Why Your Next Strategic Plan Should Start with a Board-Management Survey

There's one important element of the strategic planning process that often gets overlooked. That is, ensuring that all the people responsible for implementing the plan are aligned on the direction that the bank or credit union intends to go in. Here's how to ensure a more successful outcome.

Many financial institutions do strategic planning. Few do it really well.

Banks and credit unions often spend months in endless management team meetings, identifying issues, preparing the ever-present SWOT chart that identifies strengths, weaknesses, opportunities and threats, writing down countless action items for each department, and creating attractive PowerPoint slide decks. Then comes the strategic planning retreat for two days with the board, often at a posh resort. Sometimes there are outside speakers. Usually discussions ensue over the issues, and management makes their business case for solutions and resources. The retreat ends with handshakes and smiles.

In the subsequent weeks, the management team prepares a written plan of some sort. It is then shared with the directors at the next board meeting. Some questions and discussion follow, which typically leads to a rubber-stamp approval. More handshakes and smiles.

I usually hear from the chief executives of these institutions a few months later. They are expressing their frustration to me that the board members, and sometimes even the executives, aren’t seeing eye to eye. It might be a disagreement about the direction of the bank or credit union, financial performance objectives, or lines of business priorities. Or it might be misaligned expectations around the growth or profit strategies. Sometimes it’s the chairman or director with a pet project they insist get done. No smiles now.

It amazes me that so much effort can go into the strategic planning process, the retreat and the final plan — all with utter disregard for aligning expectations of key leaders.

Successful Strategic Planning Is About Building Consensus

The ultimate outcome of strategy is to determine where the institution is going and why, and how it is going to get there, and to get everyone’s agreement to work toward getting there. Aligning the board and top executives, aligning the board members with each other and aligning members of the management team with each other needs to be part of the strategic planning process.

Consensus building is key; unanimity is not required. What is important is to get everyone rowing the boat in the same direction.

So how do you build consensus in the structure of a strategic planning process? A fundamental first step for planning done well is to determine where you want to go as an organization over the next two to three years. But how do you identify this, beyond expressing the wishes of the CEO? Over my more than three decades of planning experience, I have found conducting a board-management survey to be a “must do” tool in this endeavor.

Step One:

Conducting a board-management survey is a must. Asking the board and C-level executives for their thoughts on key topics ahead of time facilitates a strategic planning discussion that is more productive and roots out misalignment.

Typically, I survey the key decision makers, usually C-level executives and the board, on forward-looking matters. This is best done at the beginning of the planning process in a step I call “defining your boundaries and priorities.” The goal of this step is to define and achieve consensus of where the institution would like to go during the period covered by the strategic plan.

Don’t Overcomplicate the Survey Process or Ask Too Many Questions

The survey instrument doesn’t need to be cumbersome. It can be set up on an online survey site like SurveyMonkey. You may want to have a consultant skilled in surveying and strategy administer the effort, or you may do it internally. In that case, the C-level team would write the questions.

Caution needs to be used in writing the questions. Beyond writing questions that promote valid and reliable responses and avoid biases, you also need to be careful in what you ask the board. You should only ask board members questions that they are capable of answering in a skilled way, where they have knowledge of the issue at hand. It is probably not useful to ask them about upcoming changes in banking regulations. A more useful question is to ask their perspective on anticipated future local market conditions.

It’s important to be aware that anytime you ask a question, it may create an expectation among those surveyed that you intend to do something about it. So if you have no resources to add talent, you should probably steer clear of questions along the lines of what future skills are needed.

You should only ask board members about issues where they are knowledgeable. Consider getting their perspective on how local market conditions might change, for example. But skip topics like banking regulations.

What should be covered in the board-management survey? Questions can include forced ranked priorities on growth, profits and safety. Other areas to gather input on include expected financial performance, desired lines of business emphasis in the future, expected changes for the institution, critical issues facing the bank or credit union, and needed human resource skills in the future, among other areas. I usually like to keep the questions at a high level and make them future-direction oriented, with the overall length of the survey being relatively short. Between 10 and 15 questions seems about right to promote a high survey participation rate.

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How to Turn the Survey Data into Meaningful Insights

One big benefit of a survey so early in the strategic planning process is that every one of the key participants has an equal voice on setting direction. Boards and management teams are often comprised of dominant personalities, and sometimes table-pounders. They can hijack the strategic direction of the institution if left unchecked. The board-management survey can avoid this unfortunate outcome.

Once all the surveys have been completed, the results need to be tallied and reported. If you are an informal organization, the online survey sites do a nice job in tallying the results. From there, some careful interpretation is required. You want to look for consensus where it exists, and also identify gap areas that have a wide range of opinions in need of consensus building. Cross tabulations should be used to identify consensus and gaps between the board and management, as well as intra-board and intra-management. Don’t just report the sum of all answers.

The next and most crucial step is to align the expectations of the stakeholders. I find the best way to do so is to hold a two- to three-hour, in-person meeting with the executive team and the board. In that meeting, the results are shared, highlighting areas of consensus, as well as those areas that need intervention to build consensus. In cases where gaps exist, this meeting offers the differing camps of opinion an opportunity to present their views and persuade others.

Consensus is best achieved when people have objective data or a compelling business case to back up their views. Once the pros and cons of any disagreement are laid out factually, the right choice usually becomes obvious.

Compromise is also an important outcome, where appropriate and needed. While you might not be able to achieve strong consensus where all gaps exist, everyone should have an opportunity to have their voice heard, and all should be able to support the ultimate direction that the bank or credit union sets forth in its strategic plan.

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Strong Planning, Strong Strategy, Strong Execution

The real magic happens after the surveys are tallied and a consensus is developed as to the desired direction for the institution.

For CEOs, an optimal outcome of planning done well — and one that is often missed — is using the strategic planning process to align expectations of the board and management.

A survey facilitates this, getting everyone on the same page at the outset and making it easier to maintain that alignment and focus throughout the implementation of the plan. Everyone knows where the institution is going and why, and once the remainder of the planning process is complete, how it will get done.

That’s a big win for everyone involved.

About the author:
Joseph H. Cady is a certified management consultant and the managing partner of CS Consulting Group, a San Diego-based strategy consultancy specializing in financial institutions.

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