Business leaders still prefer ‘gut feel’ over hard data: Survey

  • Many decisions still based on the instinct of whoever sits at the top
  • Finance teams still seen as gatekeepers of data, or providers of basic analysis
Business leaders still prefer ‘gut feel’ over hard data: Survey

WHEN it comes to big decisions, business chiefs still follow their hearts rather than their heads, according to a new global study from KPMG and ACCA (the Association of Chartered Certified Accountants).
The study of performance reporting conducted by KPMG and ACCA found that almost 40% of finance professionals believe decisions are still primarily based on ‘gut feel,’ ACCA said in a statement.
The global report, which took in the views of 1,100 accountants from more than 50 countries around the world, found that many decisions are still based on the instinct of whoever sits at the top of the organisation rather than information-based insight.
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“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,” said Jamie Lyon, head of the corporate sector at ACCA.
“If management does 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,” he added.
More than 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.
“The finance function is finding its reputation as a data repository hard to shake,” said John O’Mahony, head of KPMG’s Enterprise Performance Management team.
“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,” he added.
On a more positive note for performance reporting, over 71% of respondents believe their organisation applies a common set of KPIs (key performance indicators) consistently across the business.
According to Lyon, this is a great step towards being able to understand performance across the organisation consistently, but caution must be taken.
“Organisations may have consistent KPIs but 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’,” he added.
The full report can be found here (PDF).
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