Chapter 32 : Financial Decision Making: the Endgame of the Planning and Analytical Process

Abstract:

Financial decision making is more than a matter of money. This chapter aims to place the financial decision-making process in the context of the laboratory and institution as a whole. It dissects the various stages of effective decision making, concentrating on the financial arena. A sophisticated financial analysis may be technically accurate but completely misleading if all the critical elements of the process are not considered. The preanalytical issues are a function of the quality of laboratory leadership. There must be a realistic and fully developed vision (as opposed to a “vision statement”) of the goals, competitive position, and strategic aims of the laboratory to have informed financial decision making. Once the goals have been established and communicated effectively, it is time for the actual analysis. If the analyst and effector are the same person, there should be no difficulty understanding what needs to be done. The scientific managers who know the requirements for labor and materials better than anyone else must do costing of laboratory tests. The keys to success in break-even analysis and capital acquisition are that the options evaluated by the financial analysts are the correct ones and that all of the appropriate choices have been included. If the assumptions are realistic and honest, the budget will be a useful tool for measuring performance. The process of financial decision making is unitarian. All aspects of management must be brought to bear to have any hope of success.