As Europe begins another year of its sovereign debt crisis, many core and peripheral European countries are still in poor financial shape. Italy is showing worrisome signs, Portugal is in shambles, and Spanish banks and real estate are a mess.
Instead of debating the relative merits of rolling forecasts over annual budgets, the right question to ask is “What’s the best way for us to plan in our organization?” Because maybe the answer involves elements of both.
In October 2008, Apple CFO Peter Oppenheim commented that “visibility is low and forecasting is challenging,” which seemed to be a polite way of saying “We have absolutely no idea what will happen tomorrow.”
In June 2010, UPS CFO Kurt Kuehn reported that “normally we are very obsessive about building good and accurate plans, but as the recession dragged on we realized that trying to build a forecast was almost a waste of time.”
It has been more than three years since the global economic crisis battered investors, consumers and businesses alike. While there are signs of stabilization, the environment continues to be full of surprises, as witnessed by the recent battles over the U.S. debt ceiling. The situation in Europe offers little relief, with a series of sovereign debt concerns casting doubt on the fate of the Euro and the ongoing solvency of the European Union’s weaker participants. With slow growth and high levels of employment in the United States, the outlook is for more uncertainty.
Ever notice how the personalities and dispositions of animals often resemble humans? An organization’s pursuit of adopting analytics-based enterprise performance management involves personalities of all types. How are they like the creatures that populate our planet? A blog is recommended to be less than 500 words, but I violate that suggestion for those readers who want some fun ! Here is a zoology of analogous types of employees that you might recognize.
The audit committee investigating supplier payment practices at Diamond Foods will require the company restate financial statements from 2010 and 2011 after finding material weakness in the company’s internal controls. Diamond Foods will replace its current current chief executive and chief financial officers, Michael Mendes and Steven Neil. The two have been placed on administrative leave as the company searches for replacements.
I’ve had the distinct pleasure of working with some of the best run companies over the years and I’ve come to appreciate what really separates them from “the merely good”. Some of what makes great companies so successful, like hiring great talent, is quite obvious. But I’d like to share one of their lesser known secrets to their success.
When practitioners, consultants and academics discuss leading organizational risk management practices, they hone in on people, processes and supporting technology. As major risk management failures in recent years have illustrated, mastering these three dimensions is necessary but not sufficient.
Effective enterprise risk management (ERM) — or any discreet risk management process — hinges on other dimensions as well, including organizational culture, behavior, ethics and change management … all the squishy, human stuff that defies convenient categorization in COSO cubes and other traditional risk management frameworks.
Risk management is associated with assessing and quantifying business risks, then taking measures to control or reduce them. As software technologies continue to grow in terms of power and complexity we are witnessing the rapid expansion of software into virtually every walk of our business and personal life. Poor software project management can lead to missing deadline, overrun of cost and can also be major cause of ultimate cause of customer dissatisfaction. The following techniques may be considered to assess and address the complete risk management process at your company.
A zero based budget is a budget where every dollar you earn is assigned to a category in your budget. Your income minus your expenses equals zero – zero based budget. The idea sounds very simple, and it is, but the real value in creating and following a zero-based budget is that it requires you to plan very deliberately ahead of time and track it very closely as you go through your month.