Cross-functional team members may feel a strong allegiance to their functional area. This can result in over-emphasizing a function instead of focusing on the voice of the customer. Still others worry about how to rotate members into teams and still have them rejoin their function after the rotation. A matrix organizational structure that formally supports product and project teams decreases functional allegiance issues. Formally or informally, team members must be motivated by specific direction or rewards to achieve target costing objectives.
Performance metrics based on team results facilitates cross-functional teaming.
In the U.S. there is too little attention to the total target costing system architecture in terms of supportive performance measures, rewards, training and information systems. Japanese companies are far ahead on these elements. An effective target costing system requires a target setting process that is considered fair and equitable by those responsible for its management and delivery. Targets must be perceived as having a reasonable chance of attainment and must be directed wherever improvements can be expected to be achieved. Stretch targets may be employed, however, reasonable achievement expectations should be assessed and communicated to those responsible for attaining targets.