Strategic planning has become one of the most important initiatives undertaken by credit union executives. As the title quote from Babe Ruth suggests, the path that led most credit unions to where they are today will most likely not get them to where they want to go in the future. Increased competition, greater demand for new products and services, and technological advances are just a few of the challenges to which credit unions must quickly adapt or gradually lose relevance.
The more progressive credit unions today appreciate the importance of strategic planning—i.e. defining the long range goals and objectives of the credit union based on a thorough analysis of the external marketplace and internal capabilities. There are a variety of models and techniques that credit unions can utilize to facilitate the planning process. Options range from the traditional SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to more sophisticated techniques such as Bain & Company’s Adjacency Model, a framework that seeks to help companies identify and prioritize growth opportunities that are outside, but closely related to, their core business.
While these strategic frameworks and models are useful for structuring thoughts and provoking “outside the box” thinking, ultimately they are just tools. Of far greater importance is the actual planning process itself.
Strategic Planning As An Enterprise-Wide Initiative
Credit unions have traditionally treated strategic planning sessions as a one-time annual event, usually at an executive off-site retreat. Today’s industry leaders, however, are integrating the process into the daily management of the credit union and soliciting the participation of every level of the organization.
Nassau Educators Federal Credit Union ($932 million, Westbury, NY), for example, has developed an annual strategic planning process that relies on significant employee involvement. According to CEO Ed Paternostro, “the process has evolved over time.” In the past, the planning process consisted of several staff committees focused on TQM (Total Quality Management). Attention was on reducing costs and improving member service. Over time, Nassau’s board and management began to centralize the planning function itself while retaining significant staff input.
Nassau’s strategic planning process is both a top down and bottom up process. Nassau’s board and executive management team first establish the vision and long-term direction of the credit union. Nassau’s strong senior management team then begins to translate the vision into a strategic plan.
The bottom up process—staff feedback—is critical to the process. Nassau holds regular staff surveys and department brainstorming sessions to provide important information to the overall strategic plan. Once management establishes the plan, it is then communicated to all staff and specific metrics are developed to track progress. “What gets measured gets better,” says Paternostro. Customer surveys and mystery shopping occur at regular intervals as part of the overall strategic planning process. Results from these initiatives help measure the credit union’s effectiveness in meeting its stated objectives. These measures also help identify staff training opportunities.
Nassau’s ability to involve staff in the planning process and establish reliable metrics to track and measure progress has resulted in tremendous success for the credit union. Although it is located on Long Island, an area saturated with bank competitors, Nassau has consistently outperformed its peers along a number of key measures including ROA, member growth, share growth, and operating efficiencies.
Learn more about how industry leaders approach strategic planning and what tools and techniques they find effective in the webinar recording Where Will Your Credit Union Be in 3-5 Years: Effective Strategic Planning Techniques, sponsored by the Callahan Center for Credit Union Leadership.