effective Cost Allocation.