Information appropriateness is defined in terms of how relevant the information is to the decision-making situation the manager faces. If the information is quite relevant, then it is said to be appropriate. Generally, as the appropriateness of the information increases, so does the value of that information.

Figure 17.3 presents the characteristics of the information that is appropriate for the following common decision-making situations:38

1. Operational control

2. Management control

3. Strategic planning

Operational control decisions relate to ensuring that specific organizational tasks are carried out effectively and efficiently. Management control decisions relate to obtaining and effectively and efficiently using the organizational resources necessary to reach organizational objectives. Strategic planning decisions relate to determining organizational objectives and designating the corresponding actions necessary to reach those objectives.

As Figure 17.3 shows, the characteristics of appropriate information change as managers shift from making operational control decisions to making management control decisions to making strategic planning decisions. Strategic planning decision makers need information that focuses on the relationship of the organization to its external environment, emphasizes the future, is wide in scope, and presents a broad view. The appropriate information for this type of decision is generally not completely current, but tends to be more historical in nature. In addition, this information does not need to be completely accurate because strategic decisions tend to be characterized by some subjectivity and focus on areas that are difficult to measure, such as customer satisfaction.

The information appropriate for making operational control decisions has dramatically different characteristics from those of the information appropriate for making strategic planning decisions. Operational control decision makers need information that focuses, for the most part, on the internal organizational environment, emphasizes the performance history of the organization, and is well defined, narrow in scope, and detailed. In addition, the appropriate information for this type of decision is both extremely current and extremely accurate.

The information appropriate for making management control decisions generally has characteristics that fall somewhere between the extremes of appropriate operational control information and appropriate strategic planning information.

The second primary factor that determines the value of information is information quality—the degree to which information represents reality. The more closely information represents reality, the higher the quality and the greater the value of that information. In general, the higher the quality of information available to managers, the better equipped managers are to make appropriate decisions and the greater the probability that the organization will be successful over the long term.

Perhaps the most significant factor in producing poor-quality information is data contamination. Inaccurate data gathering can result in information that is of low quality and is thus a poor representation of reality.39

Information timeliness , the third primary factor that determines the value of information, is the extent to which the receipt of information allows decisions to be made and action to be taken so that the organization can gain some benefit from possessing the information. Information received by managers at the point when it can be used to the organization’s advantage is said to be timely.

For example, a product may be selling poorly because its established market price is significantly higher than the price of competitive products. If management receives this information after the product has been discontinued, the information will be untimely. If, however, management receives it soon enough to be able to adjust the selling price of the product and thereby significantly increase sales, it will be timely.

The fourth and final determinant of the value of information is information quantity—the amount of decision-related information managers possess. Before making a decision, managers should assess the quantity of information they possess that relates to the decision being made. If this quantity is judged to be insufficient, more information should be gathered before managers make the decision. If the amount of information is judged to be as complete as necessary, managers can feel justified in making the decision.

Note that there is such a thing as too much information. According to Rick Feldcamp of Century Life of America, information overload—too much information to consider properly—can make managers afraid to make decisions and can result in important decisions going unmade. Information overload, commonly referred to as “paralysis by analysis,” is generally considered the major cause of indecision in organizations.”40

According to the flowchart in Figure 17.4, the first major step in evaluating organizational information is to ascertain the value of that information by pinpointing the data to be analyzed and then determining the expected value or return to be gained from obtaining perfect information based on these data. Then this expected value is reduced by the amount of benefit that will not be realized because of the deficiencies and inaccuracies expected to appear in the information.

Next, the expected value of the organizational information is compared with the expected cost of obtaining that information. If the expected cost does not exceed the expected value, the information should be gathered. If it does exceed the expected value, managers must either increase the information’s expected value or decrease its expected cost before the information gathering can be justified. If neither of these objectives is possible, management cannot justify gathering the information.