Blame it on the past recession, but credit union boards of directors are coming under renewed Regulator scrutiny. The rules have not changed, just the attention to what has for some time been considered baseline competencies needed to successfully guide a 21st century financial institution.
Now, more than ever, Credit Union Resources’ vice president Dean Borland says credit union directors and management need to give serious thought to all things strategic – mission, vision, culture and core values, things that set the credit union apart from the competition, and risks that must be mitigated to achieve success in the “new normal.”
“Mission and vision are the building blocks of strategic planning,” notes Borland.
In 1666, London’s St. Paul’s Cathedral was being rebuilt following a devastating fire. While touring the construction site, Sir Christopher Wren, the principle architect, asked some brick layers what they were doing. One said he was working eight hours a day to earn a livelihood by taking the bricks from one place and cementing them in another. When Wren asked another brick layer what he was doing, the laborer proudly said that he was building a great cathedral.
“Consider your credit union’s mission and vision statements,” adds Borland. “Are they like the first brick layer or the second? Better yet, take your mission and vision statements and apply them to two or three of your credit union’s top competitors. Do they define your credit union’s uniqueness or do they fit everyone?”
Dr. John Redding, president of the Institute for Strategic Learning, observed that there are four principal lessons businesses can learn from the recent economic crisis. Dr. Redding’s observations stand as a viable outline to guide credit union strategic planning.
1. Manage Risk Better: Identify risk earlier, consider a broader range of risks, and prepare for future scenarios. Credit unions are faced with mitigating (not eliminating) eight types of strategic risk:
Interest Rate Risk
Transaction (Operational) Risk
2. Become More Focused and Efficient: Better understand which expenditures are truly value-added and which are not. Planners should consider what the credit union does best and what is most important to achieve credit union success. Does the credit union have a business strategy to leverage what it does best into achieving what is most important?
3. Make More Disciplined Business Decisions: Align decisions with strategic goals & business model, assess capabilities & resources, and prepare for a learning curve. All things evolve through a process of growth, maturity and finally decline. Successful organizations reinvent themselves before becoming mature and suffering decline. That means changing while things are still going well. Change can be difficult. Change requires a learning curve. Is your credit union willing to change to stay successful?
4. Strengthen Leadership Practices: Board and senior managers provide needed direction. In combination, the Board and senior management are the “all seeing eye” atop the pyramid. It is up to Leadership to set the direction and tone for the credit union.
Boards of directors are coming under renewed Regulator scrutiny because times are hard and the board of directors is responsible for credit union success – as they always have been.
Could you or someone at your credit union benefit from better understanding the importance of the planning process? If so, learn more during Credit Union Resources’ Strategic Planning Webinar which will take place April 24. To sign up, visit www.curesources.coop/webinars.html or email Bonnie Cox, at email@example.com.