By Jack Hoey

Recently my company completed its annual planning process. As most companies do, we have an annual planning cycle where we select projects for implementation, assure that income and spending are aligned in a way that meets our goals, and examine our progress toward long-term objectives.

By definition, plans look forward. Our work during the planning process centers on the future of our company. And of course, the results that we project for our work tend to be expressed in economic terms.

But our process has also come to include reviewing past progress in several areas that are more related to our values than our work plans. Looking forward is a critical aspect of leadership; it appears on any list of tasks that are essential for a leader to perform. But I think we sometimes underestimate the importance of looking back.

First, some trends take time to be seen for what they are, and, therefore, to be understood. For example, since the beginning at our company we have sought to increase employee incomes. Each year we examine income data for our nine years of existence from a number of angles.

During those years we’ve made substantial progress toward our goal; average earnings growth has exceeded inflation, and our pay is now above average for the region. In individual years, however, there is a wide variation in earnings growth, which is closely correlated with the company’s financial performance in those years. As you might expect, when business is weak, pay increases are lower, and so are overtime pay and profit-sharing; when business is strong, all three increase rapidly. Any single-year results, then, can be misleading. You have to look over a longer period of time to gauge progress accurately.

Planning tends to take the most recent trends of the past and project them linearly into the future. It’s easy to be overly optimistic when you do this. After all, the planning process is founded on developing an approach to markets and operations that you think will enable better performance.

Second, while we all know that unexpected things are likely to go wrong, for the very reason that we can’t put our fingers on what they are, we don’t include their likely impact.

Plans, then, typically encompass a rather optimistic scenario. However, looking back over long periods of time provides a healthy corrective. It provides a sense for the pace of change that is actually achievable, as opposed to that which is merely imaginable.

Another area we examine during our planning process is our charitable contributions, which we funnel primarily though a fund we endowed at the Coastal Community Foundation six years ago. Since then we have focused on building the endowment and developing a pattern of grants that enables us to build ongoing relationships with nonprofits whose work we want to support.

In the early going we struggled with how to give. Right after we started the fund, we began a year-long profit slide. It’s easy to tell yourself that you can’t afford to give back to the community when times are hard. On the other hand, it’s not necessarily easier to give when they’re good, because you realize hard times may be just around the corner.

Eventually we decided to contribute a set percentage of our profit each quarter. Some things are not a matter of planning but of establishing good mechanisms that enable you to do successfully the things you want to do. Giving a percentage of profit is self-regulating, in that it adjusts automatically for good times and bad and assures that we’re giving consistently.

For that matter, setting up an endowed fund is also a good mechanism. The needs of the nonprofit organizations we support don’t decrease in years when our profit goes down. By contributing to an endowment and making grants from its income, we are able to give consistently to the organizations we care about even when low profits reduce what we can give directly.

Good planning will always focus on the future. But seeking to understand your company’s past can help you assess future possibilities realistically.

Jack Hoey is president of Coastal Glass Distributors, a leading glass fabricator based in North Charleston. He can be reached at jhoey@coastalglassdist.com.

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