How should the plan fulfilment percentage be calculated, and how is it linked to the growth rate?

At a meeting one manager says "the plan was 105 percent fulfilled", and another says "we grew 15.5 percent compared with last year". Which of them is right? Both, because they measure different things.

Key points

• Planned target (planned growth) = plan / actual result of the previous period
• Plan fulfilment = actual result / plan
• Dynamics (growth rate) = actual result / actual result of the previous period
• All three are linked: dynamics = planned target × plan fulfilment (as coefficients). If one is unknown, it can be found from the other two
• If the plan is set modestly, it is easy to fulfil it by 120 percent, but real growth may be small. That is why plan fulfilment should be looked at together with dynamics
• In a cost plan the logic is reversed: if the cost plan is fulfilled by more than 100 percent, that is bad, because costs have exceeded the plan
• The amounts being compared should be in the same prices and for the same period, otherwise part of the growth will be merely a price change

Example: the "Mehr" bakery chain

Amounts are hypothetical. Last year's revenue was 800 000 000 soum, the plan for this year is 880 000 000 soum, and the actual result is 924 000 000 soum.

Now the cost side. Last year the cost of one loaf was 5 000 soum, the plan was to bring it down to 4 800 soum (96%), and in reality it was 4 900 soum. Plan fulfilment is 4 900 / 4 800 = 102.08%: the cost is 2.08 percent above plan, meaning the plan was not fulfilled. Dynamics is 4 900 / 5 000 = 98%: compared with last year it still became 2 percent cheaper. Check: 0.96 × 1.0208 ≈ 0.98.