How to make the most of your strate­gic plan­ning

Credit Union Journal - - Special Report -


John Gre­goire, prin­ci­pal of The Pro­con Group, a con­sul­tancy based in Madison, Wis., said one of the big­gest mis­takes credit unions make is not link­ing their strat­egy to a bud­get.

“The strate­gic plan­ning ses­sion seems to be held sep­a­rately from the bud­get ses­sion,” he as­sessed. “At the bud­get ses­sion they discuss what tech­nol­ogy they can af­ford, what branches they can af­ford to open. This is where they re­ally de­ter­mine where they can al­lo­cate re­sources. Some­times there is not a clear link from strat­egy to spend­ing. Some­times the strat­egy gets jet­ti­soned or mod­i­fied to meet the ac­cept­able ROA tar­gets.”

To avoid this mis­take, Gre­goire said CUS should con­tinue do­ing their strate­gic plan­ning the way they have been — look­ing out over the hori­zon to where they want to be — but when it comes time for bud­get­ing, in­stead of look­ing only at ac­cept­able ROA, the bud­get should be con­sid­ered the method of re­sourc­ing the strat­egy. He said key ques­tions to ask in­clude: What bod­ies do we need? What ma­te­ri­als do we need


It is hu­man nature to fear the un­known, noted Tony Fer­ris, CEO of con­sult­ing firm Rochdale Paragon Group, Over­land Park, Kan., and CEO of apogee iq, Rochdale Paragon’s gov­er­nance, risk man­age­ment and com­pli­ance soft­ware com­pany. And that fear, he said, can lead to be­ing too fo­cused on the an­swers in­stead of ask­ing the right ques­tions — and ac­cept­ing the fact that the fu­ture is un­cer­tain.

“We fo­cus on what we feel we can con­trol and what we can clearly en­vi­sion. We re­ward those who have ‘the an­swers’ rather than those who ‘ask the right ques­tions,’” he sug­gested. “We must learn to an­tic­i­pate the un­known, em­brace un­cer­tainty, strate­gi­cally and sys­tem­at­i­cally cre­ate strat­egy pro­cesses that fit, and we must spend more time truly con­duct­ing an­a­lyt­i­cal anal­y­sis and shar­ing in­for­ma­tion across the or­ga­ni­za­tion and across stake­hold­ers bet­ter than we have in the past.”


From over­con­fi­dence and the sunk-cost ef­fect to loss aver­sion and the herd men­tal­ity, there are num­ber of nat­u­rally oc­cur­ring hu­man bi­ases and blindspots that can sink strate­gic plan­ning ef­forts, ac­cord­ing to Tans­ley Stearns, chief im­pact of­fi­cer for Fi­lene Re­search In­sti­tute, Madison, Wis.

Stick­ing with some­thing be­cause you’ve in­vested so much in it you’re un­will­ing to ac­cept that it’s not work­ing and never will. Be­liev­ing some­thing sim­ply be­cause it’s been re­peated of­ten enough, so we stop ques­tion­ing it – or not ques­tion­ing some­thing be­cause we fear change. All of th­ese are among the com­mon hu­man be­hav­iors that can trip us up, she said.

“Th­ese are hu­man mis­takes and chal­lenges, hav­ing bi­ases. Go through th­ese as a team and re­al­ize th­ese are pos­si­ble out­comes you might run into,” Stearns sug­gested. “One per­son might not see it in him­self or her­self, so we need col­leagues to call us out. We also need to take a good look in the mir­ror and hon­estly say if we have made one of th­ese er­rors and work on avoid­ing them in the fu­ture.”


The sin­gle big­gest er­ror Schenk said he sees is the large num­ber of credit unions that sim­ply don’t do any strate­gic plan­ning at all. Not sur­pris­ingly, it of­ten comes down to a num­bers game that goes back to one of the most com­mon num­bers credit unions point to: as­set size.

All of the big CUS en­gage in a “pretty vig­or­ous strate­gic plan­ning process,” he stated, “but when you get down to the smaller ones a lot do not do it.”

Schenk es­ti­mated some 40 per­cent of CUS have five or fewer em­ploy­ees. He said those 2,400 credit unions are “just try­ing to keep the doors open, keep mak­ing loans,” and so many of them forgo hold­ing for­mal strate­gic plan­ning ses­sions.

“But to me, as the old say­ing goes, if you fail to plan you are plan­ning to fail,” Schenk said. “There are re­sources out there — in­clud­ing the state leagues — that will en­gage with the smaller shops at no cost. They need to take ad­van­tage of th­ese re­sources.”

The irony, of course, is that with­out a plan, many of th­ese credit unions will stay the same size, shrink or cease to ex­ist. More­over, that growth is essen­tial to credit unions seek­ing to ful­fill their peo­ple-help­ing-peo­ple mis­sion.

Do­ing strate­gic plan­ning cor­rectly is “about growth,” Stankovic said. “Use a co­op­er­a­tive score­card that goes be­yond fi­nan­cial per­for­mance to mea­sure com­mu­nity out­reach, mem­ber­ship in com­mu­nity and/or in­dus­try boards, and in­vest­ment in the mem­ber­ship. This way you mea­sure how in­volved the CEO is. Ev­ery hu­man be­ing will go af­ter what he/she is in­cented on. Ev­ery­one agrees the fi­nan­cials are im­por­tant, but if we want to say our mem­bers come first, how are we mea­sur­ing that? That is where the co­op­er­a­tive score­card comes in.”

No mat­ter what mis­take your credit union has made, the ex­perts agreed that the key ques­tion re­mains: Is there some­thing of sub­stance that can be sal­vaged? Of­ten­times, the rem­edy is in the fol­low-through.

“The credit union might even want to have a fol­low-up, shorter ses­sion with di­a­logue on is­sues that were dis­cussed. Per­haps use the next monthly board meeting,” Sievewright sug­gested.

Hunt agreed. “They can look at what was ac­com­plished dur­ing the ses­sion and re­al­ize fairly quickly that they got down too much in the weeds and need to have a re­fresh,” she sug­gested. “The good part is strate­gic plan­ning ses­sions are flex­i­ble and if you have a strate­gic plan in place it can be used for dif­fer­ent sce­nar­ios in the credit union.”

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