By Ted L. Thames, CCE
Today we focus on questions 6 through 9, some our trickier questions. While all 10 are vital to your credit union's strategic direction, this is where things can get a little bit more personal. Try to set individual and functional agendas aside—and place members and long-term plans at the fore as you forge ahead.
6. Is your organizational structure designed to leverage the credit union's human and financial resources toward meeting strategic goals and objectives?
The structure of the management team as well as job accountability is one of the most sensitive subjects to effectively discuss. Senior level managers who have been in place for a long time are often very sensitive to possible structural changes. The key concept here is that the organizational structure must align itself with the strategies of the business or the value-creating process can slow significantly. As the value focus and key strategies gain clarity, it will begin to show where changes in the organizational structure could be beneficial. These changes cannot be made lightly but will be based on sound strategy and value which make them easier to implement.
7. Are management roles and accountabilities clear and aligned with the value proposition and is there sufficient skill and experience to develop and maintain forward momentum?
Another component of the process that is very sensitive is the area of core competence. It stands to reason that if the credit union wants to improve processes that increase value and improve member satisfaction, managers need to be on board with the skills to map and improve ongoing processes.
If the organization is going to position itself as a provider of superior technology, the skill set must be on board to deliver. Likewise, if part of the positioning requires superior front-line member experience, the training budget and skill sets of corporate development and HR need to be there. This is an area that seems to get easily cut from the budget when times are tough. At a time when many of our products have been commoditized, front-line training and advisory expertise can become a key differentiator.
8. Are operating budgets, staff resource allocations and capital investments aligned with the value focus and strategies?
The allocation of resources on an annual or multi-year basis will paint a clear picture of whether the use of resources is aligned with your organization's stated strategies and value focus. Large expenditures in facilities and core operating software conversions have to be planned over several years based on project complexity and cost. For the most part, credit unions have the capital to pursue a more aggressive value proposition than they currently embrace.
It may take a multi-year effort to build board comfort levels in new lines of business and new delivery channel investments. The old annual planning model leads to a more conservative approach to capital investment and resource allocation in general. The board and management team's level of comfort toward accelerating investment in future value will be the primary governor, not the lack of resources.
9. Are management and staff incentives aligned with strategic objectives?
Part of any good planning process is a discussion of management and staff incentives. Incentives for staff and management, while they do not have to be identical, must align with strategies and the value focus. While balance sheet and equity growth are admirable goals, it may take a different set of incentives to increase value to members. One caution here is that changes in incentives need to be well communicated and understood by all staff.
There are numerous credit unions today that state their desire to differentiate themselves by the service experience. This really does mean that financial incentives for management must at least in part be based on increasing member satisfaction. The key is to agree on what the metrics should be. While member satisfaction survey responses have value, if metrics like net member growth, deposit and loan balance growth, and products or services per household are not seeing positive movement, the survey responses are not worth much.
With the growth of balanced scorecards, incentives can be structured to ensure growth at all operational levels. The trick is to keep them simple and understandable. (Read more about balanced scorecards in Part 3.)
Ted Thames, CCE, is owner of Q10 Resources, a strategy development and planning firm dedicated to the growth and success of credit unions. He is also a credit union strategic planning specialist affiliated with Cornerstone Advisors, Inc. Ted can be reached at 903.343.1176; tthames@q10resources.com or tthames@crnrstone.com.
Also read parts 1, 2 and 3 of "10 Strategic Questions CU Leaders Must Answer." Part 5, the last installment, coming soon!
