The techniques of forecasting and modeling, by their very nature, are designed to reduce the inherent uncertainty of predicting the future. Unfortunately, motives other than predicting often politicize the forecasting and modeling process to the detriment of managerial decision quality and investor confidence.
Many firms routinely manipulate elements of the forecasting process.
Requests by senior management to purposely alter forecasts, backcast from previously established cost and revenue positions, or mis-specify models occur all too frequently. The results of a survey of high-level forecasting staff at various domestic and international organizations are presented. Better training, formalized forecasting procedures, codes of conduct, clearly defined consultants' roles, and punitive actions can improve the quality of forecasting. Viewing business ethics as enlightened self-interest that always pays in the long run is too easy. While reputation can be a valuable asset, not being tied to a particular code of ethics has an option value.