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STRATEGIC PLANNING GUIDE

By Russell Ward,2014-05-16 22:04
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To assist in the internal analysis, a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis should be undertaken. A SWOT analysis summarises the key

    STRATEGIC PLANNING GUIDE SUMMARY

Introduction:

    Credit unions operate in a dynamic business environment that is subject to increased

    competition, regulation and the vagaries of consumer demand. To facilitate the

    movement’s growth, it is imperative that individual credit unions adopt a strategy that

    provides a sustainable business platform for the credit unions future development. The ILCU has recently commissioned a ‘Strategic Planning Guide’ for credit unions, with the goal of providing a blueprint for credit unions who wish to design a strategic plan. In

    conjunction with the ‘Strategic Planning Guide’, this summary document provides a synopsis of the basic rationale, so that credit unions can acquire a fundamental

    appreciation of the steps involved in designing and implementing a strategic plan.

It is recommended that while credit unions prepare their own strategic plan to address the

    particular needs of their credit union, cognisance must be taken of the plans of other

    neighbouring credit unions. This can be achieved by discussing various strategic

    initiatives taken by credit unions via chapter meetings. Additionally, it is recommended

    that credit unions analyse the national strategy of the credit union movement and apply

    the lessons learned from the international movement, as outlined in Figure 1.1.

Fig 1.1 Holistic Strategic Approaches

     Individual Credit Union Strategy should be cognisant of and if possible consistent with the following

     Strategies from the international National movement strategy Strategy of neighbouring Credit Union movement e.g. -CUSO Credit Unions Model

ILCU Strategic Planning Guide Summary March 2007

What is Strategic Planning:

    Strategic planning is concerned with the long-term direction of an organisation through

    the configuration and utilization of its resources, to meet the challenges presented within

    a changing environment. Strategic planning should include the board members and

    relevant staff, planning for the needs of its members. This involves identifying key issues

    that impact on the credit union including infrastructure, people, finances, governance,

    regulation and competition. The credit union should then implement the steps it needs to

    take in a structured, timely manner, in order to deal with these issues, while taking

    account of the resources available. The stages involved in the creation of a strategic plan

    are outlined in Fig 1.2 and discussed in detail throughout this document.

Fig 1.2 STAGES IN STRATEGIC PLANNING PROCESS FOR CREDIT UNIONS

    Stage 1: Appoint analyst & Stage 2: Stage 9: committee. Organise kick Implement the off meeting. strategic plan.

    Stage 8: Stage 3: Provide Identify what financial Stages involved areas the plan projections. in strategic should cover. planning.

    Stage 7: Stage 4: Use Write the quantitative & strategic plan. qualitative techniques to assess business. Stage 6: Stage 5: Determine key Analyse internal findings and and external strategiesfactors affecting . credit union.

Prior to initiating the strategic planning process, the credit union Board members should Stage 1:

    Appoint appoint an analyst. The analyst will play a pivotal role in the formulation and

    analyst and implementation of the strategic plan and can be sourced either externally or internally. committee The benefit of an external analyst is that they bring a different perspective and experience,

    which may not be available within the credit union. However, the advantages of an

    internal analyst include that they are familiar with the issues facing the credit union and

    may be more economical. In addition, the Board should assign a committee of 5-7

    people that will work with the analyst, while reporting developments to the Board at

    regular intervals. An outline of the various appointments can be seen in Figure 1.3

ILCU Strategic Planning Guide Summary March 2007

Figure 1.3 Board Appointments

    Board

    Strategic Planning Committee 5-7 people Internal or external analyst

The Board should then organise a kick-off meeting to decide together on an agreed vision Stage 2:

    Organise for the credit union. This is then communicated as a vision statement to the analyst and

    kick-off the committee, as stated in Figure 1.4. A vision statement is a formal declaration of meeting where the credit union wishes to be in the future. Although strategy is a reflection of the

    attitudes and values of the Board, it is recommended that the Board surveys its members

    and consult with staff in the development of a vision statement, as they may be

    responsible for the implementation of the strategic plan on a day to day basis. If the

    operational aspects of the organisation are not in line with the strategy, then, no matter

    how well considered the strategy is, it will experience difficulties in succeeding.

Fig 1.4 Vision Statement Process

    ? Board & staff discuss and decide together on agreed vision for the credit union.

    ? Issue a vision statement.

    ? Vision statement provides focus for the strategic planning committee & analyst.

The initial meeting of the strategic planning committee and analyst should examine the Stage 3: key aspects of the credit union including people, infrastructure, organisation and finances Identify

    what areas to determine the principal elements that will be addressed in the strategic plan. An

    the plan assessment of people would involve identifying key stakeholders including staff, should members and volunteers, and then identifying how they impact on the credit union. The cover issues of infrastructure/organisation require a review of support structures. This includes the technology required to deliver on the strategic goals, mergers and co-operation

    between credit unions, the premises & sub-offices and the overall support infrastructure.

    In relation to financials, the credit union should examine Loan & Savings portfolios,

    investments, reserves, costs and income. Additionally, the initial meeting should discuss

    the impact of competitors on its operations including banks, building societies and the

    post office. Attention should also be given to how directives from the Financial

    Regulator impact on the credit union operations and governance.

Once a consensus has been achieved, the results of this initial review should be

    communicated to the Board who then delegate to both parties, the responsibility of

    drafting a plan in the context of the vision raised by the review and agreed by the Board.

    At the outset, it is practical to outline what aspects the plan should cover, through a table

    of contents. The analyst and the committee can plan around the table of contents and

    check each section off as it is completed. Although the planning process will take a

    ILCU Strategic Planning Guide Summary March 2007

number of months, a definite time constraint should be provided by the Board, to prevent

    the project from continuing indefinitely. A summary of stage three is provided in Figure

    1.5.

     Fig 1.5. Stages in the formulation of a strategic plan

    ? Initial meeting driven by credit union vision statement.

    ? Strategic planning committee & analyst review issues of people, infrastructure, finances,

    regulation, competition & governance.

    ? Completed initial review goes to Board for approval, who then delegate to the strategic planning

     committee & analyst to begin the drafting of a strategic plan.

    ? Strategic plan should then be based both on the credit unions vision and initial review.

    ? Create a table of contents for strategic plan & set deadline.

    With the vision statement and initial review completed, the analyst and the committee Stage 4: Use

    should prepare a review of the credit unions current market position. The rationale quantitative

    and behind this assessment is that the credit union has a solid foundation from which it can qualitative formulate a strategic plan. This analysis should be based both on qualitative and techniques quantitative information. Qualitative information relates to obtaining information about

    peoples perceptions of the future of the credit union, which can be generated from

    questionnaires and interviews. Quantitative information involves ratio analysis and trend

    determination. This information can be sourced from management accounts and PEARLS

    reports.

To assist in the analysis phase, the credit union should make available to the analyst, the

    data required to properly assess the credit union. The ILCU can help here with both

    credit union analysis and Field Office reports. In addition to the financial analysis, there

    will be data requirements for the member analysis. The demographic profile of the

    membership should be held within the credit unions computer system and made available

    to the analyst. Examples of demographic profiles include age profile, gender, occupation,

    borrowing and savings trends. A summary of stage four is provided in Figure 1.6.

     Fig 1.6 Research Process

    Strategic planning committee & analyst undertake second review

    Research credit unions current market position

    Quantitative Research Qualitative Research

    Financial data Surveys & member views

ILCU Strategic Planning Guide Summary March 2007

An essential element of a strategic plan involves undertaking a detailed analysis both at a Stage 5: micro and macro level that covers all relevant aspects of the credit union both internally Analyse and externally. The internal analysis will focus on the credit union itself as a business internal &

    external entity and will examine issues such as people, financial performance and infrastructure.

    factors An objective view must be taken on the internal analysis, where the current practices and affecting norms should be challenged and relevance determined. To assist in the internal analysis, credit a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis should be undertaken. union A SWOT analysis summarises the key issues and the strategic capability of the credit

    union that are most likely to impact on strategy development.

An external analysis of other credit unions and competition from other financial

    institutions should be undertaken, so to provide a direct comparison and a context for the

    individual credit unions performance. Peer group assessment vis a vis other credit unions

    and research already completed on competitors would provide relevant information.

    Possible data could include opening hours, range of member services, rate of return on

    savings and interest rates charged on loans. Additionally, it is crucial that the credit

    union understands what factors impact on the credit union at a macro or environmental

    level. See Figure 1.7 for a brief summary of stage 5. The ILCU can again provide

    assistance with comparative credit union analysis by peer group, chapter or type

    (community or industrial).

     Fig 1.7 Analysing Credit Unions

    Strategic Planning Committee & Analyst

    conduct

    Environmental Internal Analysis External Analysis

    Analysis

    SWOT ANALYSIS

Following on from the internal, external and environmental analyses there is a need to Stage 6: examine how the findings from each section interact with each other. By understanding Determine

    key these interdependencies, and their cause and effect, the Board of the credit union is in a

    findings & better position to make decisions with the benefit of solid reasoning rather than intuition strategies to support its actions. Thus the analysis will result in key findings in each area, as well as

    overall findings and implications. The development of the plan will require these

    findings to be fully detailed, prioritised in order of their importance and then addressed

    ILCU Strategic Planning Guide Summary March 2007

    by way of strategies. At this stage, the Analyst/Committee should report to the Board to secure continuing commitment and buy-in to the process. A summary of stage six is provided in Figure 1.8.

Fig 1.8 Determination of key findings & strategies

     Strategic Planning Committee & Analyst ? Present key findings per section of analysis ? Determine any interdependencies ? Highlight their implications ? Prioritise results ? Report to the Board

The Board of the credit union can now approve the move on to the next stage, which is to Stage 7: write the strategic plan. The beginning of the strategic plan should include a 1-2 page Write the

    introduction, stating the people involved and the rationale behind the plan. An outline of strategic

    plan the structure of the strategic plan, which would include a summary of each section of the strategic plan, should be provided following the introduction. The next stage in the strategic plan should include a 2-3 page Executive summary that contains the key outcomes from the plan. The latter stages in the formulation of a strategic plan should contain statements on the vision, mission and key strategies of the credit union, in addition to a review of the credit unions current business environment.

To support the Strategic Plan it is recommended that financial projections are prepared by Stage 8:

    Provide the analyst and appended to the Strategic Plan. These financial projections should

    financial include Income & Expenditure accounts and Balance Sheets for the years that the plan is projections to cover. In order to assist in the monitoring and implementation of the plan, it is advised that the financial projections are monthly for the first year of the plan and quarterly thereafter. Whilst processes of strategy development are dependent on analysis of historical data may be practical in secure environments, they will be less useful in dynamic environments, where priority needs to be given to ways of responding throughout the organisation to change. In dynamic conditions, credit unions need to consider the environment of the futureabout which there is a high level of uncertainty--

    not just of the past. The degree of uncertainty therefore increases. They may employ structured methodologies of making sense of the future, such as scenario planning.

    A scenario is a detailed and plausible view of how the business environment of an organisation might emerge in the future based on groupings of key environmental influences and drivers of change about which there is a high level of uncertainty. It is recommended that the credit union supports its strategic plan with three sets of financial projections including best case scenario, worst case scenario and most likely scenario. It is essential that the projections are completed following the analysis and in support of the ILCU Strategic Planning Guide Summary March 2007

    strategic plan. Under no circumstances should the detailed forecasts be completed and then a plan written to suit the projections. A summary of stage eight is provided in

    Figure 1.9. The financial projections and scenarios will be easier to create if the credit

    union has access to detailed financial projections software and linked to their own data

    analysis.

Fig 1.9 Financial Projections & Scenario Planning

    Board accepts strategy

    Strategic Planning Committee & Analyst provide financial projections.

    Best case scenario Most likely scenario Worst case scenario

Significant resources of a credit union will have been committed to the development of a Stage 9: strategic plan and so that these resources are not wasted, the plan must be implemented. Implement

    As outlined previously all participants in the credit union (directors, supervisors & staff) strategic

    plan should be included in the strategic planning process. If successful, a sense of ownership

    will be held by both staff and volunteers, which will aid implementation. Each strategic

    goal outlined in the plan must be prioritised by the board and resources allocated to

    achieve the goals outlined. It is recommended that the board of the credit union plan its

    workload for the implementation of the plan over a number of years and that each

    strategy and task is assigned to a named person or committee to implement.

The credit union should perform a formal review of actual progress on the plan against

    planned progress at regular intervals of no more than a year. It is also advised that the

    Board establishes a committee to oversee the implementation of the strategic plan and

    report progress at each board meeting. The report should outline if and why the plan has

    slipped from its targets as well as recommended actions to rectify the issues. Further to

    this, the ILCU recommends that credit unions work at a chapter level for certain aspects

    of their strategic plans especially business co-operation and link their planning into the

    planning of the ILCU at a national level. A summary of stage nine is provided in figure

    1.10.

ILCU Strategic Planning Guide Summary March 2007

Fig 1.10. Implementing the Strategic Plan

    Board accepts strategy & appoints implementation committee

    Link with chapter and national movement strategy Strategy implemented by credit union. Committee reports progress monthly

Summary:

    Managing strategy requires the consideration of a wide range of factors which shift and

    change over time. If credit unions are to fully capitalise on their current market position

    in the financial services sector, it is essential that they take steps now, so as to plan for the

    future. Strategic planning creates the potential for credit unions to generate new business

    and satisfy the future needs of its members. A summary of the role of key stakeholders is

    provided in figure 1.11. The detailed version of the ‘Strategic Planning Guide’ can be

    accessed via the ILCU website, together with some useful work sheets.

ILCU Strategic Planning Guide Summary March 2007

Fig 1.11 Responsibilities of Key Stakeholders

     Board of Directors Responsibilities ? Appoint strategic planning committee and analyst ? Organise kick-off meeting ? Produce vision statement. ? Delegate the responsibility of obtaining relevant information for the strategic plan to committee & analyst. ? Review strategic plan and sign off when satisfied. ? Establish new committee to oversee the strategic plan implementation and review implementation monthly.

     Strategic Planning Committee Internal/External Analyst Responsibilities Responsibilities ? Work In conjunction with the Analyst ? Work In conjunction with the Strategic ? Prepare a review of the credit unions current Planning Committee market position ? Prepare a review of the credit unions current ? Analyse results market position. ? Determine findings ? Analyse results ? Decide on strategies ? Determine findings ? Design plan ? Recommend possible strategies. ? Provide financial projections ? Write up strategic plan with financial ? Report developments to the Board at regular projections. intervals.

    Credit Union Board & Staff Responsibilities ? Provide information to analyst to assess the credit union. ? Ensure staff perspectives are included in vision statement. ? Perform a review of actual progress on the plan against planned progress at regular frequencies. ? Review and monitor progress

ILCU Strategic Planning Guide Summary March 2007

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