Planning, Budgeting, and Forecasting: A Best Practices Snapshot

Published by: American Productivity & Quality Center

Published: Aug. 7, 2006 - 60 Pages

Table of Contents

• Bank of America
• Emerson Electric Company
• Nestle Purina PetCare
• Wachovia Corporation

Abstract

KEY FINDINGS

• Best-practice organizations' planning, budgeting, and forecasting (PBF) processes fit their organizational cultures.
• Comprehensive PBF processes provide excellent methods to effectively convert strategy into action.
• Care should be taken in regard to providing earnings guidance.
• Relative targets overcome the dangers of fixed targets, which can sub-optimize performance and lead to ethical challenges.
• Best-practice organizations align incentives to reaching optimal performance rather than negotiated targets.
• Effective PBF processes provide ways to continuously update action plans to adapt to changing conditions.
• Flexibility can be maintained by making resources available as required, as opposed to a fixed annual process.
• Leading organizations use their performance measurement systems to understand facts and understand cause-and-effect relationships.
• Best-practice organizations use a continuous rolling forecast to provide forward visibility and coordination instead of merely forecasting to the end of the fiscal period.
• Leading organizations remain coordinated by extensive communication using multiple methods.

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