The Resourceful Reporter, Part 16: Business Forecasts

Writing business forecasts is something like gambling. Imagine predicting in early February 2020 a record-breaking second quarter that year with no knowledge of the impending COVID-19 pandemic. You might be forgiven for that one blunder, but try writing another forecast for the third quarter of that same year with no historical knowledge of such a broken economy, restricted access to suppliers,  truncated client demand, strained cash flows, uncertain government regulations, and a dramatically vanishing workforce. 

Yet business forecasts written by astute analysts are more critical than ever for companies trying to keep ahead of marketplace innovations, supply shortages, and changing customer needs. The content, structure, and style of business forecasts vary based on industry and context. But a helpful way to view them is to borrow the healthcare methodology of a SOAP note (Subjective, Objective, Assessment, Plan). Below are a description of the SOAP elements and examples of how they can fit into forecasts. Two assumptions about the examples: they are theoretical, and they emerge from in-depth research.

Subjective – Perhaps situation would be a better term for a business forecast, as the reporter sets the stage by detailing the period, territory, or aspects of the business under review, as well as the scope of the analysis: 

• This forecast covers 3Q22 for the Asian rubber and metal markets.
• This report forecasts market conditions in the Western US region for the second half of 2022.

Objective – In this section, the reporter describes the current condition of the supply chain, sales record, or business landscape under review:

• Rubber production in Thailand continues to rebound from lower-than-expected global shipments, 20% year-over year. A continued shortage of nickel from Indonesia during 1Q22 (76% capacity) limited our access to supply. 
• For 4Q21, sales in Western US decreased 6% year-over-year, spurred primarily by business closures, especially in the retail sector.

Assessment – Here the reporter notes the current and future impact of the condition on the business:

• As Thailand, Malaysia, and Vietnam continue to maintain relatively modicum production, we will be pressed to feed our recovering production capacities. Nickel supply, however, should prove reliable through 2022.   
• In an uncertain economy due to rising interest rates and mortgage defaults, as well as a learning curve while onboarding a new sales team in the territory, we will be pressed to grow sales west of the Rockies.   

Plan – In this conclusive section, the reporter recommends what the company should do to exploit or mitigate the business conditions:

• We will continue sourcing rubber suppliers in India, Indonesia, and Philippines. In addition we will add to our supplier list for nickel in Philippines.
• We will resume cultivating our sales capacity b hiring in the Western region, transition to just-in-time inventory, and reduce production by 10% through December 31.

Other reports in this series:

1. Meeting Reports
2. Incident Reports
3. Investigation Reports
4. Inspection Reports
5. Procedural Reports
6. Scopes of Work
7. Test Reports
8. Course Reviews
9. Conference Reviews
10. Contractor Appraisals
11. Staff Appraisals
12. Self-Appraisals
13. Audit Reports
14. Root-Cause Reports

The Resourceful Reporter, Part 15: Root-Cause Reports

In this series on report writing, I have often looked at the contents that make up reports. (You can look at any of the links listed at the end of this post.) I won't discuss the contents of the root-cause report since I can think of 33 elements, as the image shows. You would better spend your time here reading more about strategy than about contents because cause causes all kinds of problems. Get it?

The best thing I can do here is offer three general tips for root-case reporters.

1. Overcome confirmation bias. We all tend to fall into confirmation bias, the tendency to misinterpret evidence as confirmation of preestablished beliefs. Let's look at three claims where confirmation bias plays a major role. 

First, we'll start with the claim Most people voted for the challenger because they were fed up with the incumbent. Many other reasons are possible, including economic issues beyond the incumbent's control, an appealing message from the challenger, and higher-than-usual voter turnout comprising a new demographic, to mention just three. Yet we find it easy to accept the claim without analyzing the exit polling data because we believed the assertion all along. 

Second, People with advanced degrees will earn more money in this economy. This assertion seems reasonable on the surface, as studies over a half-century have shown a strong link among education, occupation, and income. So why argue with a long-held belief based on apparently indisputable data? Because the economy is changing dramatically with so many people working from home on their computer, where a blend of creative and technological talent trumps most everything else. So while the premise may be true, it also may not be. We would want to research the situation further. 

For the third example, Human error caused the operator to be injured when a shard of a shattered lab bottle she dropped while walking across the production floor cut an artery on her ankle. We seem to have a clear-cut case here, but too many other factors are at play. Why was she not wearing protective footwear? Why were the lab bottles stored so far from the operator that she had to walk across the production floor to retrieve them? Why didn't a material handler feed her the bottles at her workstation? Was she rushing under direction of her supervisor? Was she fatigued from working too many consecutive hours? Was she confronted with a tripping hazard beyond her control? You might say that none of these answers changed the cause of human error, but they surely can contribute to the cause—and one or more may be the root cause. 

So how do we overcome the complacency of confirmation bias? We can start by not trusting ourselves. We should be suspicious of our experience, knowledge, and viewpoints. Then we should seek multiple and divergent sources that challenge our assumptions, accepting conflicting evidence that makes us look deeper into the event. This mindset leads to the next tip.   

2. Use a fishbone diagram. The fishbone diagram, also known as the Ishikawa diagram after its creator, Kaoru Ishikawa, compels us to look at the total picture (see illustration). By considering management, we now see causes like the operator being rushed by her supervisor, or her being allowed to work while fatigued. Looking at personnel, we detect her not wearing proper protective equipment (although we can point this issue to management or equipment as well). The process is to blame when considering the distance she had to walk or the lack of a trained material handler on site. A tripping hazard  could be attributable to the environment. 

3. Ask the 5 Whys—and sometimes more than five. The 5 Whys is a repetitive process for determining the root cause of an event. The idea is to ask why after getting an answer to the previous why. Of course, sometimes asking why even five times is not enough. Let's see how many whys we need to ask about the operator who was injured to get some closure on the case.

1. Why was the operator injured? A shard of a shattered lab bottle slashed her ankle.

2. Why was her ankle slashed? It was exposed.

3. Why was her ankle exposed? She was not wearing proper protective footwear.

4. Why was she not wearing proper protective footwear? She left it in her locker.

5. Why did she leave her proper protective footwear in her locker? She said she doesn't need to wear it.

6. Why doesn't she need to wear proper protective footwear? Her supervisor does not enforce the policy.

7. Why doesn't her supervisor enforce the policy? He said management allows him flexibility in enforcing the policy. 

While asking the 5 Whys, beware of beside-the-point questions, such as Why does management allow the supervisor flexibility?, as there is no excuse for not adhering to the policy. Also, follow on-point questions, such as Why were the lab bottles stored so far from the operator that she had to walk across the production floor to retrieve them?, as this discovery may lead to a new preventive measure.

Other reports in this series:

1. Meeting Reports
2. Incident Reports
3. Investigation Reports
4. Inspection Reports
5. Procedural Reports
6. Scopes of Work
7. Test Reports
8. Course Reviews
9. Conference Reviews
10. Contractor Appraisals
11. Staff Appraisals
12. Self-Appraisals
13. Audit Reports

The Resourceful Reporter, Part 14: Audit Reports

When I began training auditors to write high-quality reports more than 20 years ago, the senior team member approached me with a smug smile. "Teach us something we don't know" he said loudly enough for his teammates to hear. "We already know the Big Four points of an audit report are the criterion, condition, cause, and effect."

I answered, "Should we talk about the other 17 points?" The auditor's upturned lips descended into a puzzled frown. "I'm all ears," he said, returning to his seat. Once I covered the 21 points of an audit report, I found the less experienced auditors offering a twenty-second or twenty-third legitimate point.

By the end of the day, the senior auditor to his credit said, "I guess our boss made us take this seminar because auditors need a checklist. Not one written in stone, but a flexible one that works as a starting off point to ensure we are writing a complete report."

"That's right," I said. "Maybe you'll need only 17 of those points, and maybe you'll need 26. That depends on the audit type, the auditee, and your firm's preferences. But use the checklist!"

Here are the 21 points of an audit report:

1. Point – What policy or procedure is being audited?
2. Authorization – What law, policy, or group requires the audit?
3. Objective – What is the goal of the audit?
4. Business – What is the nature of the auditee’s business
5. History – What relevant events preceded the audit point?
6. Method – How was the audit performed?
7. Scope – What areas did the audit cover?
8. Limitations – What restrictions prevented a complete audit?
9. Finding – What is the judgment about the audit point?
10. Criterion –  By what measure was the finding assessed?
11. Condition – What situation did the audit reveal?
12. Cause – Why does the condition exist?
13. Effect – What is the business impact of the condition?
14. Conclusion – What does the condition imply about best practices?
15. Recommendation – What should be done to fix the condition?
16. Benefit – What advantage will be gained by fixing the condition?
17. Response – What is the auditee’s required next step?
18. Follow-through – What is the auditor’s planned next step?

 Other reports in this series:

1. Meeting Reports
2. Incident Reports
3. Investigation Reports
4. Inspection Reports
5. Procedural Reports
6. Scopes of Work
7. Test Reports
8. Course Reviews
9. Conference Reviews
10. Contractor Appraisals
11. Staff Appraisals
12. Self-Appraisals

The Resourceful Reporter, Part 13: Self-Appraisals

What do people say about writing a performance self-appraisal? It feels like bragging. I don’t have anything new to say. I don’t want to expose a weakness that management can hold against me. The self-appraisal doesn’t reflect the real me. Management doesn’t take my self-appraisal seriously. I resent when my self-appraisal is not considered for promotional purposes. Oh, the gripes, squawks, murmurs!

What ridiculous things to say! As if management doesn’t already now about your shortcomings! Besides, if you were passed over for a promotion or a given a lower-than-expected raise, you’d scream, “After all I’ve done for them!” Don’t even think about having not accomplished anything lately; if that’s true, then you deserve to be fired. As for not knowing what to write about or not reflecting the real you, that’s why you’re still reading: to get an approach to writing the self-appraisal. Here are some pointers.

1. Settle into yourself. Start with the mindset that you are not bragging but documenting your performance. Then consider the big advantage you have over your manager in documenting that performance. Your manager might be able see what you’ve done lately, but no one knows your aspirations and intentions as you do. That makes a big difference in knowing how to spin the self-appraisal. 

2. Look to the future. Before writing about your accomplishments, which you should have been noting throughout the performance period, think about those aspirations and intentions. Regardless of where and in what capacity you are working, do you want to improve your communication skills? Perform more analysis? Master project management? Move into a supervisory role? Write from that angle.

3. Connect yourself to the business. Next reflect on the organizational mission, core values, and business objectives. Let your language mirror the company’s but push toward your objective. For instance, if you have no intention of increasing your writing workload, don’t dwell so much on how your writing has improved. But if you want to become a team researcher, focus the writing improvement on anything you’ve composed of an analytical nature.

4. Balance the scale. Look to your strengths as opportunities to overcome your weaknesses. If you are a decent writer but fall short as a public speaker, which may be or will be an important job skill, explain how you are committed to writing out presentations just like you would deliver them verbatim as a means of practicing your presentation skills.

5. Highlight the improvements. If you are piggybacking on a previous performance appraisal, show how you’ve refined your strengths and addressed your challenges as described in that report. This commentary is especially critical where performance evaluations are taken seriously. 

Other reports in this series:

1. Meeting Reports
2. Incident Reports
3. Investigation Reports
4. Inspection Reports
5. Procedural Reports
6. Scopes of Work
7. Test Reports
8. Course Reviews
9. Conference Reviews
10. Contractor Appraisals
11. Staff Appraisals

WORDS ON THE LINE: Seventeenth Anniversary

On January 4, 2005, I started WORDS ON THE LINE. Seventeen years to the day and  1,004 posts later, I still have a lot to say about the writing landscape, thanks to the writers I read, the writing I do, and, most important, the writing students I teach. My aim remains the same: to improve the quality of written messages in all professions.

You can get a helpful overview of this blog by reading the thousandth post, which links to 34 series on a wide range of writing topics. A better way of getting information is by searching your topic in the search window on the upper right.

Here's to another 17 years of WORDS ON THE LINE!

The Resourceful Reporter, Part 12: Staff Appraisals

Staff appraisals frustrate both their writers and subjects for many reasons. Among them is the feeling that with sections like Areas of Strengths, Areas for Improvement, and Action Plan, performance appraisals force a potentially false narrative in which obvious strengths and irrelevant faults are revealed, and useless improvements are sought. Writers lament that appraisals are repetitive, time-consuming, repetitive, and insincere; readers complain that appraisals accentuate the negative, fail to describe the real them, and breed resentment. Those are quite a few obstacles to overcome.

Yet you can contend with these hurdles by employing these five steps.   

 1. Look to the organizational mission and core values. Start the appraisal process by connecting the desired objectives and skills to the corporate mission statement and core values. You'll get a lot of support there. For example, Apple mentions its mission as "to bring the best personal computing products and support to students, educators, designers, scientists, engineers, businesspersons, and consumers in over 140 countries around the world," and some of its core values as innovation, uniqueness, significance, simplicity,  collaboration, and excellence. Building from the mission statement, those values should be at the heart of every listed skill, performance level, and evaluative measurement in the appraisal template. If they are not, rewrite the appraisal to reflect them.  

2. Focus on the employee's development. The appraisal should exist for one reason only: to support employees in developing their skills. If the area of strength offers no clue to cultivating the employee's competence, exclude it from the report. Likewise, if the area for improvement does not tie into the mission and core values of the business, scratch it.

3. Seek multiple sources. To bring more validity and value to the appraisal, seek feedback about the employee from teammates, direct and indirect reports, managers, executives, interdepartmental staff, vendors, and internal and external customers. These parties may notice qualities and behaviors that you might disregard, devalue, or overlook, and they might provide deeper insights into the employee.  

4. Integrate the skills. The appraiser should embed into the narrative the employee's areas of strength and improvement. The listed strength should enable the employee to overcome the weakness. The strengths should be maintainable, the weaknesses should be surmountable, and the goals should be attainable—all from the perspective of the clearly described skill.  

5. Write plainly. This means ensuring the description represents the numerical assessment, if you're using one. Avoid hyperbolic words on the positive side (great, extraordinary, etc.) and the negative side (abysmal, appalling, etc.) Use the whole scale, not shying from the upmost or bottommost numerical value. This is  why I prefer a simple scale of 1 to 3. But use the upmost score as a means of modeling excellent behavior and the bottommost as a means of developing, not destroying, the employee.

Other reports in this series are:

1. Meeting Reports
2. Incident Reports
3. Investigation Reports
4. Inspection Reports
5. Procedural Reports
6. Scopes of Work
7. Test Reports
8. Course Reviews
9. Conference Reviews
10. Contractor Appraisals