21.3. Activity Units
Managers should have control over the activities in their responsibility unit. They must be thoroughly familiar with how their department functions and what resources are needed for staff and money. Activities should be detailed to show work flow.
The activity unit is an important cost element of ZBB. It is the lowest unit within the company for which a budget is prepared. An activity unit may represent a function, program, organizational unit, or line item. A manager is typically accountable for the performance of a unit. Decision units include research and development, quality control, computer services, legal, engineering, production, marketing, and personnel.
There are alternative operating modes for activity units, including centralizing the activity, decentralizing the functions, integrating the operations, expanding or reducing activities, and eliminating the function.
Productivity and effectiveness measures should be utilized. The manager should consider financial information, workload, and established standards.
Measures of performance include:
Production control—number of manufacturing trouble spots and poor productivity
Quality control—number of rejections and other deficiencies
Regional marketing manager—number of lost accounts and reasons for their loss
Control measures include:
Quarterly output appraisal, using predetermined performance standards
Quarterly modifications to the budget, based on current information
Comparing actual cost and time to ...
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