5 essential tips for creating a strong corporate plan
3 minutes read
It’s a common conundrum for many companies with multiple business units or subsidiaries: how do you get everyone on the same page? How do you coordinate all of their activities, get the most of synergies and herd the entire organization toward common goals?
The answer starts with a corporate plan. Corporate plans are often confused with strategic and business plans, but they’re not the same thing. Mature or complex companies often need all three. But creating and implementing a strong corporate plan is a knotty process that often goes awry.
You want to make sure at the corporate level that you are leveraging each business.
“It’s common for business units or subsidiaries to be left operating in silos,” says Rony Israel, a Senior Business Advisor with BDC’s Advisory Services, who specializes in strategic planning advice. “A successful corporate plan breaks the silo mindset, supports collaboration and synergies, and unites the whole business around a long-term vision.”
Israel offers five essential tips for creating a strong corporate plan:
1. A corporate plan is not a strategic or business plan
A business plan explains how a new or existing company or project brings in money and how the business is run on a daily basis, including the budget and needed resources.
Meanwhile, a strategic plan is a blueprint for where the company is going. It describes its current state, a desired future state and how to get from here to there.
A corporate plan is similar to a strategic plan, but the difference is that a corporate plan guides a more complex company with multiple business units or subsidiaries. It describes where the overall business is headed and outlines a roadmap to get there. It has the same components as a strategic plan, but pertains only to the broader company and any shared services used by the various business units, such as marketing, human resources and finance.
It also sets out broad guiding principles for each business unit or subsidiary, which the latter then uses to develop its own strategic plans.
2. Corporate plan example
Corporate planning starts with the company’s senior leadership or management team, typically comprised of the CEO and heads of each unit and any shared services. This group develops a vision and goals for the overall business and shared services, and an action plan to achieve them.
Unit heads then take the corporate plan to their teams to develop a strategic plan to achieve the broader company’s vision and goals. Finally, these strategic plans are brought back to the leadership team for validation and approval.
It’s important to have a longer view for the entire organization.
Imagine a construction company with three divisions. One is dedicated to demolition and removing construction waste; a second provides cement to construction sites; the third supplies landscaping material.
Senior leaders create a corporate plan with the vision of becoming a one-stop shop and top construction provider in the province. Projects in the plan include developing synergies between the units, such as:
- requiring units to upsell clients to sister units and use sister units as potential suppliers
- allowing employees to be seconded between units for professional development
The organization will also acquire a snow removal company that will be turned into a fourth business unit.
Each unit head then works with their team to develop the unit’s own strategic plan with initiatives to support the corporate plan. Initiatives in the various strategic plans include updating the truck fleet, doing an operational efficiency exercise and acquiring a competing demolition company to expand market reach (Mergers and acquisitions can happen at both the corporate and strategic levels).
The same process would apply if the business was structured as a holding company with independently operating subsidiaries.
“You want to make sure at the corporate level that you are leveraging each business,” says Israel.
3. How to make a corporate plan
A corporate plan typically consists of the same elements as a strategic plan:
- An executive summary
- A company description
- Mission, vision and value statements
- Strategic analysis of the internal and external environment
- SWOT analysis (SWOT is an acronym for strengths, weaknesses, opportunities and threats)
- A description of your business goals and projects to achieve them
- A 12-month action plan that lists specific initiatives, who will carry them out, a timeline for doing so and key performance indicators (KPIs) to track progress
4. How to implement a corporate plan
The implementation process for corporate plans is similar to the process for strategic plans and faces the same challenges, which often derail even the best plans.
One of the most common problems is lack of follow-up. Senior leadership should hold regular meetings (monthly is typical) to review progress on the action plan and KPIs, take note of deviations, recognize successes and make needed course corrections.
A deeper dive should happen quarterly, and each year the plan should be thoroughly reviewed and updated with a new action plan for the next 12 months. The corporate-level meetings should also review progress on the strategic plans of each unit or subsidiary.
It’s also important to measure and incentivize progress. For example, KPIs could measure the number of clients each unit refers to sister units, or the number of staff assigned to sister units for personal development.
Incentive pay can be split into three portions: one tied to meeting one’s own unit targets, another to those of the corporate plan and a third to targets of sister units. “This will encourage the leader of each unit to be in regular contact with other unit heads to see how they’re doing and if they need any help,” says Israel. “Measurements and incentives drive behaviour.”
5. A final note on corporate plan timeframe
The timeframe for a corporate plan is generally longer than for a strategic plan. For example, if the units or subsidiaries have strategic plans for two to three years, the corporate plan may cover three to five years. If the smaller entities plan for three to five years, the corporate plan may go out to five or 10 years.
“The corporate plan is always looking a little bit beyond,” Israel says. “It’s important to have a longer view for the entire organization. Units can adjust more quickly than the larger business.”