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Beynon, R. 1992. Change management as a platform for activity-based management. Journal of Cost Management (Summer): 24-30.

Summary by David Lamb
Master of Accountancy Program
University of South Florida, Summer 2003

Change Management Main Page | ABM Main page

It is a commonly known fact that most people are resistant to change, whether it is at home, church, or in the workplace. Often, employees have been found to get defensive when they are confronted with the introduction of activity-based management (ABM). The question this article attempts to answer is “What should an organization do when planned changes to it’s management processes are expected to bring about more accurate, more timely, and more useful cost information, but it’s employees are being uncooperative with the effort?” On the other hand, the question I feel the article actually answers is “What thought processes do people’s minds go through when presented with change and how can an organization’s mindset become one in the same?”

Roger Beynon feels that ignoring the impact of people’s reaction to change when implementing such a system, would be to build a mistake into the process and reduce it’s probability of success. Different methodologies have been utilized by organizations when attempting to implement a form of change management successfully, some of which include:

Attempting to understand employees’ motivation for resistance.

Meticulous planning and communication with employees.

A system of repeated trial and error of implementation.

There are many names for these processes; trainers may call them methodologies, manufacturers may call them processes, and accountants may call them systems. Whatever they are called, they occasionally work with the organization in question (p.25).

Understanding motivation, planning, and communication

American psychologist Albert Ellis has been noted with developing an “ABC” system for understanding how people react to changes in their everyday life. The underpinning theory behind “ABC” is that “a person’s beliefs determines their behavior.” When spelled out, “ABC” stands for:

Activating event;

Belief system; and

Consequent behavior.

By believing the theory that “belief determines behavior,” we should ask ourselves “What determines a belief?” The following example will explain how our belief system leads to our behavior, which in turn results in experiences that constantly loop back to modify our values, belief system, or behaviors.

Value: XYZ corporation and its employees believe in openness and honesty in all interactions.

Belief system: Since an employee of XYZ should believe that is pays to be open and honest in every aspect of his work, his behavior should be consistent with that belief.

Behavior: Assume, for example that an employee fails to submit a report on time – perhaps because the process within which he works allows several bosses to set conflicting priorities – but then owns up by taking responsibility for the late report. The employee’s resulting experience should (assuming that the corporation lives up to its own values) be shown as next.

Experience: The boss accepts the employee’s candor, and helps correct the process so that opportunities for the problem will not recur.

Note: if the corporation does not live up to its values, the effect on the employee’s belief system can be dramatic. What if the employee makes a mistake and owns up to it, then promptly gets demoted (p. 25-26)?

The Behavioral Cycle

After reviewing the above example, an organization should understand the purpose of making sure their model beliefs (beliefs management would like to see instilled in their employees) align with their actual beliefs (what the employees actually believe).

Recognize that ABM does mean change

Upon understanding your organizational and employee belief systems, as well as how a company’s employees react to certain situations, an organization should realize that implementing ABM does mean changes will occur. Benyon states that there are multiple characteristics of change, which include:

It is a fact of life.

It is a matter of individual perception.

It is necessary for growth.

It is not necessarily good.

It is always connected to the past.

It is always both an internal and an external condition.

These characteristics of change form a structural framework for individual response mechanisms that describe how people react to changes in their lives (p. 27-28). A not-all-inclusive list of individual response mechanisms can be found below.

Individual response mechanisms to change:

We tend to see ourselves either as agents or victims of change.

We accept or resist change according to how it affects the meaning of our life.

We seek equilibrium between our values and our lives.

We change most readily if we develop a “habit of growth.”

We resist giving up one set of certainties for an uncertainty.

We worry about the “fairness” of change (p. 28-29).

By understanding employees’ thought processes when they are presented with change, an organization has the capability to align its objectives (implementing ABM) without causing uneasiness. Beynon’s article continues into the instillation of ABM within an organization by reviewing the design of a ten-step process for its implementation. All in all, a successful implementation of ABM will require a shift in management perspective, as well as an understanding of the company employees, in order to be successful.


Related summaries:

Berliner, C., and J. A. Brimson, eds. 1988. Cost Management for Today's Advanced Manufacturing: The CAM-I Conceptual Design. Boston: Harvard Business School Press. (Short Summary or Concepts.) (Longer Summary.)

Campi, J. P. 1992. It’s not as easy as ABC. Journal of Cost Management (Summer): 5-11. (Summary).

Cokins, G. 1999. Using ABC to become ABM. Journal of Cost Management (January/February): 29-35. (Summary).

Cooper, R. 1996. Activity-based management and the lean enterprise. Journal of Cost Management (Winter): 6-14. (Summary).

Cooper, R., and R. S. Kaplan. 1998. The promise - and peril - of integrated cost systems. Harvard Business Review (July-August): 109-119. (Summary 1, Summary 2).

Hughes, S. B. and K. A. Paulson Gjerde. 2003. Do different cost systems make a difference? Management Accounting Quarterly (Fall): 22-30. (Summary).

Johnson, H. T. 1989. Professors, customers, and value: bringing a global perspective to management accounting education. Proceedings of the Third Annual Management Accounting Symposium. Sarasota: American Accounting Association: 7-20. (Summary).

Keys, D. E. 1994. Tracing costs in the three stages of activity-based management. Journal of Cost Management (Winter): 30-37. (Summary).

Martin, J. R. Not dated. Activity based management models. Management And Accounting Web.

Pryor, T. 1997. Making new things familiar and familiar things new. Journal of Cost Management (Winter): 38-42. (Summary).

Reeve, J. M. 1996. Projects, models, and systems -Where is ABM headed? Journal of Cost Management (Summer): 5-16. (Summary).

Sweeney, R. B. and J. W. Mays. 1997. ABM lifts bank's bottom line. Management Accounting (March): 20-22 and 24-26. (Summary).

Swenson, D. 1997. Best practices in activity-based management. Journal of Cost Management (November/December): 6-14. (Summary).

Swenson, D. W. 1998. Managing costs through complexity reduction at Carrier Corporation. Management Accounting (April): 20-22, 24, 26-28. (Summary).