BUSINESS MANAGEMENT - GENERAL INFORMATION
Information can be visualized as building blocks in the process of decision-making, the stuff that management uses to make decisions with. Without a good supply of pure, unbiased, and timely information, decision-making becomes like throwing a bowling ball down an alley with a sheet hung in front of the pins. While an action has been taken, and results are produced, management has no feedback-type information other than general operating sounds as to the results of its decisions. Without feedback information, intelligent adjustments cannot be made.
A significant source of information is supplied by the organization to management without it being specifically requested. This supply is not always timely, or presented in such a manner as to alert the manager to the true implications latently contained in the unmanaged information supply. Channels (supplies of information communication) exist in all organizations, which generally follow the firms organizational chart.
Organizational charts establish the formal lines of information communication, which is assumed to be two-way, when, in fact, it may only be on a limited, inefficient, and perhaps random basis. Through these lines of communication, reports and memos flow, and problems and information as to policies and task adjustment instructions are discussed. These are internal information sources from the primarily internal sources of supply. They contain data that is specific to internal activities and conditions of the organization.
Information that must be provided from internal sources should include accounting or financial data, which aids managers in:
Focusing attention on goal offsets;
Selecting the best solutions for the cornucopia of problems; and
Accessing and adjusting day-to-day operations.
Information provided to management must be in a condensed summary-type form. The day-to-day volume of details must be summarized or it would be little more than junk mail, resulting in information overload and a resultant data file dump. The managers interest should be in summaries containing timely and relevant information, which allows him or her to invest a minimum of time digesting the data.
Managerial data differs from pure accounting transaction data in the following ways:
Managerial accounting data focuses on data for use by managers only;
Places more emphasis on the future;
Is not governed by generally accepted accounting principles (GAP);
Emphasizes data in the main relevant to decision-making;
More emphasis on non-monetary data;
Its more organization segment-specific. This relates to the individual segments (sales, backlog, shipping, manufacturing) of the business; i.e., when backlog falls, sales must go up to maintain the needed manufacturing volume; and
Tailored to the needs of the individual managers.
Significant external information sources of reliable and respected authority are specialists who provide a large part of an organizations external information flow. A few of the more common ones are professionals such as association presidents, bankers, CPAs, tax attorneys, economists, and vendor sales and marketing personnel.
Knowing the types and sources of management information
should allow you to improve your decision-making skills.
Mike Holt's Comment: This is the third of a series of articles on Business Management. Watch for our next newsletter and, as always, we invite your comments and feedback. Please respond to Barbara at email@example.com
Copyright © 2002 Mike Holt Enterprises,Inc.