What’s driving your organizational priorities?

Organizational priorities seem to be in a constant state of evolution and flux.  Even in those rare instances when an organization maintains a crystal-clear vision and strategic plan, competing priorities are part of our daily lives.  We strive to do our best to balance strategic work with fighting fires.  There’s nothing necessarily wrong with that as it just seems to be the way real life works.  Evolving needs of diverse stakeholders often impede our ability to stay focused on the objectives that allow organizations to fulfill their ultimate mission.  As a strategy-focused consulting firm with a bent toward risk management, we spend our days helping credit unions navigate the demands of these various stakeholders, all while maintaining focus on our collective and ultimate north star (the vision and mission related to helping members succeed financially).  

As we begin to wrap-up 2017 and think about our goals for 2018 and beyond, most credit unions are in the midst of updating their strategic plans (Get in the Game; Are Your People Part of Your Long-Term Strategy).  While strategic plans are diverse and unique to each organization, the plans are hopefully focused on increasing the value of the organization to current and potential members.  Through the process of charting our future course, it is important we stop and consider what it is that members really value.  Has your credit union stopped to consider those areas that are truly meaningful to the membership?  If your priorities are driven by these member value-oriented components, you are at least on track and pointed in the right direction.  If not, perhaps you should step back and consider why it is that the organization really exists to begin with.

The next critical piece of prioritizing organizational activity is having a process in place that allows the credit union to proactively identify, assess and manage uncertainty surrounding its organizational objectives.  This is often referred to as risk management.  Risk is the possibility that an event will occur and adversely affect the achievement of objectives.  Risk management, therefore, includes the formalized processes that ensure organizations are identifying and assessing such uncertainties, and managing such within the defined risk appetite.  If your credit union hasn’t established its risk appetite, you shouldn’t be surprised if there is a lack of clarity of what’s within limits and what is out of bounds when it comes to executing strategic plans.  Risk appetite is about ensuring that not only are boundaries established, but folks across the organization have clarity regarding expectations and what they have been empowered to do in pursuit of organizational goals.  

One last component related to organizational priorities and risk management is the concept of value preservation versus value creation.  From our vantage point, we see a lot of confusion and prioritization conflicts resulting from the terminology around risk management and stakeholder needs.  While we talk about the need to push the envelope from a strategy perspective and execute on plans that help ensure our long-term relevancy (value creation), we often find ourselves stuck working on day-to-day tasks that help ensure nothing goes wrong (value preservation).  As we talk to credit unions about risk management, it seems that more and more the discussions digress to regulatory requirements.  Whether it be enterprise risk management (ERM), vendor management, business continuity, compliance or other risk-related functions, success in each of these areas is far too often linked solely to regulatory appeasement.  It is important to remember that, while regulatory bodies serve a critical role and we as regulated entities must abide by rules, regulators’ ultimate objectives of safety and soundness (value preservation) is very different than that of the organization itself (new value creation).  Finding the right balance between the two is a requirement for long-term success.  

It is important that we as credit unions keep our focus on member needs if we are to remain relevant in the eyes of consumers.  While regulatory appeasement is necessary, it is not the ultimate objective and will not propel the industry to where we need to be to meet the evolving needs of our communities and members.  The COSO ERM Framework released earlier in 2017 not only reinforced the use of ERM as a tool to identify key risks that might jeopardize an organization’s ability to achieve financial and other objectives, it expanded on governance, strategy setting and the consideration of risk appetite.  If your risk program is focused solely on value preservation, priorities should be reviewed and re-assessed.  Value preservation is just the starting point.  

While risk avoidance and mitigation might help avoid operational miscues, absent a continued focus on long-term strategy and uncertainty around that strategy, your organization will find itself growing more safe and secure, all while becoming fully irrelevant to those most dependent on its services.

Jeff Owen

Jeff Owen

Jeff has over 12 years of experience in the financial services arena. Prior to Rochdale, Jeff worked at the Federal Reserve Bank of Kansas City, and was part of the ... Web: www.rochdaleparagon.com Details