This CIMA research summary explores how formal and informal feedback play a key part in influencing how effectively organisations are managed.
In management accounting, feedback has traditionally been viewed rather mechanistically – as a formal control loop between goals and measured performance using formal accounting and information systems, such as the balanced scorecard.
Key Findings:
- Formal and informal feedback plays a key part in influencing how effectively organisations are managed.
- Formal and informal feedback does not form a black and white dichotomy with strict boxes, but is a continuum with a grey area in between.
- The power of modern models, such as the Balanced Scorecard (BSC), to balance feedback is questionable and does not detract from the relevance of informal feedback.
- Viewing feedback along three dimensions: source, time, and rule – can help make sense of the various interpretations of formal and informal feedback in organisations.
- In large organisations, especially middle managers are key to keeping vertical chains of feedback going. The challenge is for managers not to rely solely on systems based, formal accounting feedback in decision making.
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