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Five Pillars of a Productive Community Bank Planning Process

Posted by Craig Hartman on 8/25/15 2:30 PM

Plansmith has been building financial planning software for community banks for over 45 years. More than just coding keystrokes and calculations, though, we understand the real process of planning and build systems that seamlessly integrate into that process.

Depending on the role of the planner, to some the goal can be a basic numeric budget to control expenses, to others the objective is a prediction of year-end results, and to yet others the process produces a continuous roadmap to tomorrow. 

Dwight Eisenhower is often quoted saying, “It’s not the plan that’s important but the planning.”  His planning included a road map to achieving the objective of the fall of Germany, and the budget of human resources, material and equipment to do the job.

 We typically don’t have a project of this scope and importance but the essentials are the same.  But what about this process can we learn that made it successful?

After participating for years in planning and budgeting sessions with companies of all sizes, I was able to identify the underlying principles, pillars, for a successful planning process. I call these the ‘Five Pillars of a Productive Planning Process’ and like to think that they relate to the C-Suite in any company, including community banks. Conveniently, they all start with the letter C and I like to think they relate to the C-Suite in any company. They are Commitment, Critique, Control, Communication, and Continuous. They are pillars because they support the entire process and to remove any one jeopardizes the effectiveness of entire planning exercise. I will explain each in more detail.

The First Pillar: Commitment

Planning starts with vision and commitment; without a clear vision and the commitment to make it happen, the company is running on hope. Commitment is the glue that holds everything together. Commitment is not on or off - it is present by degrees, ranging from mildly to wildly passionate. The greater that passion the more successful the endeavor. Commitment is contagious. It attracts dedicated people and drives away ambivalence. Commitment permeates every aspect of the company’s actions, from the backroom to the frontline. If your organization is not fully and absolutely committed to a better future, stop reading this post now because the rest of it will just be irritating.

Without commitment, there is no purpose.

The Second Pillar: Critique

Critique is not meant to imply blame. Rather,  it is an ongoing, honest evaluation of your performance at all levels against your own standards. Critique is characterized in strategic planning parlance as S.W.O.T. analysis, i.e., Strengths, Weaknesses, Opportunities and Threats.   

Too often we see banks comparing themselves to other banks through call report data. Worst, they compare to averages of large groups like the UBPR. It has been pointed out that, by comparing yourself to the average, you are pursuing mediocrity. 

Two things to keep in mind when you critique your performance: when comparing performance to a plan, be sure the metrics you select are consistent with your strategic focus. This will keep you on course. When comparing performance against competitors, benchmark against ‘aspirational peers’, that is, peers that seem to be where you would like to be in terms of strategy and performance. This helps identify specific areas for improvement.

One interesting fact I have noticed is that many truly high performers measure themselves against themselves and their own goals, without regard for other banks' performance. This ties back to Commitment; establishing and committing to your bank's specific standards.

Without honest critique, you cannot know what is working and what is not.

The Third Pillar: Control

How can you be in control if you don’t know what’s around you? Looking ahead and anticipating the future allows you to make corrections to hit your target. The community bank planning process means anticipating possibilities and developing contingencies. The future is unknown but not unknowable. 

The product of the planning process is effective action plans that control results. Just saying that an idea will increase sales by itself means little without the supporting sales, marketing and operational plans to achieve the objective. This process produces a “Playbook” of probable and possible contingencies. This is what Eisenhower meant when he said, “it’s the planning not the plan that’s important”. It is axiomatic that “No plan stands up to reality”. Planning allows us to have pre-conceived alternatives. By monitoring progress, we can implement backup plans to maintain control.

Technology today has given us better tools to exercise control. Planning is facilitated with software that quickly and easily calculates mathematical results. But it cannot predictoutcomes, as only actions will determine the future. We can monitor the results more easily, though, and quickly evaluate responses to changes. This gives us greater control than in the past. In addition, large-screen displays and analytical graphics create a control room environment conducive to collaboration. Instead of paper being shuffled up and down the chain of command, the situation is shared immediately and backup plans and new short- and long-term ideas can be developed on the spot.

Dynamic planning is like power steering - it puts management directly in control to guide the company to its targets.  Tracking and analysis are easier and faster to allow responses to changing conditions. Planning gives management the power to control rather than just react.

Without control, results are only happenstance.

The Fourth Pillar: Communication

Without communicating our intentions, how will our staff know how to act?  Too often the plans are communicated only to the senior management and the staff is left to just follow orders. Sometimes even senior managers are unaware of the overall goal.

Sharing the company’s strategic goals and plans with the entire company - from backroom to boardroom - allows everyone to participate in the shared commitment. Ask yourself, how many of the employees know what you are trying to accomplish and how you plan to do it?

There is popular movement to re-title jobs with words like, 'associates' and 'colleagues' instead of employees. But that’s superficial if we don’t treat them like associates and colleagues by communicating our intentions effectively. In addition to confusion by lack of communication, we are wasting a resource for new and sometimes better ideas since these people are on the frontlines and can provide valuable insights.

Without communication, everyone is in the dark.

The Fifth Pillar: Continuous

The entire community bank planning process has to be  continuous, not a-once-a-year event, because life is continuous. It does not end at the end of the next fiscal year. Each period - month, quarter, and year-end - is the beginning of the next and impacts future results. Plans should be built with an eye on positioning the company to do the next thing. 

As I mentioned, plans rarely stand up to reality. Adaptation is the only effective way to deal with the unexpected. Traditionally, budgets were considered inviolable and they could not change; fortunately, that perception is changing. With current technology, we can stay on top of the situation more easily and adapt more easily by looking beyond the immediate.

I know that we all can say that we think about our businesses all the time. But do we think about the strategies and plans or just the momentary problem or opportunity? How are the current actions meeting the strategic objectives? Where are the plans not working and why?  These are the continuous process we all need to practice.

You must continuously re-commit, re-critique, re-plan and re-communicate to be successful in an ever competitive world.


I have tried to present the essential supporting pillars of an effective planning process as I have seen it practiced over the years. Now, take a moment to consider your own process. Is it built upon these pillars? Could it be? Should it be?

Topics: community bank, community bank strategy, community bank ALCO, community bank interest rate risk, community bank budget, community bank planning software, community bank budget software, community bank budgeting, community bank planning

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