Credit unions sometimes become overly ambitious with their strategic plans and, as a result, lose focus on their true priorities.
That was the message from two speakers from CUNA Mutual Group at the company's Discovery conference here: DeLania Truly, senior marketing consultant, and Tim Gardner, financial solutions officer. Both had suggestions for getting refocused.
According to Truly, strategic planning is a process that is focused on a vision of the future, but is enhanced with strong action for today. Part of the problem, she said, is some CUs confuse "goals" with "strategies." "If you have a goal, a strategy is how you achieve it," she said. "A strategy answers the question 'How?'"
Other credit unions become paralyzed in their strategic planning because they have too many goals. Truly said she worked with one credit union that had an unwieldy list of 38 goals. "Upon further analysis, it really had eight goals. Credit unions should focus on their true priorities, have a few, prioritized goals, and key strategies for achieving them."
Proper strategic planning, she advised, is based on the "four cornerstones of excellence." The cornerstones are: members, people (staff and volunteers), operations (facilities, technology and operational processes), and financials.
Broken down into their component pieces, Truly said the four cornerstones consist of:
* Member Excellence-"This quadrant is all about acquiring and retaining members. Credit unions must remain relevant to their members by enhancing the member experience. They must have the right products and services and be competitive."
* People Excellence-"The staff and volunteers need to know the purpose of the credit union- why they are there." She said this not only means creating a sustainable sales and service culture through staff and management training and development, but creating strong board/management relations.
* Operational Excellence-"Make sure employees can work smarter and more efficiently to help members." To accomplish this, CUs must maximize their use of technology internally and externally, creating a "smart" work environment.
* Financial Excellence-"A credit union's financial ratios. The key is sustainable growth in lending volume and fee income, as well as member loyalty and satisfaction."
The four quadrants meet in the middle, said Truly. If done properly, a strategic plan will give a CU a "business road map" for the next three to five years. "Each of the four cornerstones must be represented-don't focus on only one," she said.
Gardner advised credit unions to tie their strategic plans to the four cornerstones. He recommended at least one strategic goal be linked with each cornerstone, but described the first three as "leading indicators," with financial excellence a "lagging indicator."
"Why lagging? Because financial excellence is the result of member excellence, people excellence and operational excellence. If a CU has the first three, the fourth will follow," he said.
When examining a credit union's financial excellence, Gardner said ratios, rather than raw numbers, tell the story. While most peer-to-peer comparisons are done by asset size, he pointed out a $70 million-CU with two branches is quite different from a $70 million CU with five branches.
