Is It Time To Appoint A Chief Planning Officer (CPO) To The Board?
Over the last 18 months we have all spent a great deal more time discussing planning budgeting and forecasting – especially scenario planning – than almost any other topic. It seems that everyone is desperate to get a handle on the future, look further out on the time horizon and forecast with more accuracy.
Even before the pandemic struck, boards of management did not spend enough time looking forward and a trifling 11% used leading indicators of performance more than they had done in the previous three years.
FSN’s research finds that only 4% of organisations commit to regular scenario planning despite its supreme importance, although I suspect that the figure is higher now and relatively few organisations are equipped with specialised planning budgeting and forecasting software.
The new mantra is Extended Planning and Analysis xP&A, which in broad-brush terms reaches out across functional silos, operational and financial data, to achieve a more connected and representative view of plans. But if it is to become more than a hollow ambition, then initiatives like this need to be accompanied by organisational change in addition to process redesign and new technology.
To make matters worse finance functions find themselves short of time and resources to deploy a new approach. So, we tinker at the edges, shifting problems from one part of a process to another without making an enduring change. Just 9% of organisations consider themselves to have made a full transformation of the planning budgeting and forecasting process. And whilst there is a lot of press about failed finance transformation, those that have transformed the planning budgeting and forecasting process are a beacon of success, enjoying faster and more accurate forecasting, and the ability to look further out into the future (at least a year) with confidence.
Evidently, there is a massive dislocation between what is needed and what is being delivered. So, the obvious question, is how can we bring more focus and success to planning?
Given the heightened interest in planning and it’s continuing importance for years to come there may be a case for elevating it’s visibility in an organisation, perhaps going as far as giving the role of planning and forecasting a seat at the board table, working closely alongside the CFO.
Of course, it could be argued that the CFO should continue to be responsible for planning and forecasting and ultimately this may be the correct viewpoint. But having a Chief Planning Officer with a separately identifiable role at board level, could have several advantages, for example,
• Accentuating the importance of forward-looking discussions at board level
• Encouraging a more data-driven approach to performance
• Enabling a more connected and collaborative approach between functional heads present at board meetings
• Embedding scenario planning in the culture of the organisation.
“I’m reminded of a conversation I had with Professor Greg Hackett, the founder of the Hackett group, many years ago, who lamented the short life of public companies in the top 100 globally. Noticing how frequently companies disappear from the list after a stellar period of performance, he told me “The problem is that nobody on the board is responsible for scanning the horizon.” And in my experience, that’s probably still the case today.” said Gary Simon, CEO of FSN and Leander of the Modern Finance Forum, LinkedIn
Perhaps a Chief Planning Officer would help remedy that situation? Join the debate here