The Annual Work Plan Cycle

Introduction

The annual work plan cycle is really a big exercise to get everyone in the company to come together to do the work which the company has to undertake in order to fulfill its mission. The mission is the primary task. Although revenue and profits are good indicators of the financial health of the company, however they are by-products of the members within the company carrying out this task.

Background

The assumption for the sample schedule below is that the fiscal year is based on the calendar year. However different companies adopt different period for their fiscal year. The Finance Department would make quarterly, half-yearly and annual business financial forecasts to provide inputs for the company’s annual strategic planning exercise, work plans and the performance appraisal exercise.

The Order

1)     Review the business environment

2)     Identify the trends

3)     Look ahead at the possibilities and opportunities as well as obstacles and uncertainties.

4)     Think ahead for 1, 3, 5, 10 years and longer.

5)     Review the company’s mission for validity. Change or moderate the mission if necessary.

6)     Carve a strategy that the business should undertake to fulfill the mission in the new year.

There are 2 ways to conduct the annual strategic planning exercise

  • Method 1 – Do it separately from the annual budgetary exercise.
  • Method 2 – Do it together with the annual budgetary exercise.

7)     Translate the strategy into parts the company’s departments or functions need to play, either as a department or cross department.

8)     Review the structure, the competencies and capabilities and other resources.

9)     Review roles and job’s primary responsibilities.

10)  Identify untapped talents and development needs.

11)  Use decisions made from the above mentioned steps into the annual budget.

Where Could Things Go Wrong

There are areas that could go wrong:

  • No or little information about the business environment was collected as there is no framework or effort for research or documentation.
  • Planning is short-sighted, that is considerations are focused on what requires immediate attention; easy accomplishing; results is immediate.
  • There is nobody to lead the strategic planning session.
  • The company’s mission is vague. It is difficult to see the link between the mission and role played by the various functions. Otherwise, everyone just continue performing their job as in the past.
  • Individual goals are not tied to the roles held by the individual.

Sample Schedule

Quarter 1 I January
  • Start of new fiscal year
  • Project the annual salary increment for the new year.
  • Work out the monthly provisions to make for this payout.
31 January
  • The Finance Department should have completed the first draft of the annual financial result for the year that had  just passed.
  • With this information, the Finance Department will be able to provide the financial figures to the top management to make the decision on the annual variable bonus pay-out
28 February The Finance Department or Corporate communications Department would have published the company’s financial report.
Quarter 3 July Conduct mid-year appraisal for current year to assess how everyone is performing so far.
1 to 15 September The Finance Department will initiate the annual budgeting process for next year’s budget. This is a rolling budget that stretches for a period of 15 to 18 months.
Quarter 4 1 October Start the annual (final) performance appraisal exercise for current year, based on the projections of the financial results for the entire year. Start the performance appraisal cycle for the next year (goal setting).
October month Complete the budget the sales revenue projection for the next year
31 October Complete the budget of the department costs for the next year
1 November Latest date to start the annual performance appraisal cycle
31 December This is the deadline for department heads to submit the Department budget for next year to the Finance Department for consolidations.
15 December Department heads submit the completed annual appraisals.
31 December Top management completes the moderation of the annual appraisals.
Quarter 1

(Next Year)

1 Jan to 15 Feb
  • Work out the performance appraisal results into a bell curve.
  • Determine the persons who
  • Will be dropped
  • Will not receive an annual salary increment or bonus
  • Will receive annual salary increment
  • Will receive a lump sum in place of annual salary increment
  • Determine the salary increment matrix and the variable bonus matrix.

 

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