BUSINESS leaders are still relying on ‘gut feel’ when it comes to making some of their most important decisions.
That’s the message to emerge from a new global study from KPMG and ACCA which found that almost 40% of finance professionals believe decisions are still primarily based on an emotional response, rather than cold, hard facts.
The report, Performance Reporting – an eye on the facts, which garnered the views of 1,100 accountants from over 50 countries, found that many decisions are still based on the instinct of whoever sits at the top of the organisation rather than information-based insight.
Jamie Lyon, head of corporate sector at ACCA, said: “The benefits of using concrete data sources, particularly external ones, are manifold; however gaining buy-in from the top of the business is essential to unlocking their true value. If management do not trust the data on which performance insight is based, or would rather use their own instinct, it becomes even harder for the rest of the business to see it as an essential part of the decision making process.”
Over half of respondents (56%) said that the finance team in their organisation is perceived principally as “gatekeepers of data”, or “providers of basic financial analysis at best”.
John O’Mahony, head of KPMG’s enterprise performance management team, said: “The finance function is finding its reputation as a data repository hard to shake. The team needs to step out from behind their spreadsheets, actively guide the board and work with them to drive the strategy for the business. We already seeing this happen in the consumer goods sector, where finance teams work hand in glove with leadership and the wider business to drive better performance.
“However, this reputation overhaul cannot be achieved while finance teams remain tied up in transactional activities, such as time consuming data extraction or traditional month end analysis. This sort of activity is often not valued by the business and can be done by reporting technology, freeing up the finance professional to join colleagues at a client meeting and help to set the agenda, not just inform it.”
When it comes to performance reporting, over 71% of respondents believe their organisation applies a common set of KPIs consistently across the business.
Lyon said that while organisations may have consistent KPIs there is a danger they could paint a misleading picture if they aren’t focused correctly.
“Organisations using measures that are too inwardly focused risk losing sight of competitors whereas those with too outward a focus risk losing relevance to corporate strategy. The key word here is balance.”
Lyon surmises that the report shows there is still work to do for the majority of organisations when it comes to performance reporting: