Alexander Roos, James Tucker, Fabrice Roghé, Marc Rodt, Sebastian Stange

A company’s culture is frequently at the heart of mismanaged planning, with management often rewarding the wrong behavior. Because financial incentives are still frequently tied to the achievement of short-term plans, employees can feel pressured to negotiate financial goals and to sandbag. Consequently, planning begins to feel like a bazaar instead of the organized, top-down process it should be. Employees may be motivated to reach goals precisely but never to exceed them, since doing so would mean having to reach even higher goals the following year. This “plan low so you can perform high” approach by employees, in turn, fosters a mindset among top management of mistrusting data and asking almost by default for still-higher performance. Overall, this type of planning leads to budgets and targets that reflect internal negotiation and corporate networking skills rather than true business opportunities.

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