Blog - Strategy

3 Things to Prevent the “We Almost Hit Our Budget Numbers" Syndrome

Posted by Tim Lewko on Feb 22, 2017 11:18:11 PM

3 Things to Prevent the -We Almost Hit Our Budget Numbers -Syndrome.png

It’s still early in the first quarter and the CEO’s I’ve been talking to are all pretty optimistic about the results they will deliver this year. This early time is the honeymoon phase where everyone awaits to see if the strategic assumptions, changes, and initiatives that have been made leading up to Q1 will, in fact, pan out as the executive teams and key P&L owners proclaim.

Behind closed doors many CEO’s wrestle with the confidence level of hitting their numbers, particularly if their company has experienced the “We Almost Hit our Budget Numbers” Syndrome.  

This syndrome is the aggravating pattern of missing set budget targets - monthly, quarterly or annually – despite best intentions and cloudy explanations, companies seem to be okay with it. From this, a high performance “BUT” culture emerges.

Compounding this situation is in many cases no root cause for the misses ( or wins) that have been confirmed.  Conjecture vs. clarity is no way to move on to the next month.  Seasonality, weather, and elections usually are not sound reasons for missing numbers as these factors normally affect all your competitors...not just target your firm.

So What to Do?

If you, as a CEO or senior P&L owner, sense this may be unfolding in your area of leadership, you should review these 3 checkpoints to boost your confidence that the numbers will be delivered and begin the prevention or mitigation of these patterns of results and behaviors from becoming the norm in your company.

  1.    Outside to Inside – ensure the thinking and data that developed the budget numbers has connected outside the market( competitor and customer data) to inside decision making. Too many times a budget is established in a vacuum. Whether top-down or bottom up,  all the thinking was based on the internal views of the company.  Test this outside-inside approach with those who created your budgets,  they should be able to support their assertions with clear logic and data that logically supports the data, or a range and level of confidence you can live with.
  1.    Specificity on Actuals – demand that consolidated results – sales, volumes, and profit, be stratified by Products and Markets. Too many times I have consolidated numbers – either above or below budget – masking larger, more pervasive problems in organizations and they miss catching these early because they have Averaged Out performance with summary graphs and tables.  Insist on specifics for sales, volumes, cost to serve and profit by Product and Market segment.
  1.    Don’t wait to remove Non-Performers – they will not change. While there are many reasons for not hitting numbers and falling into the “We Almost Hit our Budget Numbers” Syndrome, at the end of the day, the complacency, sandbagging or lack of data-driven approach to set budgets comes down to someone’s choice and associated behaviors.  

Most leaders already know who those people are in their organization but are holding off for them to change. The best CEO’s I work with don’t let this happen and don’t waste time in rehabilitating performers who do not consistently hit their numbers. They remove them. And to their surprise, the company flourishes, regions perform and numbers start being achieved on a permanent basis..

Performance to numbers is a requirement (i.e. a cultural norm) for high growth companies, not an aspiration. The collective tools, attitudes, behaviors and actions of your people determine if they will hit their targets or hope for the numbers to be hit  in the coming months.