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How common is it in FP&A for Managers to cherry pick data?

I work at a large company in FP&A and am astounded by the level of cherry picking (show only data that supports your story, whether there is cause and effect or not) data there is among higher levels of management. Those in FP&A that go along with it seem to better with reviews and promotions than I; who tries to hold on to my integrity. Am I just naive? How wide spread is this? I have low respect for anyone who cherry picks. Should I move on? Mostly it is just a problem with Management reporting, but could bleed into Statutory reporting. Or, as my friend states, "it's like that everywhere." Moving to cure my distaste for cherry picking may not be the right answer. I'm sure many of you have run into this before. How do you handle these situations?

Answers

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

I think it depends on what you are trying to accomplish. If you are truly trying to compare two options, it would be wrong to ignore all pros and cons. If you are presenting results and are trying to explain something, ignoring immaterial things is ok, but you should show offsetting items if they are material, or you aren't telling the whole story.

Anonymous
(Associate Director, Financial Planning and Analysis - US Market) |

Let's be clear: the whole story is not being told. There are material events driving the results that are not related to the story being told.

Second question: Does it matter to you if it is only a Management Reporting issue?

Chris Holtzer
Title: Senior Manager - Strategic Analysis
Company: Sargento
(Senior Manager - Strategic Analysis, Sargento) |

It's really tough to say without much more detail. To start, how do you define cherry picking? I would define it as only including the information/data/metrics you want to share and excluding the rest. As a financial professional, FP&A or not, your fiduciary responsibility is to your investors. If you are doing a disservice to them, then you are not fulfilling your responsibilities. While GAAP is pretty clear on external reporting standards, internal is more gray. You have to be mindful of your audience, but your leadership may want to shape the message (not change or hide numbers), but a little spin is absolutely to be expected.

I would suggest that cherry picking is only going to lead to continued bad decisions by the audience of the report. They are reading it for a reason, and I am assuming that reason is be informed about the business and it's operations.

It is certainly common to call out specific metrics and address the story you want to tell. That is not the same as excluding numbers or how I perceive the term "cherry picking".

How do you handle it? Again, it depends on the details. I would challenge, that hiding information isn't in anyone's best interest long term. I have found a better way is to handle bad news, is to talk about it, soon, and be prepared with counter measures and preventative actions. I typically use the three basic problem solving questions. 1) Why did it happen 2) What are YOU doing to mitigate damage or solve the existing problem. 3) How are YOU going to prevent it from happening again. Own the solution, even if you aren't the root cause of the issue. Remember, failures are part of business, but failure and cover ups are grounds for immediate disciplinary actions.

Randall Bolten
Title: CEO
Company: Lucidity
LinkedIn Profile
(CEO, Lucidity) |

I like Chris Holtzer’s response. There is a time and a place for cherry-picking – when you’re trying to make a point that’s especially relevant to a particular reporting period or segment of the organization. Chris also makes some constructive suggestions about how to deal with it.

Stepping back a bit, one way to address the practice is to put some good fences around different reports. There should be a STANDARD reporting package that always looks the same and has the same reports for every reporting period (and ideally for all functions across the enterprise, as well). Then there can be a separate section called “Other Highlights and Lowlights for This Quarter,” or something like that. This is where you have graphs or tables that the presenter thinks will add color to the standard package. If the results are always positive in that additional section, period after period, the audience will ultimately smell cherry-picking – especially if the results in the standard package are only so-so.

If the cherry-picking is flagrant, and your own efforts to change the situation – and your efforts in raising the issue with the CFO and other senior managers – prove ineffective, then the enterprise has a serious problem with its culture.

(I might add that I led a webinar last week on “World-Class Management Reporting,” and cherry-picking was one of the issues I raised. In my experience, cherry-picking is much more prevalent in reporting packages that are heavy with graphs (as opposed to tables.)

Robert Ewalt
Title: Exam Development Manager
Company: Institute of Certified Management Accoun..
(Exam Development Manager, Institute of Certified Management Accountants) |

Anonymous, you have described attributes of a dysfunctional company. Leaving out disagreeable info in public financial reports is illegal of course; leaving out disagreeaable info from management reports is worse - these people are leading their management to make mis-informed decisions. Consider changing companies, or maybe talking to a senior exec whom you trust.

Scott Donald
Title: Grower Represenative
Company: Pearl Crop, Inc.
LinkedIn Profile
(Grower Represenative, Pearl Crop, Inc.) |

I worked as Director of Finance FPA at a Fortune 20 company. Usually there is a company template standard for the required information and roll-ups. While you may choose to high-light some key items over others in a narrative or on summary slides, all the numbers still need to be there. If you work in a public company, this information is required to be reported (albeit at a summarized rolled up layer). If you work in privately-held, the owners/investors want the whole story. HOWEVER, every company has a culture of how to tell bad news. Many times this art, and I choose that word carefully, this art is important to learn and perform.

As a Director, I would pick and choose to high-light the unexpected over the expected. Again, not hiding numbers or data but in my summary, I want to explain what is material and unexpected or extraordinary. If you consistently period after period have a 25% period cost variance on the same line item, that may be less important to highlight than a 5% variance where once has not been seen before.

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