Relational Change with Negative Values

Relational change? Negative Increasing Goal? Positive Decreasing Goal? What does all this mean???

When using a Relational Change calculation method (Relational to Last Year Accumulating, Relational to Last Year Averaging or Relational to Last Year Month to Month), the system will use the prior year's values to set your target goal number. All this tells the system is what is the number of our goal. It doesn't say whether we should be above this number or below this number (this is true of all calculation methods except for fixed range). The goal number is just a single number for each month and doesn't provide enough information to the system. Therefore we include a second setting: Goal Type

The 'Goal Type helps the system to understand if you are trying to increase or decrease performance over the prior year. This should be fairly straightforward, but there are some subtleties.

Normally when you have an increasing goal, you are trying to increase over the prior year so your percentage of change will be a positive value. But an increasing goal just means that you want to be ABOVE some specific target number (the Annualized Goal). By providing a positive increase percent with an increasing goal, you are telling the system that you want to be ABOVE the Annualized Goal AND that you want to be ABOVE last year's value by the specified percentage.

However, you may not want that. What if you and your analyst have determined that you want to cut back in certain areas this year; but still want your goal to be ABOVE the Annualized Goal line? Perhaps you're forecasting a bad year for widget sales where normally you sell 1,000 widgets per month you are now expecting to only sell 900 widgets per month. You don't want to sell less than 900 widgets per month, but sales of 900 or more widgets is an acceptable goal. Using the Relational Percent Change, you can tell the system that you want a -10% change (negative 10 percent) over the prior year and setting the Goal Type to Increasing that you expect a 10% reduction from the prior year but anything below a 10% reduction is unacceptable. We call this a Negative Increasing Goal.

Let's use another scenario for a Decreasing Goal. Perhaps you're tracking total failed parts per month. Normally you have 1000 failed parts and you want to reduce that to 900 failed parts per month this year. You would set your Goal Type to Decreasing and enter a -10% (negative 10 percent) to tell the system the Month to Month Budget should be 900 (or 10% less than last year) and that any number BELOW the Annualized Goal is a success. This is a Negative Decreasing Goal which is the standard decreasing goal most people think of.

However, what if one of your machines is on it's last leg and you decided that you won't replace it this year. Perhaps the machine that produces your widgets has shown an increase of 10% to it's failure rate and you decided that you'll replace the machine if it's failure rate has an increase above 10% for 3 months running. You would still want to show success if the number is BELOW the Annualized Goal', so what do you do? Last year it was failing at a rate of 1000 parts per month. This year you expect a 10% INCREASE in defects per month, so you set your Relational Percentage Change to "+10%" (positive 10%), or 1100 defects per month. You set your Goal Type to Decreasing so that any number BELOW the Annualized Goal of 1100 defects per month is acceptable. This is a Positive Decreasing Goal.

Finally, the most common goal is a Positive Increasing Goal. This is any goal that has a positive increase over the prior year with an Increasing goal.