Get real about strategic planning in 11 steps

Sometimes it seems like the strategic planning season runs all year. But it does seem to gin up particularly in the spring, with a goal of getting the strategy established in the fall, producing a budget, and moving on.

Many community banks have done no formalized planning in their history. Regulators have been pressuring those institutions to begin to think strategically.

Making planning time and expense pay off

Key to making the exercise work—and not a waste of time—is making sure the board is prepared and excited about planning. How do you do that, and otherwise make planning all it can be? Our firm, as facilitator of over 100 strategic planning meetings a year, recommends the following:

1. Do whatever you can do to ensure that the bank’s directors and officers buy-in to the planning process.

The planning session should include both the directors and senior officers from your bank. Strategic planning will not be very effective if the individuals in charge of implementing that strategy are not invited to the meeting. Likewise, the directors.

Some banks have found that compensating directors for attendance is an effective solution. Even if your bank does not go that route, simply catering in a quality lunch from a well-known restaurant in town can make a significant difference. Seriously.

2. Make it enjoyable for the participants.

All the appropriate attendees from the bank will not make a difference if none of them want to be there. Combining some fun with the work—golf, a nice dinner, etc.—makes some sense.

The idea is to mix it up a little from the routine and make it memorable. If the whole day is a chore, your participants will not just lose interest quickly. They will be much less likely to approach the process with enthusiasm next time around.

3. Focus on the substance of the issues—not the planning process itself.

There is no “right” way to plan effectively. One major downfall of many planning sessions is that the facilitator focuses on the process rather than ensuring all of the substantive areas are addressed appropriately.

In the end, regulators want to know that the bank’s board and senior management team have taken a good, hard look at the bank’s current situation and its future direction.

4. Do not spend a significant amount of time on the mission, vision, and value statements unless you actually use them at your bank.

For those banks that actually utilize their mission, vision, and value statements, it is a worthwhile exercise to regularly ensure that the statements adequately and accurately reflect the bank’s purpose and direction.

I guesstimate that this fits less than 5% of the banks out there.

For most banks, those statements are simply there for the benefit of the regulators. Do not waste your attendees’ precious time “wordsmithing” statements you are never going to use.

A better use of time would be to determine whether your bank actually wants to utilize its statements and, if so, how to do so effectively.

5. Don’t bog down: Spend very little time on the SWOT analysis.

Looking at the bank’s strengths, weaknesses, opportunities, and threats is a good way to answer the question “Where are we today?”

However, SWOT really is nothing more than an icebreaker to get thoughts flowing. If you can get the attendees thinking about the bank’s current situation, then you have a good springboard. But the discussion has to move forward from there.

6. Follow the four “Cs” of planning: Communication, Candor, Consensus, and Confidentiality.

Participants need to be honest with themselves and each other. Lack of honesty will undermine the planning process. All of the ideas present at the meeting need to be given equal weight, as well as treated with respect and confidentiality.

Let’s be blunt: Meeting in the parking lot after the planning session is never a good way to do business.

If you have something to say, then it needs to be said in front of the group.

And if it cannot be said in front of the group?

Then your bank has other issues that need to be addressed.

7. Strategic planning is not synonymous with budgeting.

Strategic planning is a long-term, 30,000 foot view of the bank’s future.

While the strategic planning process should identify and flesh out key financial targets, including return on assets, return on equity, and asset growth, it should encompass much more than that.

8. Focus on substantive issues.

As noted above, strategic planning is not budgeting, a SWOT analysis, or hammering out the world’s best mission statement.

You should be concentrating on matters like these:

• Long-term independence

• Capital needs

• Ownership succession

• Management and board succession.

• Dividend policy

• Regulatory relations

• Geographic expansion strategies

Such heavyweights should dominate the meeting. Once the group identifies all of the substantive issues, it should discuss each of them individually, decide on the best strategy, and move on to the next one.

9. Provide accountability.

Lack of accountability post-retreat is the primary reason that many directors and officers believe strategic planning sessions are a waste of time. Lots of blue sky and bold talk leading to nothing makes great evidence against the process.

This is why our firm strongly advocates for action plans, which document the results of the planning session; identify a responsible party for each item; and set a timetable for performance.

Such an action plan should be in the board packet for review at least quarterly to ensure that the bank is, at minimum, striving to achieve its goals.

If adjustments need to be made, then the board and senior management can address those issues, but they will never do so if expectations are not clearly spelled out.

10. Use an outside facilitator.

 Yes, I recognize my facilitation of 40 to 50 planning sessions per year creates an inherent conflict of interest here. But the reality is that outside facilitators can ask the tough questions and get to difficult issues without the political ramifications someone on the inside would experience.

Moreover, the facilitator can keep the meeting moving and drive the group toward consensus if it reaches a snag. Even the best boards of directors have blind spots, and an outside facilitator can provide a good checks and balances approach to the whole process.

11. Never let one person dominate the meeting.

The patriarch of the bank, the chairman, or someone else may be the leading voice in many areas, but the strategic planning process is a venue for all ideas and consensus of the entire board and management team.

If one person is allowed to dominate the meeting, then the meeting is essentially useless. You have not only wasted the time of the other attendees, but you have wasted valuable resources.

This applies to the outside facilitator, as well. Sometimes he or she should shut up.

When “planning to plan,” keep in mind these suggestions. If you execute them appropriately, your directors will be engaged, will enjoy the process, and will be ready for it the next time around.