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Probably the single biggest "scenario" to plan for is having a plan for change. No matter how well you do the scenario planning - the reality never looks the same. Too often we lock ourselves into the "most likely scenario" - then BAM - black swan time.

Who would have thunk property values would go down by 50%? They never did before. Strategic planning (and scenario planning) need to be predicated on changes in the environment - not changes in time like we have done in the past.

Great post Ann - as usual.


Agreed - across the board. To really add value, scenario planning needs to push outside the box, which is never easy to make happen in our time-pressed, discussion-weary world. And yet, I still think we would better position ourselves (comp planning wise) if we could take at least a few steps down that gangplank...

Just getting into Black Swan, by the way ... way behind you and all the other "forward thinkers"...

Think indirect compensation, like openly expressed appreciation, growth opportunities and autographed pictures of the CEO.


My cousin who worked as a Division Manager at Caterpillar told a story about how they used scenario planning there. Back in the '80's, Cat's CEO embarked upon a long, drawn out battle with the UAW to break the union. They envisioned 3 different scenarios and drew up a detailed plan based on the possible outcomes. Once the situation played out, then they were able to act faster to implement their plan.

Must have worked as they're in business still and GM is not....

I think this is a great idea to consider using, based upon where the management team thinks the organization may be over the next 18 months. As Paul said, you can't anticipate every scenario, but perhaps you can select a few of the most likely to occur and build plans around them.

BYW, I'm going to have to research "black swan"...

Thanks for a strategically oriented post that's very timely for salary planning purposes!


Everyone should always have a GTH (Go To Hell) plan for when Murphy thwarts your every carefully prepared option.

In the World At Work Community Benefits blog, I responded thus to a blogger asking how to Plan for the Unknown benefits situation in 2010:

How can you be expected to plan for it? Do you have a superior crystal ball or a special tap into the Congressional negotiating rooms?

Like the rest of us, you may be required to make a B.A.D. (Best Available Data) decision. You go with what you actually know and can project into the future based on your most carefully laid extrapolation from current and forecasted information. Standard decision-analysis process suggests that you should budget as though nothing will change, with preventive/contingent steps. No matter what the outcome, you will be covered. At worst, if wrong, you will have excess money put aside to be re-allocated.

Along with the BAD decision scenario - there is always the SWAG - some wild a## guess. Always a favorite!

Ha! Gonna add these to my list of favorite acronyms.

These days, you probably have as much luck with SWAG as anything else!

And, as you point out Jim, never a bad idea to keep that worst case scenario top of mind.

always thought SWAG stood for "Scientific Wild Axxed Guess" but it fits, either way

Ann, thanks for this nudge. Well put and immensely important, I agree.

I think that it would be a great use of time if every strategic compensation team took a break to tackle your four questions.

At this point in business history, discussing these issues means more than blue skying it. It means learning so you can consider new alternatives.

Dig out the business models, learn what the execs are projecting (not announcing, but discussing behind closed doors). Try to figure out what your competitors will be doing. Check out the concepts that the big consulting firms are kicking around.

This time, there is definite change in the winds. Better you should have a couple of different (sketchy) travel plans than none at all!

Congratulations! This post was selected as one of the five best independent business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.


Wally Bock

Ann, I've just come across your post through the HR carnival - sorry I missed it earlier.

I agree - scenario planning is a great and substantially underutilised tool. But in my experience (reasonably limited), it makes sense to do it across the HR portfolio rather than simply for reward, as obviously you want all these different functions to be aligned. Just a thought.

And more relevant thoughts at http://strategic-hcm.blogspot.com/2009/02/hr-scenario-planning.html

and http://strategic-hcm.blogspot.com/2009/02/scenarios-for-hr-future-in-global-reset.html

The later post formed the basis of the model which I briefly described in our webinar with Globoforce.

Best, Jon.


Thanks for the comments. I completely agree that it is best to utilize senario planning across the entire HR function rather than limiting it to reward planning.

I have been preparing a follow-up post on scenario planning, and I would love to include links to your posts on the topic - both to further illustrate the technique and to make your important point about alignment across HR.

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