LOMBARD, Ill.-Strategic planning discussions often get derailed by the "under and over" dynamic between the board and management, according to Raddon Financial Group.
Gee Gee Kaufman, director of consulting solutions there, said that management tends to be more conservative and tentative in establishing financial and growth goals and is often unwilling to take unwarranted risks (the under). However, the board often leans toward quicker results, relying on perception and not reality in matters of timing and execution (the over).
"This happens because management and the board set expectations without a solid foundation and understanding of the credit union's markets, membership base or financial metrics," offered Kaufman.
Kaufman said the two sides meet in the middle through a solid planning exercise that addresses the facts-the realities facing the credit union and the dynamics of the market. "It becomes more of a collaborative effort," said Kaufman, who added that the overarching goal is to get both sides to seek strategies that deliver profitable membership growth.
"There are many mechanisms we can employ to drive asset growth without even contributing to the wherewithal of the credit union," said Kaufman. "You can get membership growth by getting more engaged with indirect lending or buying a portfolio, for example. But unless what you are doing drives profitability, it's a foolish strategy. So understand your membership, put the X-ray machine up to the membership and your markets and link what you find back to your balance sheet and products and services. Do that and you will drive a consensus opinion on how to achieve profitable membership growth."
'Where Are We Going?'
Kaufman also noted that at the outset effective strategic planning meetings define to attendees what constitutes success and what are critical success factors.
"You have to know: Where are we now? Where are we going? During the planning process you have to have specific metrics and actionable business intelligence which provide direction and focus-how do we get there? And you have to measure throughout the duration of the plan, both strategies and tactics whether you are on track.
"If there are no markers that define success, how will the CEO and board claim victory?" asked Kaufman. "This is like playing golf without a scorecard. Shoot 125 and you believe that you are ready for the PGA Tour."
