Recession motivates executives to improve decision-making, according to study

Executives listen keenly to customers, broaden information sources and seek insights from the CFO, says Economist Intelligence Unit

Economic uncertainty puts a premium on good decision-making, say corporate executives faced with the challenges of navigating the recession. So suggests a survey of 229 senior executives worldwide summarised in a study from the Economist Intelligence Unit entitled Management magnified: Getting ahead in a recession by making better decisions, sponsored by SAS.

Recessions tend to expose organisational weaknesses that might have remained undetected in more settled times. Recessions also open up entirely new opportunities, as competitors scale back and customers seek value. By gathering the right information, systematically analysing it and routing it to the appropriate level of authority, organisations can make quick and informed decisions to rectify flaws and seize opportunities, concludes the study.

“In previous recessions, companies that re-positioned themselves were able to shine when the recovery came,” said Dan Armstrong, the editor of the study. “Companies with a clear and solid long-term plan can use a downturn to secure an unassailable market position, at a time when their competitors are struggling to survive.”

Key findings of the study include:

• Survey respondents sought to diversify the sources of information used to make vital decisions: 46% looked for more insights from middle managers, 57% cited the importance of customers and 33% mentioned providers of capital.
• Two-thirds of respondents said that the most important source for good decision-making came from the financial and operational information held by the finance function and interpreted by the chief financial officer.
• Functions with direct links to customers (sales, marketing and customer service) were each mentioned by about a third of respondents as crucial to decision-making.
• About 39% of respondents cited the strategic planning function as important for good decision-making.
• Decisions at the worst-hit companies surveyed emphasized the short-term and tactical, focusing on survival rather than on long-term strategy.
• The downturn has led 96% of those surveyed to improve the efficiency of their operations and 53% to focus more closely on key customers.

Overall, the survey suggested that recessions exacerbate the tension that all businesses experience in trying to achieve a balance between short-term business needs and long-term development and expansion. A significant majority of businesses respond to a more challenging environment by focusing on costs, customers and survival. Four in ten regard the recession as an opportunity to invest in product development and get ahead of their competitors.

Management magnified: Getting ahead in a recession by making better decisions
is available free of charge at www.eiu.com/sponsor/sas/decisions/

Press enquiries

Joanne McKenna, press liaison, +44 (0)20 7576 8188, joannemckenna@economist.com
Dan Armstrong, Senior Editor, Americas, Industry and Management Research, +1 212-698-9710, danarmstrong@eiu.com

About the survey

In May 2009, the Economist Intelligence Unit surveyed 229 senior executives for their views on how decision-making had been affected by the recession. Respondents were almost evenly split geographically with 31% from Asia Pacific, 31% from Europe and 29% from the Americas, with the remaining 9% from the Middle East and Africa. Financial services providers constituted the single largest sector in the survey at 29%, followed by high-tech (15%) and manufacturing (12%). Forty-four percent of the companies had annual revenues less than $500 million, while 27% were over $5 billion. Forty percent were in the C-suite or at the board level, and another 19% were at the SVP level.

About the Economist Intelligence Unit

The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of more than 650 analysts and contributors, we continuously assess and forecast political, economic and business conditions in more than 200 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.

About SAS

SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions delivered within an integrated framework, SAS helps customers at more than 45,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world THE POWER TO KNOW®. SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. Copyright © 2009 SAS Institute Inc. All rights reserved.