Leadership Tip #13: Invited guests: Improving financial forecasting

Brought to you by Raytheon Professional Services
By Bill Russell, Raytheon Professional Services

When we have an important forecast to prepare, it is important to be sure we invite two guests to the session where the final numbers will be agreed upon. Executives say that improving our ability to forecast is important today because of our terrible track record recently. Despite all the new IT tools at our disposal, our forecasts have not improved much since the days when we prepared them on Big Chief tablets and No.2 pencils. (Remember the recent financial crisis?)

Important forecasts, of course are those critical milestones that others will look back on and measure your performance against. They might include proposals, annual budgets or strategic plans. The session I refer to is that final review where the team looks over a preliminary version of the forecast, validates the numbers and agrees to the commit to live by them. It is at this session where we need to critically examine our assumptions and models.

At Raytheon Professional Services Performance Consulting, we have found that if we invite two guests to the final review meeting, we can come to a much better understanding as to the amount of risk in the final forecast. The key to inviting these guests is for the leader point to a critical assumption in the forecast and ask "How do you know this?"

In our experience, a member of the team will usually answer: "This is our best judgment." You have now met the first guest: The Voice of Experience. This is an important guest to have present. It took years to gain this asset, and we need all of the experience we have. But we need more. If only The Voice of Experience joins the discussion, the forecast may be inadvertently distorted.

The leader needs to ask again "How do you know?" An amplification of this second repetition is: what actual recorded data from events in your past leads you to believe this? Let's retrieve it and make a graph of it. This is the crucial step that invites the second guest: The Voice of the Data.

Having both our intuitive judgments and some real data together at the same time sparks a much richer discussion in the team’s final review of the forecast. Now people join in the debate, and there is give and take. Were these incidents the same or not? What will this situation be like? The result is true collaborative discussion in which all parties will become much better informed. We never are perfectly sure, but we will have a much better understanding of the forecast and the possible risks we take. This is informed decision making.

Leadership Tip #12: Prepare for the expected uptick in hiring

Brought to you by SourceRight Solutions

While optimism is still in short supply, more companies are beginning to look ahead to better times in 2010. The smart ones are realizing that now is a good time to find the very best candidates, while the talent pool is still deep. They also want to avoid being caught short when the economy finally rebounds.

But many are encountering a significant hurdle. Their human resources capabilities have taken a beating from layoffs and other reductions in force. This gap has HR and other executives looking for options to rebuild their staffs. To face this challenge, companies need solutions that are both scalable and flexible. One potential solution: Recruitment Process Outsourcing (RPO) can be a good solution for challenging times.

In addition to being short-handed internally, the economy has forced many organizations to rethink their business model and marketplace niche. To stay competitive, they have had to adapt and change. Right now, they may not fully understand what their future needs will be.

In a volatile economy RPO offers flexibility. Companies can shift a fixed cost to a variable cost. They pay only for what they need. By paying for results – successful hires – rather than an entire HR infrastructure that may be out of scale or even inadequate to an organization’s current needs, companies can save money while boosting the quality of hires.

Equally important, RPO offers great scalability. Whether a company needs to make numerous hires quickly or adjust to reduced demand by limiting hiring for a period of time, scalability adds efficiency and saves money.

If a company already has an RPO provider, the job of creating a robust candidate pipeline for upcoming high-priority positions can be a smart way to utilize that provider. If they don’t currently have an RPO team, getting one in place now can help them ramp-up when the time comes. The provider and the client company can use the time to begin creating requisitions and a system. While it may start small, the engagement can scale up as the economy revives.

While many companies are still struggling, one thing is clear: It is very important to stay competitive, despite the economic fluctuations. RPO enables companies to be nimble and flexible, meaning they can pursue a winning strategy even in challenging times.

Leadership Tip #5: Embrace failure – especially your own

By Richard J. Crespin

No matter how much we’ve progressed, trial-and-error is still the best and only teacher when dealing with truly new things. Yes, you can avoid the mistakes of others by studying what they’ve done, but that also means your treading old turf.

When striking off into the unknown – and if you’re doing something truly innovative you’re off in unchartered waters – you will need to learn by trial-and-error. To encourage the rational risk taking that will drive innovation you will need to accept failure as not just a consequence but as an indicator of progress.

This does not mean it’s time to experiment wildly. These times should focus you and bring a keen sight to your endeavors. You need to couple experimentation with rigorous criteria (see Leadership Tip #6: Impose clear criteria) and a deliberate approach to learning from mistakes. Consider using an approach like the US Army’s After Action Review Process.

The Army is probably one of the world's largest hierarchical and bureaucratic organizations, yet when it comes to training it has managed to flatten itself out and become more of a horizontal organization. By performing After Action Reviews (AAR) after a training activity, it turns it into a learning process that involves all the participants, from the lowest-ranking soldiers to commanders to interested outsiders and observers. It focuses on the tasks and goals to discover why things happen. . . never to judge success or failure. An AAR is perhaps one of the ultimate performance improvement tools because it encourages all stakeholders to share and learn in order to have continuous improvement. (Sources: Department of the Army (1993). A Leaders Guide To After Action Review (TC 25-20) and Big Dog & Little Dog’s Performance Juxtaposition Web site, After Action Reviews.)

Don’t just study failure, embrace it. That means learning from it and that means ruthlessly shutting down failed investments – though not the people involved. One of the cardinal mistakes leaders make in these environments is to equate the failure of an endeavor with the personal failure of the people involved. If being associated with a failed project harbingers career-doom, then people won’t take risks. If people are allowed to live to fight another day then colleagues see that you can take smart risks and still hold on to your job even when those risks sometimes don’t pay off.

This is not an excuse for avoiding tough personnel decisions. If it’s the people that caused the failure, then everyone needs to recognize that and deal with it; even if that means terminating the individuals’ employment.