Too often the planning process leads to political games, such as sandbagging. Plan processes stand or fall with people's behavior. How do you intelligently unlock your organization's collective wisdom? With the 5 Key Performance Questions you get an effective dialogue. And therefore plans and forecasts that add up.
5 'must ask' questions in your planning process
The planning process sometimes leads to political and dysfunctional behavior, such as "back casting. Here top management sets targets where the forecast should lead. 'Carpeting' also occurs, where employees want to keep management happy, avoid tough questions about forecasts and withhold bad news. Other examples include "sandbagging," tempering result expectations to gain recognition if the forecast is exceeded, and "gaming," downwardly influencing budget targets to beat the bonus system.
Two-way traffic
How can you positively change these behaviors? The crux is asking questions, the right questions. With answers to the fundamental questions about the current and future performance of his or her business unit. The underlying idea is to arrive at a shared rationale for the answers in dialogue.
Key Performance Questions
To achieve this dialogue, we developed the Key Performance Questions, KPQs for short. The following 5 KPQs lead to an effective dialogue regarding the planning process and prompt people to take action:
1. Looking back: where do we stand?
- Have we met our plan so far?
- How accurate is the forecast to date?
- What did we do to get on-track?
2. How realistic is the plan, budget or forecast?
- In what way does the current forecast differ from the previous one?
- Are the underlying assumptions valid?
- Is the forecast consistent with the previous plan year?
3. Is the plan, budget or forecast "enough"?
- Are we going to meet our targets with the current forecast?
- What additional resources or investments are needed?
4. What if?
- What are the upside opportunities and downside risks?
- What contingency plans have we defined for this?
- What is the picture with the bandwidth in the forecast?
5. How will we adjust?
- How do we secure plan realization?
- What measures can we take to get on track?
The right order for the planning process
We often see that a review immediately zooms in on the3rd question, causing the dialogue regarding the plan process to falter. The reason that "is the plan realistic" precedes "is the plan enough" is that you first need to know whether the plan and its associated numbers are realistic before you can assess at all whether you can meet your target with that same plan. Conversely, you could forecast that you will meet the targets, while that says nothing if the forecast is not realistic.
A thorough response
KPQs are open-ended questions, which help you avoid socially desirable answers. Moreover, our brain is set up to give the most thorough answer possible in open-ended questions. With open-ended questions, we start to think about the context and reorder, rank, assess. And frankly, that's the primary effect of asking these questions, regardless of the answer given.
Thus, these five essential questions provide a powerful performance dialogue, leading to more openness rather than political behavior such as carpeting or back casting. In doing so, the planning process and forecasts become more accurate, and decisions better.
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