The relationship between work measurement and management accounting in small businesses

Abstract

The research starts from the general premise that small firms could benefit from greater combined use of management techniques. Through analyses of the general concepts of two such techniques, management accounting and work measurement, theoretical links based on their various properties are established between them and their relevance to small businesses is assessed. The testing of a hypothesised relationship between the use of work measurement and beneficial output of management accounting information is carried out in small business units of the furniture and timber industry in the North of England. Measures are designed and applied to generate two sample groups of firms which are similar in their use of management accounting but are dichotomous in either using or not using work measurement. Differences between how useful the accounting information on direct labour activity is perceived by managers and supervisors from the two groups are measured. An assessment is made of whether this difference is associated mainly with the use of work measurement, or is influenced by the accounting system itself or by the behavioural aspects of the environment in which it operates. The results show clearly that in the cases researched, the management accounting information is perceived as being more useful by decision makers when it is based on the use of work measurement. Similar perceptions about the usefulness of information are held by accountants. Guide lines are suggested to aid small businesses in general who are not in the furniture and timber industry to assess the relevance of the research results to themselves.