Six principles of useful management information
The role of an analyst in FP&A/Finance BI is to support decision-makers by providing meaningful, actionable information. This information takes many forms — charts, reports, data tables — and serves myriad purposes, from describing performance to diagnosing issues, predicting trends, or prescribing actions.
However, the sheer abundance of available data poses a risk: over-informing. The analyst’s job is to process this data, distill it into insights, and present it succinctly and impactfully. For information to be useful to stakeholders, it must follow the following principles.
Early in my career, I came across these six principles of useful management information, which have guided my analytical work ever since.
1. Relevance
Relevant information directly addresses the problem at hand. Sometimes, the same data can be relevant in one context but not another. For example, income statements often present sales and refunds on a calendar month basis. Calculating a refund rate from these figures may seem intuitive, but it’s misleading for operational effectiveness because the refunds likely relate to sales from prior periods. Cohort-based analysis, which aggregates sales transactions by period and calculates refunds as a percentage of that cohort, provides a more accurate measure of consumer behaviour than the income statement does.
Another pitfall is presenting information that’s merely “cool” or “interesting” but unrelated to the issue. For instance, if data doesn’t strengthen or weaken a key argument, it may not be relevant. Such information can be moved to an appendix or excluded entirely.
2. Comprehensibility
Stakeholders must be able to easily understand the meaning and implications of the information presented. While analysis often involves rigorous methodologies and complex mathematics, reports must be tailored to the audience. Explaining statistical methodology is appropriate in a peer review but not in most business contexts.
A common misstep is responding to a data request by delivering raw tables in Excel and calling it a “report.” This approach shifts the burden of interpretation onto the recipient. Instead, include charts, descriptive summaries, and key insights to make the insights accessible. For example, a summary highlighting trends and outliers ensures stakeholders can quickly grasp the insights without sifting through rows of raw data.
3. Reliability
Stakeholders depend on accurate and consistent information. This means ensuring data is truthful, free from bias, and transparent about its sources and methodologies. For instance, secondary data often contains inherent errors. The analyst must assess whether these errors are within reasonable limits and disclose any potential inaccuracies.
Reliability also requires consistency. Analysts should apply standardized definitions, formulas, and presentations to avoid confusion. For example, a sales metric should be calculated the same way across all reports to ensure comparability over time.
4. Significance
Useful information focuses on what truly matters. Dashboards, for instance, monitor a handful of metrics that strongly correlate with business performance. Understanding the key drivers of success ensures that reports emphasize impactful insights while filtering out distractions.
I recall an analysis where my team identified country-level differences in refund rates and considered modifying our reporting system to reflect these variations. However, further investigation revealed these differences were too small to influence decisions, making the proposed changes unnecessary. The analysis allowed the team to focus on the more significant performance drivers, saving resources and effort.
5. Timeliness
Information must be delivered in sync with decision-making timelines. Operational decisions, such as optimizing advertising campaigns, require near-real-time data, while strategic planning benefits from broader, less frequent updates.
For example, ad campaign performance data should be available daily to allow for quick adjustments, whereas financial planning for the next fiscal year typically involves monthly updates. Striking the right balance between timeliness and reliability ensures that information supports the cadence of decision-making without overburdening the system.
6. Action-Oriented
Management information exists to enable decision-making. It should present insights in a way that clarifies the available options and their implications. To do this effectively, the analyst must put themselves in the stakeholder’s shoes and understand their needs.
When I began my career leading a sales channel, I often felt underserved by the available data. As the business owner, I knew exactly what information I needed and had to create it myself. This experience taught me the importance of delivering action-oriented insights. Analysts must work as though they are the decision-makers, understanding the business context and tailoring their analyses as though they are making the decision.
By adhering to these six principles — relevance, comprehensibility, reliability, significance, timeliness, and action-orientation — analysts can ensure their work consistently drives impactful decisions. As you review your analysis, assess it against these principles. If it doesn’t meet the mark, consider refining or reconsidering its inclusion. The objective is not only to provide data but to empower decision-makers with actionable intelligence that leads to success.
