Management

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What Information Does a Manager Really Need?

 

The performance of a business depends on the quality of its decisions. In turn, these decisions depend on the quality of information available to the people who make them.

 

An accounting system generally only summarises the financial consequences of the variety of processes that are involved in doing business.

 

It focuses on the outcome rather than the process, so it fails to provide information in sufficient enough detail to monitor the performance of activities critical to the success of the business.

 

A business's Critical Success Factors (or CSFs) are those factors the business absolutely must get right in order to prosper and grow.

 

From the customer's point of view, quality is the dominant issue — it's what dictates their perception of value.

 

From the business's point of view, productivity is a critical factor as it ultimately determines the cost and the margin between revenue and expenses.

 

A business's CSFs are ultimately determined by its strategy — in other words, by the way in which management decides to compete. It's worth noting in this instance that unless the company's strategy is based on being the lowest-cost producer, it's unlikely that cost would be very high on the list of CSFs.

 

Identifying and monitoring CSFs in conjunction with KPIs helps businesses effectively manage performance and the key processes that contribute to their financial outcomes. And with quality information, these businesses are in a better position to make decisions about their future growth and success.