For most business organizations, wages and salaries are the largest operating cost. The measure of the labor cost that is widely used is the Employment Cost Index (ECI). The ECI is a quarterly economic series detailing the changes in the costs of labor for businesses in the US economy. It helps identify the changes and trends in compensation costs to employers over the certain period of time. The ECI reflects the complete labor cost structure, including the wages, salaries, and benefits. Because it includes the costs of benefits in addition to wages and salaries, it provides a comprehensive view of an essential part of the business operating costs.
More ideas on using Cost Management KPI:
Cost Management is a relatively undefined domain that covers any and every effort undertaken with the aim of bringing the costs of products and services down and increase value provided to customers.
To attain this, cost accounting is frequently utilized by managers for pulling the ‘costs incurred’ slot down and adding to what is given to clients as ‘value’.
Consequently, all the short-run and long-run decisions that pertain to planning and controlling are included under this heading.
Owing to the ‘general’ nature of this concept, it is not worked on in a ‘separate’ manner, rather is well incorporated in other managerial thoughts that occur in the organization. This is to say that all programs and strategies that are developed with the purpose of aggravating customer satisfaction can be well placed under the ‘cost managing field’.
However, one should not infer from this understanding that cost management has a single dimension, that too of ‘somehow reducing costs’ as managers often go for bearing large expenditures like ‘advertising’ to expand customer base.
Stating it in a nut-shell, one can effectively manage costs by attaching it intelligently with other concepts like lean accounting, value chain analysis, throughput accounting etc.
A balanced scorecard is an effectual way to have a ‘measurable determination’ for managing costs incurred in organizational processes. |
