How Organizations Can Enhance Their Long-Range Planning
Only one-fourth of executives take the time to communicate their organizational strategy to employees, according to a new survey by Ventana Research. Half of companies at least give the rest of the organization a general idea of what's in store, while the rest admit they do not do a good job of communicating their objectives or don't even try.
Those who do clearly and consistently explain the company's strategic objectives tend to have the support of a solid long-range planning process, according to the researchers, who surveyed a range of 210 executives, managers and employees for a benchmark report sponsored by Planview and the Financial Executives Research Foundation (FERF).
The findings of the "Long-Range Planning Benchmark Research Report" found the current state of long-range planning is mixed. While many executives recognize the need for effective planning processes, some may not be sure of how to implement better processes or how to better utilize the technology and data they currently have. According to the research, only 5 percent of enterprises surveyed claimed their long-range planning processes are so strong they need no improvement.
"The research shows that although there are legitimate differences in how companies plan, there are also important elements that can make these efforts more effective," said Robert Kugel, senior vice president of Ventana Research's financial performance management practice.
What Are Companies Doing Now and How Can They Improve?
- Executive communications could be stronger. While many executives are trying to make headway in the communication department, they may need to rethink their strategies in order to truly improve. A webinar hosted by representatives from FERF, Ventana Research and Planview discussing the results of the survey revealed only 27 percent of workforces claim executives explain their long-term objectives clearly and consistently. It's essential for executives to improve their current communication processes in order to ensure all employees are on the same page and working toward the same goal.
- Training plays an important role. While basic training seems like an important component of any job, research found only 29 percent of firms provide formal methodology training to their employees. Long-range planning training can be extremely effective and helpful, but if it's overlooked or underutilized by management teams it isn't likely to help a business succeed in the future.
- Better integration makes a difference. Integrating capital projects and long-range planning may play a key role in the success of any company's strategy. The FERF data showed 85 percent of firms with highly integrated processes say their strategies work well, compared with only 63 percent of enterprises who claim their processes are only somewhat integrated and 22 percent of those that have no integration whatsoever. This highlights the importance of integrated processes and how they can prove to be beneficial in the long run.
- Data accuracy is essential. Companies that have more accurate data are better able to complete long-range plans, cope with a changing business environment and continue to make smarter choices when determining which capital projects are worthwhile. Accuracy isn't the only important component of a data set - timeliness is equally important. A firm working with outdated data can find itself unable to accurately plan for the future or make strong project choices and financial planning decisions.
- Trying out new tools can be beneficial. The research also looked at the prevalence of spreadsheets in long-range planning and found many organizations utilize these tools, but do find they have significant limitations. While more than half use spreadsheets as their main planning tool, 95 percent use them at some point during the process. However, only 36 percent believe they are an effective tool for this sort of activity, making it beneficial for some firms to try out new applications or software to enhance their planning processes.
"By benchmarking long-range planning, we were able to lay out a detailed profile of the process and methodologies companies use," said Kugel. "The research shows that although there are legitimate differences in how companies plan, there are also important elements that can make these efforts most effective."