Questions to ask about GRC – #7: Management Information
7. Does management (at all levels) have quality, reliable, timely, current, useful information readily available when and where they make decisions?
The quality of management decisions depends to a great degree on the quality of the information they receive. The better the information, the more likely they are to make the ‘right’ decision.
Consider these questions. All need to be addressed before we can conclude that management has the information they need to make quality decisions to deliver optimized performance that complies with all applicable laws and regulations.
a. Is the information reliable? How confident are you that the information is accurate? Does it come directly from the corporate systems, where it is secured and subject to internal controls, or is it ‘massaged’ in spreadsheets before it is given to the decision-maker? Are ‘adjustments’ made based on his or some analyst’s judgment as part of the reporting process? If it is a report from a data warehouse, is that data store secure and can you be sure that the reports are working the way they should?
There are many stories of meetings where, for example, the CFO addresses a group of executives to discuss the period’s results. When he shows a slide with the revenue pipeline by region, there is a chorus of dissent as the head of sales and the regional sales executives all say that the numbers are wrong – but each has a different number. I have seen situations where sales executives keep pipeline information on spreadsheets and don’t enter them in the corporate systems immediately. I have also seen situations where an executive ‘corrects’ the numbers in the corporate system because he has “special insight”.
b. Is the information complete, providing everything needed for a quality decision? For example, does it include not only performance but risk information? Do decision makers have the input from compliance personnel so they can assess the potential compliance requirements and risks? Do they have information from everybody that will be affected by the decision, as well as those whose actions are required to make the initiative a success?
For example, when considering a new venture that involves expanding into a new country, is the decision on whether and how to proceed fully informed? Is it based on input from Human Resources (about the availability of skilled personnel), Tax, Treasury (about cash management facilities and regulations), Compliance, Facilities and IT (about the ability to house and support the new country’s personnel), and so on?
c. Is the information current? Is the information up-to-date, reflecting the current situation? Or is it based on financial statements that are weeks, if not months old? In some situations, information that is only an hour old may be out of date! The question becomes “is the information sufficiently current to make an informed decision?”
Some years ago, the CFO at my company told me he was tired of “managing through the rear view mirror”. If he had a decision to make, he would ask his staff for the information he needed to base it on. But, none of the information was current. The company’s operational data was only updated monthly, in most cases, and financial information was not only monthly but not finalized for several days after the end of the month.
What his team did, which took time as well, was to take the last set of information in the corporate systems and then project what they expected to be activity since.
How old is the information managers use to make decisions? Is it too old to be valuable?
d. Is the information timely? Do managers get the information they need quickly, when they need to make a decision? The speed of business is accelerating; can managers afford to wait even hours to get the insight they need? Taking this one step further, sometimes the first set of information you receive only gives you a rough idea of the situation and you need to drill down into the data. How long does that take? Can you ask multiple questions and get the answers fast enough to make quality decisions?
Is there a risk that while your decision-makers are waiting for information you might lose a window of opportunity?
e. Is the information useful? When you have a business decision to make, you don’t want a stack of reports. You want the answers, the information you need, clearly presented and easily understood. Do your decision-makers have that, or do they need to pore through the reports and try to find the information they need? Do they then have to run additional reports or call other people because the information is not clear, or even raises more questions than it answers?
It’s an old expression, but it’s still true: there is a huge difference between data and information. What do you have at your company?
f. Is the information where the decision-makers are? If an executive is traveling and trying to run the business from an airport lounge, is the information there – with her? Or is it with her assistant in the home office, who is trying to read it to her? Wouldn’t you rather they see it themselves?
Not only do we have a global business world that is spinning faster, but executives and managers are global travelers that need to make fast decisions from all kinds of places. Can you afford for them not to have access to the information they need, when they need it, where they need it? The good news is that with the advances that have been made in mobile technology, this is now a solvable problem.