On Strategy: The Importance of Strategic Planning for Credit Union Boards

If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster. – Stephen Covey

What a great quote—and it’s so true in so many ways. It’s like the quote from Alice in Wonderland, “If you don’t know where you’re going, any road will take you there.” So, what do these quotes have to do with credit union boards and strategic planning? Read on and see.

Strategic planning is critical for the board of directors; not only is it a key role and responsibility of the board, but it establishes a coherent and unified direction for the organization. The strategic plan guides the credit union in fulfilling its mission, goals and its response to both opportunities and challenges in the financial services market.

Why Is Strategic Planning So Critical for Boards?

Here are some reasons why strategic planning is so important:

• Strategic planning helps to align the long-term vision and mission of the credit union with actionable goals. It ensures that all stakeholders, including management, staff and board members, understand and work towards common objectives.
• Effective strategic planning helps the board make informed decisions about budgeting, ensuring that limited resources and investments are directed toward areas that will maximize member value and operational efficiency.
• Through strategic planning, the board can anticipate potential risks, assess their impact and prepare appropriate mitigation strategies, enhancing the credit union’s resilience.
• Credit unions face rigorous regulatory requirements. Strategic planning helps ensure compliance and helps to prepare the credit union to adapt to regulatory changes.
• By strategically analyzing market trends and competitor activities, the board can position the credit union to capitalize on new opportunities and gain a competitive edge.

Determine Where to Lean Your Ladder

So how does a board ensure that its’ approach to strategic planning will help deliver on the objectives above? The following can help to ensure effective strategic planning takes place:

1. Engage stakeholders by conducting surveys or interviews to gather insights and expectations prior to the strategic planning session. This helps in identifying key topics and concerns and fosters a sense of ownership over the strategy.
2. Most organizations have access to tremendous amounts of data. So, leverage the data to make informed decisions about market trends, member needs and operational efficiency. Used properly, analytics can help predict future conditions and guide the strategic direction. The data is useful when discussing various scenarios and their potential impacts on the credit union. It helps in preparing for various future possibilities.
3. The business and financial environment is dynamic, so regular reviews of the strategic plan are necessary. This allows the board and the organization to adapt strategies based on new information and changing circumstances. There’s nothing worse than spending the time and resources on developing a well-crafted strategic plan only to have it sit on a shelf somewhere. Make sure to implement your plan and review it often.
4. Using an external consultant or expert to facilitate the planning session and develop the plan can offer new perspectives and professional methodologies to the process. An experienced facilitator can help guide the discussion impartially, manage group dynamics and keep the session on track. Facilitation also allows participation from all members, ensuring a diversity of viewpoints and reducing dominance by a few.
5. Once your strategic plan is completed, it’s important to ensure that it is communicated clearly and effectively to all parts of the organization. Everyone in the credit union should understand where they fit into the strategy and what their role is in achieving the strategic goals. Communication is critical to the successful execution of your strategic plan.

Following this approach will help the credit union’s board of directors effectively guide the organization towards sustained growth and success by developing a winning strategic plan. It helps the board maintain its commitment to serving members’ needs while navigating the complexities of the financial landscape. Having a well-developed strategic plan helps ensure the ladder we are climbing is leaning against the right wall.

Taras Nohas, CMC, MBA, ICD.D, CCD, is principal and senior consultant at TN Governance and Strategy. He can help put together a purposeful and strategic approach to an organization’s board governance ensuring directors perform at their best and bring more to the table. For more information, contact CUES at p&S@cues.org.