Tuesday, October 2, 2012

Annual Strategic Planning

Well managed companies spend a considerable amount of time implementing Strategic Planning each year to establish the direction of the company.   In our case, our Senior Team first meets to understand the factors that may impact our business in the next year and to establish macro corporate objectives for the firm for the coming year.  Those objectives are shared with all Managers of the company that are then asked to propose goals for the next year for their department, division or subsidiary. 

Once we agree on specific goals,  the budget and calendar of events for the new year are approved.   In our company, this process is usually completed by mid January of every year; though publicly traded companies may do this no later than the fourth quarter of each year for the new year.   It is the way we manage our company and it has served us very well since our founding.    

Ultimately, goals and objectives then translate into Performance Objectives for all of our employees to make certain there is alignment between what we say we want to achieve and what we are going to achieve for the year.   This a great way to deal with short term annual objectives.   In addition, companies should focus on a growth and development ten year plan.   Of course, there will be many variables impacting a long term plan; but company management needs to see the road ahead to best understand the path to long term success.  

A short and long term Strategic Plan should be used as the blue print to manage the company.  Each quarter, in addition to reviewing profitability goals,  Senior Management should review progress related to achieving annual objectives.   If adjustments are necessary because of unexpected factors, they should be made.   At the same time, as part of this quarterly review, budget to actual revenues and expenses must be a topic for discussion.   Is the company on track to meet the year's goals?   And, in particular, if profitability targets are not on track, then serious adjustment to expenses may be necessary. 

Senior Management should work with Management to create the Strategic Plan and then work the plan to achieve the desired end result.   Annual Strategic Planning is absolutely critical to company success.   Hope is not a strategy.  Success never happens by accident. 

No comments:

Post a Comment