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Value creation by the holding company: a delicate balance

The sense and folly of an annual plan

October 5, 2015 – by Leonie Arkesteijn and Otie Hauser &samhoud consultancy

When summer draws to an end and traffic jams start reappearing, you know the time has come again to draw up (annual) plans. Framework letters, strategic recalibration and organisational goals – meticulously formulated by management teams – are eagerly waiting for further substantiation and translation into an annual plan. New ideas are generated or dusted off and repackaged, and goals are formulated. The parties involved coordinate and communicate occasionally to enrich the annual plan for 2016. Does this annual ritual of drawing up plans actually assist in the creation of focus and the attainment of goals? Or is it an annual ritual management dance of good intentions? 

The ritual management dance

This period allows managers to distance themselves from everyday issues and set aside time to think about the future. Organisations spend a great deal of time reflecting, conducting SWOT analyses and brainstorming. The results are then written down carefully in an annual plan, which is a time-consuming process. However, once the year has begun, most managers lose themselves in day-to-day matters and lose sight of the annual plans and accompanying goals. Remarkably, when steps are taken a year later to create new annual plans, the content and the objectives of the current annual plan are looked at again. This marks the beginning of another ritual management dance. The layer of dust is blown off of the current annual plan, and new input from the framework letters is implemented, etc. We step onto the dance floor together once again.

What is the purpose of such an annual plan process, and hasn’t the time come to sidestep the dance and turn it into a process that ensures connection, ownership and the realisation of goals?

Sidestep the ritual management dance!

If this sounds familiar, and it is estimated that around 50% of managers recognise this, continue reading for some inspiration. In addition to the content of the annual plan, the process for creating an annual plan is of the utmost importance. We believe that a well-designed annual plan process provides clear frameworks and targets, reinforces connection between departments and layers, generates focus, gives energy and creates ownership, thereby ensuring a better chance of achieving the specified goals. As is often the case in theory, theory and practice are the same. In practice, theory is not always right. In my opinion, there are three elements that sabotage an effective annual plan and stimulate this ritual management dance. 

1. The lack of connection
The annual plan process is usually implemented top-down. Once the annual plan of the management team board is ready, the baton – the completion of the annual plan format – is passed onto direct reports, and then onto underlying teams. Be aware that no format can ensure connection between hierarchical layers and departments within an organisation. A format is a tool that helps enforce uniformity, which simplifies the comparison of plans. Real connection arises in dialogue and from curiosity. Discussing goals with one another brings these goals to life within the chain, within the organisation, within the department and within the team. And that is how connection is created. 

In other words: Organise structural feedback loops, and horizontal and vertical alignment to encourage connection and ensure that targets are adequately translated. This will provide a shared image of the goals and everyone’s contribution. 

2. Vague goals
Er … what did exactly did we mean when referring to operationalising better client servicing in 2015?’. Some annual plans are packed with vague goals that give too much room for different interpretations. They are loaded with words such as ‘better’, ‘larger’ and ‘wanting to be the best somewhere’. Focus and specificity gives direction regarding what needs to be achieved and how to do so. If this is non-existent, it is difficult to tell whether the goal has been achieved. It is striking that vague goals are often tolerated within organisations. Why is that so? Are we afraid to attach ourselves to something? 

In other words: Formulate the annual plan and the goals as specifically as possible. Dive deep during the dialogue to disclose the reason behind the goal. Then use indicators to determine whether or not something has been achieved, and point out how you intend to focus on this during the year ahead. Start from the reason why and make a clear distinction in what you wish to achieve and how you will make this happen. 

3. The daily temptation
Day-to-day activities are rife with temptation. Extinguishing fires is easier than finding time to work on annual goals. Especially when the goals are vague, as mentioned above. People want to do well and play a role. Contributing to something and receiving recognition for something we have done has an energising effect. Troubleshooting on a daily basis gives more of a sense of satisfaction than working on (long-term) annual goals. 

In other words: chop annual goals from the annual plan into monthly or even weekly goals and preferably translate them up until an individual level. By doing so, you will create focus, meaning and ownership at all levels. 

Does an annual plan make sense?

Drawing up an annual plan certainly does make sense, provided the entire annual plan process is designed with clear frameworks and goals that can be translated and create connection between departments and layers. Only then does it create the right energy and ownership, enabling the specified goals to be attained earlier.

May we have this dance with you?

Despite the fact that there are, in most cases, numerous instruments and procedures for strategy execution, experiencing the vision and realising the strategy is a real struggle. To ensure the vision and strategy are executed successfully, we help different organisations answer the following questions in a usual unusual manner:

  • “How do we realise our strategic goals and experience our vision?”
  • “How do we introduce greater focus into our plans and how do we allow different departments to work together to achieve the best results?”
  • “What can we do to create a feedback culture, within which we can learn from each other and constantly improve?”

Please do not hesitate to contact us if you would you like to know more about this topic and how we can assist your organisation: L.Arkesteijn@samhoud.com or O.Hauser@samhoud.com

 

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