Strategy Planning: Another Way

A traditional way of creating strategy and of communicating it to management is by means of a Board/Management annual retreat. Several years ago we stopped doing this in favor of a more continuous process by adopting the Carver Policy Governance Model. Our Board no longer goes on an annual or semi-annual strategy planning session with management and a consultant. Rather, we now follow a governance model by which the Board communicates policy to management and in turn receives regular monitoring reports.

 
 

A traditional way of creating strategy and of communicating it to management is by means of a Board/Management annual retreat. Several years ago we stopped doing this in favor of a more continuous process by adopting the Carver Policy Governance Model. Our Board no longer goes on an annual or semi-annual strategy planning session with management and a consultant. Rather, we now follow a governance model by which the Board communicates policy to management and in turn receives regular monitoring reports.

Our board governance model calls for the Board to govern the credit union through four basic policy groups or categories. The first is the ends policy. This communicates in broad terms why the credit union exists and what it means to accomplish for members. The second is a listing of executive limitations, setting limitations beyond which management may not go. The third maps the Board/Management relationship. The fourth is a definition of how the Board governs itself. Naturally, all these are interconnected and must be considered as a whole body of policies.

The third policy above – on the Board/Management relationship — explains to the CEO (who is the Board’s only employee) that the Board makes the ends policy but allows a reasonable interpretation thereof. The Board says that it will accept reasonable interpretations but will also be the final arbiter of interpretations. Accordingly, the Board is able to change policy rapidly and retains a very high level of control of the credit union.

For the ends and limitations policies, the CEO is obliged to make regular reports to the Board. Thus the Board is continually monitoring results. In effect, the CEO first, interprets Board policy, second, develops a strategic plan to achieve the ends aimed for in the policy, and third, reports results to the Board.

Other aspects of our method are as follows. The CEO controls the balanced scorecard (BSC, a strategic implementation tool) but consults with his executive team on the BSC’s initiatives, measures and targets. The executive team works with the management team and CEO on BSC components, and the Management Team implements strategy. The management team meets regularly about the BSC to check goals, measurements and results. Their findings are factored into the report the CEO makes to the Board, coming full circle.

No Annual Planning Session

There is no annual strategic planning session.
We see some advantages and disadvantages of this. I believe the best advantage is flexibility and the ability to make changes as new circumstances arise. When an annual planning session is paramount, too much thought and energy is put off until the time of the meeting. This means that opportunities are lost. It can also mean that so much is loaded onto the agenda of the weekend retreat that it cannot all be addressed, that, in fact, everyone is set up for failure.
Under our method, policy is ever present, if somewhat out of constant view owing to its lofty level, and everyone knows that it is subject to change without the formality of an off-site retreat.

A disadvantage is that the Board does not have a “celebratory event,” or formal off-site policy-setting meeting. But we have not yet found this to be a problem. One reason is that the Board does occasionally travel together off-site. This might be, say, to seminars or the GAC.

An Example

Here is an example of how the system has worked. Management recently decided it could reinterpret our field of membership allowing the credit union to create new FOM expansions opening eligibility to 60,000 new persons. Under a traditional approach, such an expansion would require discussion, consensus and approval at a Board attended strategy session. Rather, we advised the Board we were planning to extend membership eligibility to this group and that our Regulators had expressed no concerns. We merely included these developments in our regular reportings to the Board.

We believe this governance model works well for us. The Board is in full control but remains so at a very lofty level, setting high policy but not descending to tactics and implementation. Management is allowed a reasonable interpretation of these policies but well understands its limits and is continuously reporting to the Board on results.

 

 

 

April 19, 2004


Comments

 
 
 
  • I will utlize this article to initiate discussions with 2 boards that I sit on: my natural person credit union which I serve as CEO and director and, my corporate credit union which I serve as Chair. Thanks!
    Anonymous
     
     
     
  • I like the idea, but my experience tells me that the Board will gravitate to the details, and simply maintaining the required separation will eat up a lot of good will.
    Anonymous
     
     
     
  • Excellent inforemation and good example !
    Anonymous