Improving Employee Business Acumen

Over the years, I have had many requests from clients that boil down to how can we improve the business acumen of our leaders and managers.

The place to start is the variance.  Retail processes to improve business and financial performance all focus on managing the variance between two numbers.  We calculate the size of the variance, we report it, and then we focus on how to exploit it if it is favourable, or how to improve it if it is not.

How do we create the right variances to analyze?

1. Build a plan and measure the variance of actual against plan.  The plan may not be great to start with, but a less than satisfactory plan is better than no plan at all.  Heaps better.  As you investigate the variance between plan and actual, use the insight to improve your plan.
    
2. Compare this week, this month, this season or half year against the same period last year. Calculate the variance, investigate it and adjust the appropriate forward steps accordingly. Doing this will help you build a better plan, which will mean smaller variances of concern, as you build your history and skills in this process.
    
3. Use the first two analyses to create a time-based rolling forward forecast.  Forecast a  rolling 6 weeks say, or the rest of the current season.  In retail, update this forecast every week. Then compare future actuals against the most recent forecast.  Investigate those variances and use the insights gained to sharpen the re-forecast.
    
4. What do you plan, analyze and forecast? Sales, achieved gross margins, expense levels, inventory levels and needs, free cash flow, etc.  It all depends on what role you play in the organization.

In next week’s Martec Minute, I will expand on how to do that variance analysis.

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Posted by Brian Hume
30th May 2025

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