Introduction of Rolling Forecast Drives Forward Looking Behavior and Improved Accountability for Results
Context and Challenge
A leading producer of petrochemicals with over 2,000 employees set its sights on aggressive growth and needed to improve certain foundational processes
The new CFO was not satisfied with the forecasting and budgeting processes which did not reinforce accountability, a long term outlook and created massive organizational burden during the annual budgeting cycle
The forecasting & budgeting process was ineffective:
The forecast looked only 3-6 months ahead which drove short-term mindset
The forecast was developed exclusively by the finance group which reinforced lack of understanding and ownership among the business units
The annual budgeting process was painful and resource intensive
Unclear roles did not encourage accountability
Approach
We worked with the team to discover pain points in the forecasting and budgeting processes and created an improvement plan to increase accountability, increase visibility, and reduce organizational burden
The forecast was lengthened from 1 to 6 quarters to reinforce longer-term thinking.
The process was updated to include several review and approval cycles by owners of business units to reinforce accountability.
The new process enabled a meaningful reduction in annual budgeting time by pre-populating the budget for the following year. It also pushed the start of the budgeting from June to September, reducing the cycle from six months to three.
“Working with a team of dynamic people toward a set goal leads to success. I have learned that change brings fear, but not changing can be more scary.”