Management Training:
Planning - The Hub of the Wheel of Management Seminar
So far in the series of articles entitled "The Wheel of Management" we have dealt with the six spokes or processes which keep the wheels of business turning. We all know that those spokes will collapse if not attached to the hub, so what in the process of management is the hub? The answer to this question is demonstrated from experience. Companies that have a formal planning process are generally more successful than those that do not! Yes, planning is what makes all of the processes of management more efficient, and I sincerely believe that the investment in planning is the most productive investment any business owner can make.
That is the truth! I tell my clients that they will get a five fold return on any investment they make in planning. I have never had anyone dispute that prediction. So what do we mean by planning. Let me give you the simplest of examples. Working with a concrete contractor in the Mid West, we interviewed their workers to find out why different teams appeared to be more or less productive. The insight came when one of the more productive team members told us this, "I like to be organized, so as I am driving to work every day I run through what I can expect. When I am working with supervisor X, he tells us the night before what we are likely to do each day. Because I know what is coming up for the day, I can prepare mentally for it."
As I said, this is the simplest example, but it is mirrored in all the planning functions. Preparing a budget, scheduling construction work, devising market strategies, these are much more complicated and comprehensive processes but they still breakdown to the same thing. They help you be organized, to know what to expect, to prepare mentally, physically, organizationally and financially for the future. Being prepared means you can react more rationally and more quickly, but most importantly, more accurately. We all make wrong decisions, but if you have thought things through ahead of time, you will make a lot less, and that puts you ahead of the crowd.
So what kind of planning should we do. Here are some of the most important:
* Cash planning. More companies fail because of cash flow problems than for any other reason. Cash planning tells you where and when the money is coming from, to whom and when it will be paid, and gives you advance warning of problems on the horizon.
* Budgeting. Apart from this being your road map for the future, a good budget sure makes the banker a happier guy.
* Personnel and succession planning. Knowing when you are likely to need new staff or what you have to do in the event of the loss or illness of key personnel will save time, money and most importantly, angst.
* Operational and Marketing planning. This is too big a subject for this short article, but be assured, planning pays.
I know there will be a chorus out there saying, "What is the point in planning, nothing ever stays the same?" My answer, "Precisely, that is why we have a plan for that!"
Mike Anderson:
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Management Seminar
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