CORPORATE MANAGEMENT - HOW DO WE SET IT UP?

THE ETERNAL DESIRE TO ACT RIGHT

Many companies - not infrequently owner-managed - rely on control mechanisms introduced at short notice, often depending on the situational business development and at the same time based on profit and financial data already received. The approach is understandable. Regularly recurring business processes, which require detailed knowledge of one's own business and decades of experience, facilitate the steering process. What should be bad about this? Obviously it works without planning and budgeting, although vehemently demanded by everyone. If it was always possible to counteract gaps in profitability and liquidity with simple means, the desire to look more precisely into the future will be increasingly neglected. It is also obvious, however, that risk assessment and any future opportunities that may arise could be lost sight of more quickly.

MAKING THE FUTURE MORE PRECISE. WHAT KIND OF FEAT OF STRENGTH IS INVOLVED?

Does this mean that the abandonment of planning and budgeting is a serious management error? Everything about this can be found in the relevant literature. Preview can be simple, it can be prepared quickly and flexibly, it can be highly detailed or overly organized, it can be highly aggregated and reduced to a few sub-areas. In truth, it is all about one answer: What do those responsible expect from the new fiscal year? Taking all assumptions into account, can the company continue to exist, can it afford the plans and satisfy the owners? These questions should be asked and answered by a team of experts. Many cooks refine the porridge. Especially if deviations from plan/target and actual figures occur after only two to three months in the planning year already underway and are worthy of discussion. Are you confronted with questions such as whether it will be possible to make up for the dip in sales or whether it was caused by force majeure (environment, damage, seasonal effects, etc.) or management errors? In any case, the answers given by a team of experts are more binding than those given by sole decision-makers. In the expert team, each member has his or her own area of responsibility and will therefore be able to contribute his or her proposed solutions in a professional manner. Not to be forgotten is the associated motivation and information factor, which the team passes on to participants in all areas.

Nevertheless, the monthly control process must not be neglected as a time-critical compulsory exercise despite high planning accuracy and meaningful target/actual analysis combined with professional forecasting logic. Always reporting according to the same pattern and schematically, without putting together implementation and measure packages, will be too little. This goes hand in hand with a behavior control system that recommends which trend is emerging month after month and instructs how corrections should be made.

In our consulting activities we experience time and again that results are delivered according to internal standards without questioning them. It is not uncommon for a rude awakening to occur in the last month under review, because facts influencing the results during previous periods were not taken into account or were not discovered.

TO MAKE A LONG STORY SHORT

A general standard can be laid down quite easily. Corporate management is based on real, mainly financial actual figures. Inevitably in companies without planning focus. But of course also in companies with well-organized and modern controlling concepts. Because qualitatively equivalent plan and actual data make it easier to take countermeasures in line with requirements and, above all, more quickly, because a larger group of people in charge pursues uniform goals, knows the expectations originally set and will contribute a broader concept for partial solutions.