The Importance of Good Management Information.
The importance and need of good information is critical to successful management of companies. To be able to consistently make effective decisions, a range of information is needed, and if failed to be provided, can drastically affect the survivability of a business through poor management decisions.
The information can come in many forms, often financial data like budgets or cash flow statements, but the term can encompass many other things, like employee retention numbers or customer satisfaction rates. Ultimately though the term means anything that can be used to aide in the key decisions that management have to make; however, that does not mean all information that can help with the decision is useful or “good”.
What makes the management information “good”?
When considering whether the information obtained is actually of a high quality and therefore any use to the company, there are the following 5 key areas to consider.
Relevancy – Take into account whether the information you have is actually relevant to the company, but also to the employee who will be using it.
Authentic – To be able to use the information to make key decisions, it must actually be authentic and accurate information.
Prompt – If it takes too long to obtain, or too long to be delivered to the people who require it at the right time, then it would not be of any use, therefore it is important the collection of data to be used is prompt.
Pursued – For it to be good, then it must be able to be acted upon, if not then the time spent collecting was for nothing.
Documented – If the data collected has not been evaluated, then processed and documented, in the future you can now reference back to the effectiveness of what was provided, or be used again in future decisions.
It is in combination of all these factors that make up “good information”, but it is up to the management to decide which factors are more important that others, if there is an urgent need for information, then the weighting on the importance of it being prompt may overshadow the need for it to be documented, however this always depends on the context of the situation.
Why is good management information important to a business?
When the data used is of a high standard, it can allow a business to identify areas for improvement, monitor the quality of operations, increase profits and analyse strengths and weaknesses to allow time to be spent on doing what the company does best, and raise the standard of where it may be failing.
In making key decisions, you need supporting evidence to be able to avoid making an ill-informed decision, with bad information, you could plan a wrong strategy, or not respond to changes in the business environment. The wrong decision can set back a company and allow competitors to gain an advantage of your business, which highlights the importance of good information as it will decrease the chances of making the wrong decision. If you do not have any information at all you are just gambling on the chances of it being right and increase the risk within your company.