Forecast is good and it is bad. When a company achived the goal and exceeded expectation, they extend the gain sharing to the employees and the board members also get fat checks. But when the forecast fails, stress kicks in, employees who have been great before will now be put into unnecessary stress forgetting that forecast is just a projection of what the company could earn over a period of time. And the possibility of this forecast depends on many factors. In my opinion, forecast should be in three phases: The highest expected point, Mid point and the lowest point. This will reduse the pressure and better access the performance level.
That is precisely the reason why salepeople and economists hate to produce forecasts - there is no upside! If you are right, nobody remembers, but if you are wrong you get to be a scape goat. Yet without the forecasts we cannot function as individuals, as companies or societies. Formalizing forecasting processes and isolating them from political pressures will provide significant improvements in their accuracy. I was interested for a long time to implement a forecasting model similar to ocean or air navigation methods that use multiple information reference sources to triangulate on their current and desired positions. Well, may be some day :)
That's why sometimes it is better that the company is not public so that they don't always have to keep high pressure to make the numbers at quarter end. Often times, the private companies are much more generous in terms of bonus and profit sharing etc.
But going back to our article here, forecasting will always be just an estimate. Even when companies meet forecast, that doesn't gurantee the stock price will go up. I think it has to do with expectations and growth prospects.
I have found myself asking those same questions many times. Why do these companies often go after unrealistic numbers? One would think that by running in the black and increasing sales and profits everybody would be happy. Yet when these unrealistic numbers aren't met everything goes haywire. The stock markets take a tumble; CEO's and other higher ups lose their jobs, all because the company didn't meet these goals. One would think that there should be some merit in having a profitable company.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.