MADISON, Wis.-Good strategic planning for 2014 should follow six steps, according to one industry expert.

Theran Colwell, director of strategy and business development for CUNA Mutual Group, has consulted with credit unions on ALM modeling and strategic planning for several years. He was on the board of $1.9 billion Summit CU, also in Madison, for five years.

Asked how to make this a particularly effective planning season, Colwell told Credit Union Journal he advised a six-step procedure.

"The No. 1 thing, and it sounds so simple, is to have a planning process and framework established," he said. "The framework I feel has worked best is to 'bucket' things. First analyze, second design, third plan, fourth approve, fifth implement and sixth measure. The final step is important because what gets measured is what gets done."

1. Analyze. The first "bucket," said Colwell, has three components that credit unions need to understand: the macro environment and the economy, and how those affect the CU; credit union system trends; and internal trends at the CU over the last year.

"Part of analysis relates to ALM, and a major macro factor is interest rates, so credit unions have to prepare scenarios," he said. "This includes accounting for extremes, both good and bad, calculating the percentages of probability, and the effects they will have. A lot of work occurs in the analyze bucket."

2. Design. This is where a board and management team look at mission/value of the institution and turn that into strategy. The mission statement might not change every year, he noted, but it should be reviewed.The practical application is what products and services will be offered over the next year, and what channels the CU will be using.

"The board is integral for the design phase, especially reviewing the mission and objectives."

3. Plan. Once design has been decided, Colwell said it is time for senior management to determine how to implement and create the budget.

"Strategy is a three- to five-year look, but the budget is one year," he said. "Make sure the budget and strategy are aligned in the plan phase."

4. Approve. In other words, get buy-in from the board and senior management.

5. Implement. Once strategy is approved, senior management starts implementing. Colwell said there are a variety of ways to do so, starting with communication with staff regarding the strategy.

6. Measure. This is about the need to determine key performance indicators. Colwell recommends not trying to measure too many things or this part may start to become "cloudy."

"The board needs to track if the strategy is working," he said, adding it is important to remember a strategy is dynamic and needs to adapt.

"Having a great framework in place is the key to strategic planning," he added. "This is just one framework, but it is effective. Having just six steps keeps it simple, and the division of responsibilities between board and management are clearly defined."

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