For decades, top-performing sales teams have encouraged members to make accurate forecasts. As any sales leader or CEO will tell you, a group of reps who can reliably predict the revenue they’ll bring in over the next quarter are an unbeatable resource for making sound decisions about the future.

In my tenure as CEO, I know I’ve made this a priority. At a previous company, our sales team got to a point where they could predict their quarterly bookings with a 90 percent accuracy rate (with a tolerance of five percent), giving me a one-quarter crystal ball that let me see where we were headed and how I could best position us for success.

But here’s the question I’ve been asking in earnest for the past couple of years: Why confine this forecasting discipline to sales?

The Case for Company-wide Forecasting

Especially as knowledge work becomes more specialized, more complex, and more nebulous, I believe that CEOs and leaders who don’t start asking employees to regularly predict their performance against goals will miss the chance to be at the forefront of organizational health in the twenty-first century.

This is because the traditional management practice of asking employees about their progress toward a goal is fundamentally different from asking for their informed prediction on the likelihood of the goal being met. It’s the difference between asking “What is now?” and asking “What is likely to be?” I would argue that asking the latter question — preferably to the whole organization, preferably every week — presents a wide-open opportunity for CEOs and other executives to position themselves at the forefront of business.

In fact, my latest venture, Khorus, is a SaaS platform for capturing company-wide predictions from the whole company and presenting them in a simple dashboard for leadership.

Whether you use software to support the process or not, here are five reasons to favor predictions over progress reports as you lead your team through the execution process.

1) Predictions give you insight, not information.

Ask someone how far they are on a project, and you’ll probably get a number of some kind — “About halfway there,” “Ninety percent of the way,” etc.

But unless you’re familiar with the work being done, this type of information can be misleading. Say you have this conversation with Melissa, your head of sales:

You: “Melissa, how’s your team coming on that 200-new-customer target for the quarter?”

Melissa: “It’s going great! Only halfway through the quarter and we’ve already signed on 150 new customers.”

But ask Melissa for a prediction, and you might get a different answer:

You: Melissa, how likely is your team to meet the 200-new-customer target by quarter end?

Melissa: “Well, we’ve signed up 150 already, but those last 50 might be our toughest. Our pipeline is looking pretty depleted, so we may not get there.”

The second response may not thrill you, but it gives you useful insight instead of raw information. Rather than thinking the 200-customer goal is in the bag based on the fact that Melissa’s team is three-fourths of the way there, you now know that the goal looks less attainable than that data indicates. You also know that it’s time to check in with marketing to talk about replenishing the pipeline.

This excellent piece in the New York Times by two data scientists — one at Facebook, the other an ex-Googler — makes a great case for insight and context as a supplement to data. By asking for a prediction, you force a deeper level of insight behind the metric, which helps both asker and answerer as both tend to the goal in question.

2) You display trust — even as you foster accountability.

Progress reports have the flavor of oversight, more “verify” than “trust.”

When you instead ask your employees for a forecast on their goals, the interaction loses the feeling of a check-in with a probation officer and becomes a collaborative discussion between professionals. By asking them to make a judgment on the likely outcome of their goal, you show the employee that you trust their knowledge of their own work. This increases the sense of autonomy, which research has shown increases satisfaction and engagement.

Somewhat paradoxically, this predictive spin on the update encourages greater accountability even as you display more trust in the employee. There’s a special kind of responsibility that comes with asking people to set a goal and then predict whether they’ll make it each week. At the end of the quarter, it’s much harder to dodge an outcome you’ve been predicting all along.

3) You face the future, not the past.

Ever tried to drive to the office using just the rear-view mirror? That’s kind of like what leaders do when they try to drive performance by looking at progress reports and historical data on people’s goals. Just as when you’re driving a car, you need to be looking forward most of the time, checking the rear-view as needed.

The most accurate forward-looking view you can get is the one you get by consistently asking employees to predict whether they’ll meet their goals for the quarter. Your windshield will get clearer every quarter, as employees build forecasting muscle.

Of course, these ongoing predictions won’t tell you about the future of the outside world: you won’t get intel on coming natural disasters, changes in consumer taste, or market up- or downswings. But you will have a reliable vision of how your own teams and employees will perform, enabling you to react to unpredictable situations with more confidence than most.

4) You get the chance to nip problems in the bud.

On the road to executing a business goal, unpredictable situations arise constantly. This friction can be either internal (a colleague fails to deliver on a commitment that affects a goal) or external (a strong new competitor comes out of the woodwork).

It’s a fool’s errand to draft Plans A through Z to help employees handle these contingencies. Much more effective is to use employee predictions as an early alert system. When an employee reports that the likelihood of meeting a goal is lessened, ask why. This surfaces nascent and newly developed issues, giving you a chance to intervene where you can.

Do this and you’ll avoid a situation I once faced at a previous company, where a leader announced a $3.2 million budget overrun two weeks before a board meeting.

“So you’re telling me that you had this budget all quarter and only now are you seeing that you’re off budget by over three million dollars?” I asked.

“Yes, that’s what I’m telling you,” the leader replied.

Suddenly I had no choice but to mitigate the damage and worry about how to soften the blow in the board meeting. Not a fun situation, but one that could have been avoided by having future-focused conversations with this leader.

5) You make better decisions.

Something magical happens once you build the discipline of prediction into your organization: you’re able to lead with more confidence, knowing that the decisions you make are based not on conjecture but on the collected intelligence of your workforce.

If you can rely on sales bringing in a certain amount of revenue in the quarter, you’ll feel more comfortable laying out resources for a new initiative. If you see that the engineering team isn’t feeling confident about meeting the deadline for a product launch, you can reallocate resources to keep them on track and tailor your communications about the launch accordingly.

Scaling the Prediction Process

As a company moves past the start-up phase, the idea of the CEO getting a weekly prediction from each employee on his or her goals becomes increasingly less tenable. Teams expand and layers develop, and the CEO must train his or her direct reports to keep up the prediction process with their own employees.

To keep CEOs fully informed on how all goals are going as the company grows past 100, past 1,000, and beyond, I developed Khorus, a SaaS platform that asks employees for predictive insight on their goals every week, with likelihood rated on a 1–5 scale.

This company-wide intelligence gets rolled up into a performance dashboard that allows the CEO (or anyone else in the company) to see which goals are going well and which need attention.

To be sure, most employees are unaccustomed to predicting their own performance, and it takes time, effort, and effective communication to help people feel confident giving accurate reports on the likelihood of hitting their goal each week. But as your business environment becomes increasingly competitive, dynamic, and demanding, it’s the leaders who build predictability into their businesses who will prove to have a significant competitive edge.

Photo by: Davide Ragusa