Management information and performance

June 2007

Chief financial officers (CFOs) and finance executives need to improve the quality of their organisations’ management information if they are to fulfil their ambition of updating their role and influencing senior decision-makers, according to a survey by CFO Europe Research Services for PricewaterhouseCoopers LLP.

A survey of 193 finance executives at companies with annual revenues of $750 million (£375million) or more set out to establish how finance executives view the quality of the management information they produce, collect and distribute, and how well their organisations use management information to aid decision-making.

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While the majority said the financial information they receive was overwhelmingly good or excellent (83 per cent), over half of respondents (47%) felt that much still needs to be done to improve the quality of other non-financial management information:

Key highlights from the survey include:

• Less than half (45%) of respondents said they were satisfied with the quality of their management information. As a result, 83% said they occasionally or frequently seek supporting information or ad hoc confirmation about the data they received, although 55% said they occasionally or frequently ignored the information.
  
• There was also a lack of clarity over the responsibility for providing non-financial information. 27% of respondents said responsibility rested with the CFO and 41% said it did not lie with any one individual in their organisation.
  
• Some 70% of respondents said their companies’ senior managers are paying more or significantly more attention to management information than two years ago. The reasons cited are better technology, changing regulations, a tougher competitive environment and heightened stakeholder expectations.
  
• Finance executives do not feel that they are currently getting sufficiently robust management information needed to make business decisions and support the board. As a result, they do not believe they are on track to meet their professed goal of spending more time on decision support and less time on compliance and transaction processing. Companies reap big rewards when their management information is robust. Respondents that reported a better-than-expected financial performance over the last three years have significantly higher quality management information than their under-performing peers. Moreover, the best-performing companies included financial and non-financial indicators in one management report.