Introduction
Controllable and non-controllable costs are an integral part of the functioning of any profitable organization. The first group can be defined as those that can be altered in the short term to fulfil current needs. For the discussed case, these might include labor costs, direct materials, and basic maintenance costs. Non-controllable costs are an expense that cannot be changed unilaterally as they are determined by higher authorities. This cohort includes marketing budget, employees’ salaries, overall budged, security costs, insurance, rent, and maintenance costs.
Essence
In the majority of cases, a manager of a fitness center that is one in a chain does not have many options regarding the budget or the whole organization’s funds. This specialist’s responsibilities might include monitoring of maintenance costs because the effective use of such resources as electricity or water can help to reduce spending. Moreover, he/she possesses the ability to introduce rules related to more productive use or storage of materials (equipment and other fitness utilities). At the same time, the manager of a fitness center does not have an authority to regulate insurance payment, overall budged, rent, security costs, or salaries. Usually, these aspects of the functioning are determined at a higher level of the organization and help its departments to work effectively.
Sufficient management of controllable and non-controllable costs and their differentiation is vital for the development of any firm. The minimization of unnecessary costs can help to improve the performance of a department and contribute to the overall success of the franchise. For instance, the manager of a fitness center should devote special attention to factors that can be controlled by him/her, such as the use of resources, or the effective use of equipment. The scope of his/her authority offers multiple tools to establish the beneficial work of the local department.
At the same time, effective management of resources is possible if a manager creates a development strategy considering factors that can be altered at the moment, and using non-controllable costs as a ground. In this case, the manager will focus on the finances that can be utilized and will help increase the profitability of the center. Otherwise, considering non-controllable costs, the manager will fail because of the ineffective planning, poor understanding of the organization’s nature, and its strategy.
In such a way, the differentiation between controllable and non-controllable costs becomes critical for the discussed setting. First, only by using available finances, the manager can solve local problems and create the basis for future development. Second, the current organizational strategy and culture are vital for the growth of the line, which means that a specialist should not alter them but consider them as the aspects impacting his/her performance and outcomes.
Conclusion
In conclusion, a manager of a fitness center that is one in a chain should possess the improved understanding the difference between controllable and non-controllable costs as it is one of the basic components of success and higher performance of this unit. His/her pivotal aim is to focus on controllable costs to improve employees’ motivation and performance, along with conditions under which they and clients work. This specialist should also pay attention to non-controllable costs to make sure that they do not disrupt operations and guide his/her decisions regarding expected rise. If this happens, the corresponding measures should be made, based on the report of the manager and the decisions made by the top management of the company.