Pub. 3 2014 Issue 7

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 26 I N TODAY’S CHALLENGING ENVIRONMENT, strategic planning is an important ingredient in the success of a financial institution. Economic, financial, regulatory, technological and operational challenges require a more in-depth and comprehensive planning process. The current risk environment in the financial industry also has led regulators to ask for a more comprehensive plan that addresses all of these concerns. Historically, many financial institutions have viewed strategic planning as an exercise to meet regulatory requirements or better engage the board of directors and management in planning the institution’s future. While these planning meetings had the potential to truly impact the future performance of the institution, many times they were not successful. The following tips and ideas can help you develop a more comprehensive plan with a better chance for success. In the past, strategic plans have traditionally included goals and objectives to address some of the following areas: • Financial performance • Employee development • Operations • Growth & expansion • Credit quality • Succession issues However, to increase the potential success of the plan, financial institutions should consider also establishing goals and strategies for the following new emerging risks: • Asset liability management • Interest rate risk • Liquidity • Capital planning • Debt repayment, including trust-preferred, TARP & SBLF • New regulations & the impact on the bank’s business model • Succession issues related to officers, directors & shareholders • Creating liquidity for owners & shareholders The goal is to not only provide strategies for addressing these new risks in the industry today but also to provide value to the organization and put it on a path to success. To further increase the effectiveness and value of the strategic planning, here are some tips that can increase the opportunity to create a successful value-added strategic plan: 1. Engage a trained facilitator with experience in creative problem solving and strategic planning in the financial institution industry; using a formal process with an experienced facilitator will dramatically improve the result. 2. Commit to spend as much or more time in planning the session as executing the session; a trained facilitator can assist in this area. Planning is an essential ingredient to a successful outcome. 3. Make the process action-oriented. Leave the strategic planning session with an effective action list, including specific responsibilities and timelines. 4. Keep it simple. Consider limiting the number of action items to a realistic and manageable number. Overreaching in this process leads to inaction. Think quality over quantity—do not try to pass the weight test! 5. Keep the meeting short. Be fair with the time commitment; while strategic planning is important, spending too much time in the actual session can be draining and inefficient. 6. Choose the team carefully. Selecting planning retreat attendees is important. While implementation of the ideas likely will involve a wider audience, the leadership team should set the strategy. 7. Consider inviting a trusted business advisor to the session; the right advisor can add value. 8. Stick to the agenda. Often, the group will veer off on tangents. A trained facilitator can help keep the team on track. 9. Carefully choose the location. Offsite locations can decrease distractions, but the room needs to be properly sized and have appropriate logistics. 10. Don’t let it get stale! The strategic plan needs to be part of future team meetings and should be a working document to help guide your organization to successful outcomes. Overall, a well-planned strategic planning session can add value by setting the institution on a course for improved and sustainable performance that will not only allow you to address your challenges but also help you survive in today’s environment. This information was written by qualified, experienced BKD professionals, but applying specific information to your situation requires careful consideration of facts and circumstances. Consult your BKD advisor before acting on any matter covered here. Article reprinted with permission from BKD, LLP, bkd.com . All rights reserved. STRATEGIC PLANNING – KEYS TO SUCCESS By Donald Hutson, Jr., CPA BKDNational Financial Service Industry Partner