| The plan part of the performance management cycle is the phase in which budget, forecast or target information is collected. This will include absolute values such as sales, or KPI targets such as on time delivery.
The planning process should be collaborative allowing each level of the organisation to contribute, but it also needs to be rapid. In the best run organisations plans are continuously updated as information comes to light and frozen for a monthly cycle and then one monthly cycle is declared to be the budget for the following year. Although seemingly a lot of extra effort this approach both increases the effectiveness of the planning cycle by engaging people more readily, it also makes it more accurate since people can react to events pretty much as they happen.
To achieve this it is important to differentiate between plans prepared for running the business, and detailed sales forecasts. The former will be done at a much more summarised level of detail than the latter, and it may be required to bridge the two numbers. If the two become confused then the planning process becomes unnecessarily detailed and not able to achieve the required velocity of process.
For many companies circulating spreadsheets is the common way of planning. There are however specialised tools which enable the velocity and collaboration described which assist in delivering the benefits of a properly integrated planning process. |
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