Academic journal article ABA Banking Journal

Turbocharge Your Bank's Strategic Plan with a Well-Engineered Compensation Program

Academic journal article ABA Banking Journal

Turbocharge Your Bank's Strategic Plan with a Well-Engineered Compensation Program

Article excerpt

Does your bank engage in a regular, comprehensive strategic planning process? If so, are you achieving the goals you've established? If the answer to either one of these questions is "no," you're not alone.

Execution: The Key to a Successful Strategic Plan

Even those organizations with excellent strategic planning processes often fall short when it comes to executing strategy. In our experience, most strategies don't fail because they are bad strategies--they fail because those developing the plan haven't given adequate consideration to implementing the plan. In other words, the organization's systems and processes must support the execution of its strategy.

Employees need to understand the tactics, execution and consequences: "What, specifically, am I supposed to do? And what happens when I achieve--or fail to achieve--those objectives?"

A carefully engineered compensation system can "turbocharge" the execution of your strategic plan by communicating concrete expectations.

Hallmarks of an Excellent Strategy: Who, What, How

An organizational strategy that is positioned for success is based on deep thinking about seemingly simple questions:

* WHO are you? You've defined your vision and mission, but do you clearly communicate them to employees--in word and deed? How do your customers perceive you, and why do they prefer to bank with you? All too often businesses assume they know the answer without the research to back it up.

* WHAT is the environment in which you conduct business? You need to be aware of legal and regulatory changes as well as what's happening in the competitive environment.

* WHAT do you want to accomplish in the next three to five years? These are the ambitious but achievable goals your strategy should be built around.

* HOW are you going to implement your strategy? Many organizations spend all their time developing a strategic plan around financial and operational strategies without giving sufficient consideration to critical "people requirements. …

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