Congratulations! You’ve made it through the most difficult part. This past year has brought a myriad of unforeseen challenges to credit unions—loan forbearance, PPP small business loans, remote banking, the list goes on. But now, as the global pandemic begins to lift, it’s important to not stay stuck in this emergency management mentality. Here’s how to perfect your board and management strategy execution post-COVID.

The Importance of Strategy

Strategy is key to the success of your credit union. After a difficult year, it might prove challenging to not assimilate automatically into crisis mode. The first step in implementing a strategy for your credit union post-COVID is to take a step back and ask yourself, both board members and management team alike: First, what is our role in governance? And second, how do we play that role as we move forward?

Although the light at the end of the proverbial COVID tunnel is visible, we are not past the strategic changes as a result of the global pandemic. Taiwanese businessman Morris Chang once said, “Without a strategy, execution is aimless. Without execution, strategy is useless.” 

Strategy and risk are things that your board needs to observe high-level, but without getting into the weeds. After all, strategic planning is about focus.

There are two additional questions that a board and its management team can ask themselves. First, what do we provide our members? For example, is your credit union offering loyalty or pricing benefits? How well are you engaging members with your credit union? There is a balance your union must strike between giving your members too little or giving too much. This balance, in turn, is highly dependent on your credit union’s level of safety (in other words, what is your excessive risk-taking level?)

The second question, which goes hand in hand with the first, is in regards to sustainability. Specifically, the need to analyze your union’s profits and capital levels. In short, what does the growth of your credit union look like? After all, the benefits you’re able to provide your members are dependent on these numbers.

These additional questions will provide your board members and management team with the parameters to determine what your current “risk box” looks like. Where do you stand?

Who Is Responsible for What?

Sometimes there is an overlap between the responsibilities of the board versus management. Here we will detail the difference as well as where the two parties might benefit from collaboration.

Typically, a credit union board is responsible for:

• Ensuring the credit union has a formal strategic planning calendar and cycle in place
• Asking tough questions (i.e. how can we provide insight outside of our credit union? What are our establishment’s strengths and weaknesses? How are we reflecting and performing in terms of our foundational elements? In other words, our mission, values, and vision).
• Determining your credit union’s business model
• Proposing reasonable hypotheticals to the management team (which will indicate the credit union’s preparedness)

*Note: The board, although they are technically responsible for ensuring the credit union has a formal strategic planning calendar and cycle in place, doesn’t necessarily mean they need to create it themselves.

This is when many boards turn to hiring a CEO and delegating this task to them. In fact, it is likely smarter to hire a professional, qualified individual to do so as they can leverage their expertise and that of the team.

On the other hand, a credit union management team is responsible for:

• Managing and implementing the strategic planning calendar and cycle (Note: It is management’s responsibility to formulate a strategy with the support and insight of the board)
• Identifying and pushing toward the credit union’s key objectives and goals
• Providing the board with a rolling financial forecast as well as any necessary, relevant, and timely information
• Creating and maintaining a quarterly dashboard, in addition to reporting on enterprise risk (i.e. what’s going on with the economy now? What’s going on with our competition? Have there been shifts in delivery and technology? Consumer behavior? Is there anything to be wary of in the risk and regulation world?)

Management is responsible for calculating risk. This includes credit risk, interest rate risk, liquidity risk, transaction risk, fraud and compliance risk, strategic risk, reputation risk, and so on. They are responsible for asking, what’s the likelihood of loss, and what’s the potential impact? Management is responsible for dialing in these numbers for the board. It’s a lot to manage, which is why it’s important that your credit union’s board acts as a sage advisor to assist your management team.

In the most simple terms, a board is responsible for the credit union’s “what” whereas management is responsible for the “how.”

Overlap and Collaboration

Four questions that your board and management team can partner on are these:

• • Where are we? Think big picture, and be honest. (Board members are typically known for being so, which is helpful!) Think: How do we assess ourselves today? What’s going on in our community? What do we need to be aware of right now?
  • Where could we be instead? This challenges your board and management team to look at its business model. Who is your target market? What are your key strategies? Ensure you’ve created a three to five-year vision that the board can bring to management. Keep goals ambitious and realistic.
  • How do we get there? This is ultimately for the management team to develop, but it is helpful to discuss together.

• What’s the impact? Once you reach this goal, ask yourselves what the impact might be.

The Ideal Board and Management Partnership

If perfect board and management strategy execution existed, this is what it’d look like.

• • Honesty and communication upfront: All the time. For example, let’s say your credit union just sat in a board meeting and approved a strategic plan. There should not be any eye-rolling or side conversations after the matter. Instead, we’d encourage you to ask questions and hash out disagreements prior to the plan being approved, so that everyone is on board and the plan supported by a unified voice.
  • Prioritize your time wisely: Although it can be tempting to revisit a specific goal every meeting, some goals do not need to be discussed every meeting. Instead, your CEO can update you on key milestones and emerging risks. This way, you can streamline meetings—diving into critical topics that really need to be discussed.

• Plan your annual calendar in advance: Does your credit union plan on having any guest speakers at meetings throughout the year? If so, this should be strategically planned using an annual calendar.

Must-Have Tools

• • A Quarterly Dashboard: Every credit union must make use of a dashboard to track measurable outcomes and milestones. Having a dashboard will allow your team to see where you stand in those measurable outcomes and will encourage you to ask if you are completing the necessary milestones that are developmental in your plan.
  • A Set Cadence: You want to design and execute your strategy so that it is an ongoing process. Strategy is not something to simply mark off your to-do list. It is not a one-and-done approach. It is a constant effort that will be always be evolving.

Coming Together: Perfect Your Strategy Execution

Your team has gone through a lot and will continue to adapt post-COVID. At Newcleus, however, we believe that these challenges have forced board members and management to cultivate more transparent and trusting partnerships. Both parties in this partnership need to feel balanced and supported as to create value and focus on strategy moving forward. Using these tips above, you will be one step closer to perfecting your board and management strategy execution. Contact our team today to learn more!