5 basic principles of Operational Planning
Operational planning is common terminology in our sector, but what exactly does it mean? And more importantly, how do you implement it correctly in your organization? Operational planning is a part of your strategic plan. On a day-to-day basis, your operational plan will help you achieve your strategic plan with short-term objectives that support the larger strategic objectives.
A clear and straightforward operational plan has great advantages for your business. While you’re buried in daily challenges and operational matters, you might lose track of the overall picture. Your operational plan will help you to keep your goals clear and never forget what you are working to with your team. It will help you determine priorities and stay close to your strategy. But there are a few principles you have to keep in mind while designing your operational plan:
Principle 1: Don’t forget your strategic plan!
Operational planning and strategic planning go hand in hand. It’s important that you define a strategic plan with a clear vision, direction and objectives for your organization. Let your top management set well-defined goals for your organization. What do they want to achieve, which KPIs are important, how will you achieve these goals…? These are questions that need to be considered in your strategy. Afterwards communicate these goals with every department manager, so that they can work towards the same goal optimization.
Principle 2: See your operational plan as a part of your corporate culture
Most organizations treat their operational plan as a mere financial tool. That’s not the right way! Treat your operational plan as a strategic management tool in which your management can set realistic objectives. Let the department managers make their own plans and tie incentive compensations to their performances (Bottom up approach) in order to achieve the predefined objectives by the top management (Top down approach). This way, all departments will participate in the process and clearly understand common goals. This will increase the accountability and effective information exchange, but also the involvement and commitment of your employees.
Principle 3: Buckle up for driver based planning
As management, you can set guidelines for your strategic plan, but it’s important that your whole organization is aware of these guidelines. The driver based planning is a management exercise in which your management lists all kinds of assumptions perceived to achieve the predefined goals. The drivers, your employees, are the pillars based on which assumptions are determined. Build a template or planning model that covers all the drivers of your organization.
Principle 4: Spend your time wisely
Time is money, is a well known phrase that is also applicable in this context. Your operational planning should be in a specific timeframe to ensure its relevance. For large organizations, making an operational plan for every department is a time-consuming task. It is recommended to create an operational plan for departments where your organization benefits from. That means, departments that have a significant impact on revenue, costs or profits. This will help your organization to efficiently get the right results.
Principle 5: Stay up-to-date with all your data
A plan is only successful when it’s flexible to change. Therefore, it’s recommended to stay up-to-date with the latest internal and external changes in your environment through rolling forecasts. Check your rolling forecast regularly together with your annual planning to ensure that your plan reflects the latest scenarios. Keep your data and analysis centrally organized on a single platform. This way you don’t lose time searching for the latest information.
The purpose of operational planning is to provide every person in your organization, from directors to managers to employees, with a clear description of their tasks and responsibilities in order to achieve the long-term objectives, set in the strategic plan. These principles will help you define the objectives of your operational plan.
Do you have question or need more information? Aexis is an expert in Corporate Performance Planning and can help your organization with making an operational plan. Our expert Christian Pauwels is happy to help you with this! Contact Christian for more information.