Setting plans and budgets is only half the battle; the other half is keeping them top of mind all year. As we approach mid-year, teams run the risk of losing their focus on annual plans set “way back” in December 2012. As new opportunities and distractions crop up, teams may focus on the immediate rather than the important. 

In many companies, the CFO monitors the budget for overspending. Exceeding budget is a problem, but it’s not the only one. Under-spending can imply that some budgeted work not is not getting done — potentially, a larger problem.

In small and midsize businesses, the chief executive officer generally is responsible for hitting plan, but many CEOs are distractible. Others simply lack the interest or discipline to keep their top team’s eyes on the plan. As an example, one of my clients is the founder and CEO of a $36 million IT company. He is an industry visionary, always focused on the more distant future, and he finds execution mundane. His company implemented annual planning, but the CEO held three monthly plan review meetings and then abandoned them. His attention was captured by new ideas, and driving the current plan was not fun.

Soon, it was worthless.

CFOs should play a critical role in developing a culture of management discipline that goes far beyond budgeting. They can begin by operating three levers: communication around performance; the formal mid-year plan update; and organizational pressure on the leadership team.

1. Shine a light on performance

A business plan hidden in a desk drawer is worthless. Each member of the leadership team must have a set of key performance indicators that should be part of the annual planning process. Each month, companies should hold plan review meetings that allow leaders to present their results to their peers and superiors. In smaller firms, that could be a single monthly meeting. Firms with over $20 million revenue might benefit from monthly meetings in each department (with the VP and direct reports) as well as a top-level monthly plan review meeting with the CEO and each VP. Firms over $300 million may have three or more levels of plan review meetings. 

Review meetings highlight each leader’s performance (or lack thereof) — a big motivation for staying on plan and hitting both group and individual targets. Moreover, review meetings can identify problems early, enabling management to adjust course and stay on plan.

CFOs have every reason to drop in on plan review meetings from time to time, or as a regular attendee. Their presence alone can raise the performance bar. If such meetings aren’t happening, it may fall to finance chiefs to plan them. They may need the CEO’s ongoing support, since many executives in mid-market firms have not yet learned the benefits of formally monitoring plan progress.

2. Don’t be afraid to change course
Growth companies often inhabit high-change niches with less than a year’s visibility into their customers, competition, finances, and sometimes even their own products and services. After six months’ time, that annual plan can feel old, with an increasing number of initiatives needing to be tweaked or replaced. So rather than fighting any change to the annual plan, or letting any shiny new initiative consume it, it may make sense to update it. Resources (time, talent, and money) can be reallocated in an orderly, formal (but not cumbersome) process, which the CFO can facilitate.

3. Control the pressure
Pressure in the workplace is a useful tool for shaping performance. Too much pressure is a bad thing, but so is too little. Consider the highest performance environments in the world: the Olympics, the Navy Seals, and the World Chess Championship. All high pressure, yet people choose to put themselves into those situations. Some stay, and some leave (which is as it should be).

CFOs who more narrowly restrict their role to finance can still maintain pressure on the entire team by making sure it’s clear what each leader is expected to do. This makes pressure productive because the path to success is transparent. Pressure without clarity makes people crazy. In fact, most CFOs possess tools such as dashboards and internal reports that act as windows into the performance of individuals and teams.

With the support of their CEOs, CFOs can help maintain the level of productive pressure within the work environment by reminding each member of the team how meaningful their work is. CFOs can also help create incentive programs and other rewards for high performance and establish consequences for under-performance.

Staying on plan is hard work, but CFOs sit in an excellent spot to deliver strategic value by helping the entire leadership team stay focused on the plan all year. By setting the drumbeat for plan review meetings, by formally readdressing the plan at mid-year, and by helping to keep the pressure on, CFOs can drive both top and bottom lines.

Robert Sher is the founding principal of CEO to CEO, a consulting firm of former chief executives who improve the skills of mid-market company CEOs and C-level executives navigating major shifts in their business or marketplace.

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