Getting on the right side of delivering your forecasts is important for your business, your personal brand and your bonus. Your business needs to anticipate what to make and deliver to run effectively and efficiently. Delivering what you say you’re going to deliver impacts your personal credibility. And bonuses are given to people that over deliver. Putting all three together leads you to under promising and over delivering at the right level to enable the business, strengthen your personal brand and maximize your bonus.
Forecasting for the Business
Procter & Gamble’s Puritan Oil brand in the middle of growing 50% over two years, growing between 20 and 25% year on year every month. We provided different constituents with different forecasts.
Senior leadership got mad at us if we came in below a forecast and applauded when we beat a forecast. Every month we told them we were going to grow 10%. They were thrilled when we came in at 20-25%. Had we told them we were going to grow 25% and only grown 20% they would not have been happy. Keeping your senior leadership happy is a good thing.
Product Supply got mad at us if we sold materially less or materially more than our forecast. They cared more about accuracy than about whether we were a little over or under. Every month we sat down with them and gave them an honest projection of our most likely sales. We were generally within 5 points of our predictions which made them happy.
Think in terms of range forecasting. With senior leadership we wanted forecast the bottom of the range so we could beat the number. With Product Supply we needed to forecast the middle of the range so we could come in close to the number.
Forecasting to Strengthen Your Personal Brand
In general, people respect people that do what they say they are going to do. I’m sure senior leadership at Procter & Gamble knew we were running two forecasts (one for them and one for Product Supply). At some point, consistently over delivering suggests you’re sandbagging your forecast. That hurts your credibility.
There’s a special case when you’re onboarding into a new leadership role early in the operating year. In that case, you’ll inherit someone else’s plans and forecast. Our strong suggestion is to dig into that plan and forecast and understand it before you accept it as your own. Most organizations will give you a one-time chance to revise your forecast and blame the miss on your predecessor. Do that. And do that right.
- Understand the data behind the plan and forecast.
- Figure out where it sits on the forecast range:
- More likely to come in ahead of than below a “conservative” forecast.
- Equally likely to come in ahead or behind a “most likely “forecast.
- More likely to come in below than ahead of an “optimistic” forecast.
- Revise the forecast as appropriate – knowing that few people revise a forecast far enough down the first time.
The reason people hesitate to go all the way down in revising a forecast is that that generally leads to a reduction in resources which risks becoming a vicious cycle. Under perform. Reduce resources. Under perform more. Reduce more resources. And so on.
Forecasting to Maximize Bonus
The math here is generally simple. The lower your forecast and plan and commitment versus what you deliver, the greater your bonus will be. What’s not to like about that?
Lots.
Under promising is bad for the business and bad for your personal brand. Too low a forecast will lead to resource constraints and potential supply problems. Too low a forecast will lead to people doubting your credibility and commitment.
Net, don’t aim to maximize your near term bonus. Aim to do what’s right for the business and your personal credibility over the near and long term. Appropriate recognition and rewards will follow over time.
