Many companies create a plan for their year, with budgets, sales projections, initiatives and organization charts. Some never look at it again until the end of the year; some watch it like a hawk.
But in my experience, a quarterly review is a good way to determine how you are doing.
3 Traps to Avoid
Before we dig into the better ways to handle a quarterly review, let's point out some of the more obvious pitfalls to avoid.
- The Ahead-of-Plan Trap: When leaders are ahead of plan in the first quarter, they have a strange tendency to begin doubting the plan: "We set the goals too low!" In an attemptto keep the organization motivated and avoid complacency, they push to reset goals and plans. Bad idea: Not only does it undermine your authority, but people also begin to expect they will be punished (with higher expectations) for good performance.
- The Behind-Plan Trap: Conversely, if first-quarter results are behind plan, leaders start trying to adjust, well, pretty much everything. Marketing, messaging, compensation, projections, budgets ... the list is endless. But making changes takes energy and distracts from execution. Often the shifts keep companies from moving forward swiftly on a fundamentally sound plan.
- The On-Plan Trap - Why should being on plan be a trap? It's the voice in the back of every leader's head that says, "Things are maybe a little too quiet." Paranoia manifests itself in lots of ways, even when things go exactly as planned.
Best Way to Analyze Performance
Now let's start digging into the numbers.
1. Focus on underpinnings, not results. When your plan was built, you made certain assumptions. These included performance expectations, market response, competitors and other influencers. So before you start making adjustments, check to see if there were any variations to your assumptions.
Plans are usually not created in a vacuum What has happened to those other factors? If the answer is "not much," then maybe your plan is solid and the results are happening off-cycle. Stay the course for now. But if the context has shifted, you may need an entirely new plan.
2. Leverage the least for the most. Leaders love firefighting (even if they don't admit it). They are most active, alive and directive when there is a crisis. The real problem in this case is the potential for overcorrection. It's better to look for opportunities for smaller adjustments rather than an overhaul. Big, frequent change can be operationally corrosive.
3. Don't panic. Reality check: This is just one quarter. You and your team were not stupid when you made the plan, and it was a good plan at the time. Get your bearings, look at what is working, and lean into that.
In my experience, overcorrection is as dangerous as under-response. Be careful that you don't see quarterly results as an excuse to break out the sledgehammer.