3 Big Mistakes in Annual Planning – And How to Avoid Them

By Generational Equity


Will your company meet its annual targets this year? If not, you’re in good company. By some estimates, only 50 percent of companies achieve their annual performance targets.

These missed targets represent millions of dollars in lost opportunity and lost market share that goes to better-performing companies, therefore damaging your business worth.

According to Alan Gehringer of Rhythm Systems, the most common reasons that companies fail to reach annual performance goals fall into three categories:

  1. The plan wasn’t right. Maybe the CEO set goals without consulting anyone else, or failed to incorporate key market forces, or maybe operational goals were set rather than strategic goals.
  2. The plan was kept secret. If annual goals aren’t shared widely across the company and cascaded into and made relevant for every department, your teams can’t work toward the goals.
  3. The team couldn’t execute. If teams or individuals are already overwhelmed with daily tasks or aren’t given the right tools to succeed, they won’t have the time or creative energy to devote to new methods of operation.

How can you, the company leader, avoid these three common mistakes and get your annual performance plans on track?

Poor Execution = Failed Strategy

Billions of dollars are lost each year in unproductive meetings, so it’s important to plan your goal-setting meeting thoroughly. You need to bring together the right people with the right tools and complete information so that you can build relevant goals that develop your long-term strategy for the company.

For a highly effective annual goal meeting, take these steps:

  1. Prepare for your plan. Preparation is your friend when it comes to an annual plan. Choose the key players who should attend and block out three days on every participants’ calendar. Everyone will also need to set aside time before the meeting to gather sales figures, analyze market trends, and reflect on what did and didn’t work in the prior year.
  2. Hire a facilitator and go offsite. A facilitator lets the CEO participate fully in the meeting rather than juggling two roles. A facilitator can also help with meeting set-up and encourage participants to get their homework done prior to the meeting. Offsite locations help keep everyone focused and allow for team building activities.
  3. Set three to five realistic goals. Don’t set overly aggressive, short-term goals and hope for the best. Your annual goals should move the company along its three-to-five-year plan. And don’t overwhelm your teams with too many goals. Your people need to be able to concentrate on getting a few things right rather than pulled in too many directions.
  4. Review key performance indicators (KPIs). Before solidifying your annual and quarterly goals, be sure to review your KPIs. Are these still relevant? Are any adjustments or updates needed? Do your KPIs help you meet your financial goals and help the company grow? Do you have enough people in place?
  5. Cascade plans to the department and individual level. Your annual goals need to be broken into quarterly and monthly goals. Then, each department should know how to contribute to those goals and each person within a department should know how their job adds to the whole.
  6. Communicate your plan. Every single employee needs to understand where the company is going and what they need to do to help the company reach its targets. This means you’ll need to communicate, probably through a combination of in-person meetings, company-wide emails, and maybe video conferences if you have offices in multiple locations.

Once you begin executing your strategy, it’s important to check your progress weekly and monthly. Avoid holding meetings where everyone reports the news. You want to spend these meetings identifying problems and finding solutions.

Such a focus helps keep meetings productive and helps drive performance throughout the year.

When it comes time to sell your company, having documentation of your annual goals will make it easier to provide the type of due diligence investors love. Buyers will be able to see exactly how your company is functioning, and the steps you’ve taken to build a worthy investment.

Still unsure how to proceed with your company’s annual plans? Look for help with a Rhythm Systems webinar on The #1 Mistake CEOs Make When Preparing for Annual Planning. And, for advice on the key components for any successful exit strategy, be sure to attend one of Generational Equity’s complimentary executive conferences.

By Jessica Johns Pool.

© 2017 Generational Equity, LLC. All Rights Reserved.