If your company is working through its annual business planning process to create your 2018 strategic plan, you should be approaching the department planning and budgeting process. Department planning is one of the five fundamentals of the Stop Selling Vanilla Ice Cream planning process. Why? Department planning turns your strategy to action. It is where the work gets done “on” the business.
Department planning can also be called tactical planning. It is a plan developed annually by each department leader and his or her team. For example: operations, sales, marketing, HR, Finance etc. To keep it simple, in the first year of department planning we recommend four key components in your department plans (templates available at www.stopsellingvanillaicecream.com):
- Action plans to work “on” the business in each department to achieve the annual company goals and execute the strategic plan. Each action plan must have a single owner and due date.
- Department measurements to ensure the plan is working
- Training and development plan for each team member in the department.
- Budget or capital requests to execute your department plan.
Each department leader and their team create their department plan by completing these four items. Then the department leader presents their plan to the planning team for input and support. The department plans and their budgets are then approved by the leadership/ownership team and the final annual company budget is finalized. It’s a very simple but effective process that engages all employees in your organization.
Why do I stress the importance of developing and executing department plans? There are several reasons:
- Department plans drive the execution of the strategic plan through all levels of the organization.
- Department plans increase the number of people working “on” the business versus “in” the business. If you are creating a new process, you are working “on” the business. If you are using that new process, you are working “in” the business. Many organizations spend about 90-percent to 95-percent of their time working “in” the business, and they can significantly improve the financial performance of their organization by developing and executing department plans.
- Department plans prioritize our activities and tie our daily work to our overall strategy. In other words, department plans focus our human and financial resources on the action plans that are going to have the greatest impact on company performance.
- Department plans result in company-wide involvement, ownership, buy-in and accountability. Department leaders and their teams buy-in to the planning process and are willing to be held accountable to their plan because they created it.
As each department completes its action plans working “on” the business, the success of the organization accelerates. The entire organization feels the momentum increase as action plans are being completed in every department. As that happens, you also increase your differentiation over your competition. You get more business and get paid more for it. In other words, as you keep getting better and better at what you do, it drives increases in sales and profitability.
You create a culture of discipline and accountability in your organization by holding a monthly plan execution review meeting and reviewing the action plans that are due, financials versus budget and measurements.
Implementing the department planning process into your organization is simple. Take the first step and get started as your department leaders and organization will get better at it each year. We have seen that the most successful and profitable companies we work with have become experts at department planning. Remember, Those Who Plan – PROFIT!®