During the development of a company there may appear and get amplified additional functioning expenses, determined by dysfunctions or by an insufficient efficiency, expenses that describe counter-performances and have a direct impact upon the strategic potential of the company.
Within the processes unfolded in a company there may appear abnormalities, gaps between the normative and the real functioning of the company, which generates losses and negative implications on the result. Dysfunctions may, according to their location, be classified into six categories: labour conditions, labour organization, time management, communication-coordination-pursuit of the objectives, integral formation and strategic location.
The causality relation between the superior costs and the diminished performance is conceptualized by the “hidden costs” approach, which emphasizes the need for an efficient management that might ensure the complementariness between the economic and the social aspect. The hidden costs approach allows one to calculate the hidden expenses that depend on five factors: absenteeism, work accidents, rotation of the personnel, product quality, direct productivity.
With this approach, hidden costs are the monetary expression of dysfunctions and of the actions taken for regulating them.
For evaluating hidden costs, five components must be identified:
- additional expenses:
- additional consumptions
- additional time
- additional wages
- opportunity costs:
- non-production
- non-creation of potential
The methods designed for calculating the hidden cost allow one to establish the relationship between hidden and visible costs-performances, as emphasized by the profit and loss account. They intend to determine the gross and the net dysfunction-generated costs.
Identifying the dysfunctions and the hidden costs they give birth to represents a reserve for improving the management and, therefore, for reducing the costs and improving the financial performances of a company by incrementing its economical-social efficiency.