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How do I create a culture of accountability when a consolidated forecasts comes from across departments and borders?


Ric Ratkowski
Title: Vice President Strategic Alliances
Company: TopOPPS
(Vice President Strategic Alliances, TopOPPS) |

The cultural part always takes time, but from our customers we have seen moving the culture typically requires a change in process including:

1) Breaking down both the inputs and reports at a detail level based on the person(s) submitting the information. That way both the forecast and the actual results against the forecast can be compared in a budget vs actual type report.

2) Creating a defined workflow process for managing the collection of forecasts, their completion and approval so folks are "signing on the dotted line" virtually.

With that said, this gets extremely difficult to do with regular excel spreadsheets environment and without a system it can become a full time job.



Keri Brooke
Title: VP Marketing
Company: host analytics
(VP Marketing, host analytics) |

What we have found is that a culture of accountability is created when the plans of a particular revenue or cost center are truly owned into by the decision maker - by region, country, functional area, project, initiative etc.

At the center, the workflow needs to controlled and managed – especially with diverse groups of contributors - but the planning model needs to be created in such a way so each decision maker can plan, report and model in a way that fits their business. A rigid centrally owned plan will help a corporate office understand variances at the local level but each business unit needs to own the decision making process as part of that plan.

Functional decision making needs to have all the financial facts fed into it- each manager needs to understand the risks and returns of choosing one initiative over another. In the same way finance needs to understand all the operational assumptions associated with the plan being fed into corporate.

David Wittenberg
Title: Director of Financial Strategy
Company: World Vision
(Director of Financial Strategy , World Vision) |

I heartily agree with the above and urge one more step: Follow-Up

While it requires a time commitment, begin tracking the estimate versus actual variances over time of the groups submitting forecasts. Once a track record is established, require those groups to evaluate the information and determine what, if anything, should be done to improve future estimating skills.

For example, if a team consistently under-estimates sales they are likely getting accolades each year for beating the plan, but in reality they are also causing the company to under-plan cash flows and are likely missing investment opportunities. And if I was the suspicious type, I could also suggest they could be intentionally sand-bagging their numbers to make it easy bat the plan (and this may also be part of some bonus metrics). Depending on the situation, some companies reward accuracy with praise for minimizing absolute variances and ignoring whether the variance was positive or negative.

When forecasting, the only thing we know for certain is that we will be wrong. We will never get our numbers exactly right. However, we can improve our forecasting only when we get regular feedback to spot trends and learn to counter our bias toward optimism or pessimism. This does not need to be implemented in a punitive spirit but with a genuine spirit of being better!

If it is not important enough to invest in tracking, I would then suggest the company ask itself whether the forecasts are worth the huge time investment of the planning process when improving quality isn't valued.

Note: In an ideal world we would track variance trends by individual, but people usually move around too much in companies to develop an individual track record.

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