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Charles Tilley FCMA, CGMA, CIMA's chief executive, said recently: "Getting the right information to make the right decisions at the right time has never been more crucial." But, with the sheer volume of data and myriad metrics available to us, how do we pinpoint the most relevant and timely material? Sometimes it's hard to see the wood for the trees.
The best place to start is at board level to see how information requirements for decision-making cascade down through the organisation. The duties of boards are common around the world and can be summarised as the survival, stewardship and success of the enterprise. These three levels of responsibility are reminiscent of Abraham Maslow's hierarchy of needs. Maslow formed his model of personal motivation in the 1940s. It has been a foundation of industrial psychology ever since and remains relevant to many elements of the CIMA syllabus. A company is a "legal person", so Maslow's model can provide a framework for sustainable success when the business is seen as a dynamic organism rather than a static organisation (see diagrams, page 54).
The job of the management accountant is to pick the most relevant measures that will enable the leadership team to make the right decisions to make the organisation successful in the short, medium and long term.
Survival
The most basic need of an enterprise is to survive - similar to an individual's need for safety and physiological security. Companies and individuals go bankrupt not because they are unprofitable, but because they run out of money. The most basic need is therefore liquidity. This is always vital and it is important to choose appropriate measures here for each period - eg, the quick or acid-test ratios in the short term;...