• Planning without any monkey business

Many organizations streamline their planning processes and invest in applications to anticipate on market changes. And rightly so. However, the effectiveness of these processes and tools depends on the behavior of people. All too often, planning processes become political rather than social in nature. How do you prevent the planning process from turning into monkey business?

By Patrick Tullemans, May 2018

The planning process sometimes leads to political and dysfunctional behavior that is more reminiscent of the conduct of monkeys at the zoo than of effective interplay. Just like in primate troupes, behavior is strongly determined by individuals’ positions within the group. The gorilla who plays the leader and beats his chest hard to impress the rest of the group looks like backcasting, a planning process in which the senior managers determine targets that the forecast then has to converge on.

Monkeys attract attention or even flirt to maintain good relations with the leader of the group. This is similar to carpeting: employees want to keep the management happy, avoid awkward questions about prognoses and hold back any bad news. Other examples include sandbagging – toning down expected results to gain more recognition if expectations are exceeded – and we also often see gaming – influencing budget targets downwards to manipulate the bonus system. In situations where the planning process is not going smoothly, we also see second guessing: the organization starts to doubt the planning figures. This distrust can result in negative attitudes, for example from the logistics team about the sales department. Worst-case scenario, logistics react by making their own plan.

“Based on facts, with room for subjective opinions.”

Two-way traffic

How can you improve these behavior patterns? It is basically about creating a clear picture for each other of the plans and forecasts by having an effective dialogue during the budget or forecast review. We call this a “performance dialogue”: the communication is two-way rather than one-way. You have to be unprejudiced and listen to each other. There is mutual respect and openness about the assumptions that the budget or forecast is based on. Risks, opportunities, ambitions, and the feasibility of the objectives are shared openly. All of this is based on objective facts as much as possible, but with room for subjective opinions.

How can you set up this ideal dialogue? The crux is to ask questions – the right questions. Questions that give answers to fundamental issues about the current and future performance of the business unit. The underlying idea when asking questions is to find answers that are grounded in evidence, through dialogue.

“Open questions avoid socially desirable answers.”

Key Performance Questions

To achieve this dialogue, we developed the Key Performance Questions, abbreviated to KPQ. KPQs are open questions that help you avoid getting the socially desirable answers. Our brains are also equipped to give as thorough an answer as possible to open questions. When presented with open questions, we consider and rearrange, rank, and assess the context. To be honest, that is the primary effect of asking these questions, regardless of the answer that is given.

The following five KPQs can instigate an effective dialogue and encourage people to take action:

1. Retrospective: how are we doing?

  • Have we achieved our plan so far?
  • How accurate has the forecast been so far?
  • What have we done to get on track?

2. How realistic is the budget or forecast?

  • How is the current forecast different from the previous one?
  • Are the underlying assumptions valid?
  • Is the forecast consistent with the previous plan year?

3. Is the budget or the forecast ‘enough’?

  • Are we going to realize our targets with the current forecast?
  • What extra resources or investments are needed?

4. What if?

  • What are the positive opportunities and negative risks?
  • What contingency plans have we defined for this?
  • What feeling does the bandwidth in the forecast give?

5. How are we going to make adjustments if necessary?

  • How do we make sure the plans get implemented?
  • What measures can we take to get on track?

The correct order

We often see that a review immediately zooms in on the third question, making the dialogue falter. “Is the plan realistic” precedes “is the plan enough”, because you have to know whether the plan and associated figures are realistic before you can assess whether you can achieve your target with that plan. Conversely, you could forecast that you will achieve the target, which means nothing if the forecast is unrealistic.

“First, you have to know if the plan and associated figures are realistic.”

Effective interplay

Tools, data, and processes are strong enablers. Of course, you cannot manage the performance of the organization without the correct data and a structured planning process. However, a powerful and open performance dialogue is an indispensable complement to it. It yields common ground in the insights and outlook on future developments. This lets the organization make better decisions. As for monkey business, you’ll have to go to the zoo.

Planning, Budgeting & Forecasting