4 minutes
As recently as 10 years ago, many credit unions did not have a strategic plan. As rapid change and financial disruption came to financial services, CUs caught up with the rest of corporate America and now it’s hard to find a credit union that doesn’t have an annual retreat and resulting plan document. Despite this investment, national board surveys across all business domains suggest boards believe they lack a strategic orientation, don’t spend enough time on strategy, and spend way too much time looking into the rear-view mirror.
We know that boards of directors set mission, values, direction and strategy for their organization—and, as such, must act as a strategic asset partnering actively with the CEO and executive team. This calls for an annual rhythm for addressing, tracking and recalibrating strategy that assures time for authentic dialogue, risk assessment and innovative thinking about a vibrant and relevant future for the organization. High performance boards achieve this by (a) having an annual discipline around developing, approving, and tracking strategy and (b) investing close to 70 percent of board effort on strategic thinking and planning.
Achieving a Rhythm
A strategic rhythm is a strong, regular and systematic pattern of developing business awareness, considering strategic scenarios, creating strategic initiatives, re-calibrating strategy in real time as tactics are rolled out and, ultimately, strategically tracking achievement. This goes way beyond the once-a-year annual retreat.
What exactly do boards consider as part of the 70 percent investment in strategy?
Typical strategic agenda items include progress updates, business environment updates, trends noticed at regional and national CU and other business conferences, review of new industry developments (yes, regulatory oversight counts here), tracking member value shifts, governance succession, identifying risks (e.g. the risk of not successfully recruiting younger members), and appropriate tracking metrics. This discipline for strategic discussion helps ensure the board maintains a “rolling awareness” of the business environment and the opportunities and threats therein.
Helping directors stay tuned into strategic and business environment shifts must also become a between-meetings investment. Subscriptions to journals and online resources, plus books on trends in contemporary industry—financial and others—help board members stay attuned to the changing discourse, models and disruptions.
When directors attend conferences, they should be expected to harvest insight not only from the agenda, but also from networking with other board members. If your board members form a clique and don’t spend time seeking out other board members to chat about CU governance, they are missing a strategic opportunity. Boards I work with have assignments for directors to find someone at their conference whose CU is dealing with similar opportunities or issues, such as recruiting younger members, mergers and acquisitions, board governance succession. Finding out what others are doing or not doing helps generate a greater strategic perspective for your board.
Early in the strategic cycle the board focus is on understanding and confirming the shifting business environment and thinking strategically about implications for the organization. The executive team is closest to the field of play and therefore in the best position to lead this discussion with the board. Later in the strategic cycle, adjustments to current strategy are decided and tactical plans created. In today’s fast-moving environment, it’s possible a particular strategy may need to be adjusted in real time throughout the years.
Finding the Time
How do boards find time to invest 70 percent of their meeting time in strategy? If the CU is performing fine, less time is needed on fiduciary oversight. Using dashboards to track key performance indicators helps focus board awareness of performance without pages of financials or assessment reports. Only “exceptions” to good performance need extensive review and--when that’s the case—it, too, is strategic.
In sufficient time for budget preparation, the board finalizes the priority strategic initiatives for the year. At the same time, the board must recognize that in a fast-moving business environment, there are always new developments that require at least quarterly tracking of progress and needed re-calibration.
Outlining a strategic rhythm helps the executive team focus its partnership with the board “on the business” rather than “in the business.” Frequently, too much board time is invested in mundane reports, unnecessary glimpses into operations and meandering board discussions of less than strategic matters. If your CU is in good shape, moving to a strategic rhythm is easier. If you are a struggling CU, getting healthy should be your strategic focus.
Les Wallace, Ph.D., the 9Minute Mentor, is president of Signature Resources Inc. He is co-author of A Legacy of 21st Century Leadership and author of Principles of 21st Century Governance. He is a frequent speaker and consultant on leadership and governance.
