Perceived Quality of Management Information and the Influence of Overspending Penalties in the NHS

Abstract

The information needs of managers have changed considerably since the introduction of the internal market and many NHS units have invested in new management information systems to enhance the organization's performance. The characteristics of good quality information include accuracy, timeliness and comprehension. Information for management control also benefits from participation between the provider and the user. There are behavioural implications of using information as a control device and managers must internalize the financial objectives of the organization, usually expressed in budget reports. Failure to meet targets must attract penalties that will influence the managers' behaviour. They must respond to the information provided if control is to be exercised. This paper gives the results of a study into managers' perceptions of the adequacy and usefulness of financial information and the impact of penalties for overspending. It concludes that the financial information currently provided fails to meet many of the criteria of good quality information. Any perceived penalty for failing to attain budget-related goals is better than none, and there is little distinction between an overt reprimand and the ultimate sanction of dismissal.

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