Most strategic decision making involves dealing with large amount of non financial and qualitative information. And that is why there are difficulties in using and interpreting qualitative non financial information.
Analysing and interpreting commentaries, opinions, debates, other people’s experiences and subjective information are what makes members of top management valuable in organizations. However, dealing with qualitative non financial information is not very easy and requires special soft skills and experience to handle.
This article will bring to light those difficulties that are inherent in using and interpreting qualitative non financial information.
Challenges and difficulties of qualitative information
There is this false sense of thinking that decisions are made based on quantitative information while what really influenced the final choice of action was qualitative in nature. It is quite difficult to record and process non-financial qualitative events and activities.
Inherent defect in the traditional MIS
Both the AIS and MIS are notoriously known for being quantitative centric. Researchers have laboured greatly to help eliminate this problem but still not been able to do so. How easy is it to capture the level of staff motivation on traditional MIS?
Costly and expensive
Qualitative information like ‘Opinions’ takes a lot to gather, analyse and interpret and yet would not give a concrete ‘decision making rule’. Even Big Data has not done much in this regard.
Incomplete in nature
There is always that missing link between what would have been a useful decision driver and what strategic decision makers get when faced with the challenge of gathering, interpreting and using qualitative information. Subjective instincts are usually turned to for guidance by managers in discharging the managerial functions.
We all know that closed systems rarely exit and this creates a high degree of interdependencies in business and decision making events. The challenge is even more pronounced on qualitative matters that are sometimes characterised with information overload syndrome. One of the budgeting functions is to coordinate various activities which to a great extent explains the level of interdepencies that exits in modern day business.
Dealing with qualitative information with ease
I know that one might be thinking that all hope is lost but not too worry as there is hope on how to make sense out of the chaotic arena of making strategic decision that relies much on the use of qualitative non financial factors. This section of this article gives suggestions on how to go about using qualitative information.
Clearly stating any assumption(s) made in the course of using qualitative information
Understanding top management reports that are based mostly on qualitative non financial decision can be a nightmare when the assumptions used to make the decisions are not known. Clearly stating assumptions used to prepare qualitative information is a good practice that does not only help the preparer but also ensures that the recipient of the information would not be left in the dark.
Quantifying the end product rather than the process if possible
Quantifying certain information is difficult but this would get a lot tougher when we try to quantify everything that has to do with information processing. One way to make things a bit easier is to aim towards quantifying only the end product and not trying to quantify most of the processes.
Making educated attempt in quantifying things
Intuitions are mostly relied upon to make a strategic decision which is largely why interpreting this kind of information not very easy. This problem can be greatly ameliorated if we attempt to quantify things the best way that we can as long as we make our assumptions clear.
Leave a Reply