Before You Finalize the 2027 Strategic Plan
Seven questions worth asking before the planning session starts
For many banks and credit unions, the fourth quarter means strategic planning. Most planning sessions cover the same ground they always do. The harder questions are usually about the people expected to execute the plan.
Yarmouth & Choate would add another topic to the agenda: whether the people, experience and planning process actually line up with what the institution says it wants to accomplish.
We spend a lot of time talking with leaders about these issues. More often than not, the problem is not a shortage of ideas. It is that the plan quietly assumes the organization can execute them. That assumption is worth testing.
Here are seven questions we think deserve some time around the table this planning season.
1. Does the leadership team you have today fit the strategy you are about to approve?
Suppose the plan calls for meaningful growth via new markets, commercial bank or specialty platform expansion, an acquisition or a major technology change. Is the organization built for that, or are we assuming the people who got us here will automatically be the people who get us there?
For every major priority in the plan, put someone’s name beside it. Has that person done something reasonably similar before? They do not need a perfect resume for the assignment. Good people grow into bigger jobs all the time. But there is a difference between stretching a capable executive and asking someone to learn an important job while the bank is already trying to execute the strategy.
2. Is your strategic planning partner challenging the plan, or simply facilitating the meeting?
This is often the elephant in the room. Institutions can spend months preparing for strategic planning and very little time asking whether the outside partner leading the process is the right one.
Deep expertise in one part of the bank or credit union is not the same as being able to challenge the whole organization. Some planning partners know the frameworks and benchmarking but have limited practical experience making the decisions they are asking the board and management team to make. And sometimes the relationship has simply become comfortable.
Facilitation is not strategy.
A good outside partner should add something the bank does not already have and be willing to push back when needed. Can that person think across the entire bank, not just one function? Will they tell the CEO or board something they may not particularly want to hear? If the answer is yes, a longstanding relationship may be exactly the right one. If not, familiarity is not much of a qualification.
3. Do you really have a succession plan, or just a CEO succession plan?
CEO succession deserves the attention it receives. However, Bank Director reported this year that only 9% of respondents had identified a CEO successor along with a timeline and plan of action. Additionally, the more immediate vulnerability may be the CFO, Controller, Chief Credit Officer, COO, technology leader, commercial leader, etc. It’s the person who holds a lot more institutional knowledge than everyone realizes.
Ask the question plainly: If this person resigned Monday morning, what would we do?
Increased succession planning discipline at the CEO level is needed at many institutions but it’s imperative below the CEO as well. Find the positions where the institution is effectively one person deep and decide what you are going to do about them before somebody gives notice.
4. Are you building next year’s organization around the strategy, or around today’s organization chart?
Start with the work the bank will need people doing three years from now, not with today’s organization chart. What will matter more? What will matter less? Where are poor systems creating work that shouldn’t exist?
That is a better starting point than asking every department head how many people they need next year and then adding those numbers to the existing organization chart. Conversely, the objective is not automatically fewer people either. It is making sure the people and jobs still make sense for where the institution says it is going.
5. What happens to your strategy if one of your competitors sells?
You do not have to be a buyer or a seller for consolidation to matter. When a competitor is acquired, customers get nervous, branches become redundant and good bankers who were not available six months ago can suddenly be very available.
So ask the question before anything happens: If one of our competitors sold tomorrow, what would we want? Which bankers? Which customers? Which branches or markets? It is much easier to move quickly when you have already thought about the answer.
6. Does the experience around your management table match the risk you are taking?
Leadership planning and balance sheet planning should not be separate conversations. As the bank takes on more risk, who around the table has actually been through it before?
Regulators are still paying close attention to credit, liquidity and operating risk. None of that should be a surprise. Credit unions are facing many of the same basic risk questions.
There is a big difference between understanding a problem in theory and having managed through it when things were going the wrong way. If that experience is missing, better to know it now.
7. Do you really know what the external talent market looks like?
Banks benchmark almost everything they do. Executive talent is often the exception.
Before assuming the internal successor is the answer, understand who exists outside the bank and what comparable people are earning. The same applies when you are creating a new role or entering a new market.
Yarmouth & Choate is a big believer in developing leadership internally. But you cannot really know how strong the internal bench is if you have never compared it with the market. You do not have to hire externally. However, you should know what the alternatives look like before you decide the answer is already sitting inside the bank.
One Last Question…
If everything in the strategic plan works, will the people and organization you have today be capable of running the institution you will have created?
If that question causes a long or uncomfortable pause, it probably belongs on the agenda.
Have questions? Want to learn more or discuss? Please contact us:
Phone: 828.333.6300
Rob.ohalloran@yarmouthchoate.com
or info@yarmouthchoate.com
221 Peachtree Road NE
Suite D #4521
Atlanta, Georgia 30309-1106
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