Strategic Planning in uncertain times is the most difficult way to start a New Year. What are you going to do to prepare for 2023? “Fight, fight, fight. No Matter What!” That was the response from a NASCAR Truck driver after ending the race in second place. Community Banks and Credit Unions can embrace that same attitude as they prepare budgets and strategic plans during one of the most uncertain times of this generation.

The current uncertainty touches several risk categories such as Interest Rate Risk (IRR), capital, liquidity, human capital, credit, and technology. Because all risk categories are interrelated, the impact on one risk category affects others simultaneously. Many community banks and credit unions are in the process of finalizing their budgets and strategic plans for 2023. Below are some strategies to help your leadership team through this difficult season in banking:

Take care of your people first.

You can have all the capital in the world and without your employees, you’re not going anywhere. Therefore, make retention of your top talent a priority in your strategic planning. It is true that many employees leave because of higher salaries elsewhere. But people leave mostly because of a toxic culture or work environment. To address turnover due to higher salaries, ensure your bank’s compensation and benefits are competitive and introduce new and creative benefits. Communicate to your staff that you surveyed other institutions of similar size in your area, so they know you did your homework. To address the culture problem, conduct periodic surveys, interviews, and truly listen to what your employees tell you.

Cybersecurity is still a top risk.

The investment in technology to safeguard your customers’ sensitive data should not be considered a burdensome expense. It is rather an investment to allow you to retain your existing customers and potentially attract larger businesses that need more sophisticated services such as Treasury Management.

In addition to the investment in hardware and software technology, you need to invest in the right talent to run the technology. This includes the consideration to outsource the expertise to third-party IT managed services. Additionally, ensure you have a strong Vendor Management Program which is crucial to a successful Cybersecurity Program.

Watch Your Balance Sheet and Income Statement closely.

As an ex-CFO, I typically found budgeting for expenses easier than estimating income—especially during uncertain interest rate environments. This year bankers have the additional challenge of low liquidity with their bond portfolio tied up due to unrealized losses. As you know, borrowing to fund your loan demand increases your cost of funds and decreases your Net Interest Margin. Therefore, you need to focus on increasing other sources of income and Treasury Management should be at the top of your list. If you can make your Treasury Management services a competitive advantage, you will attract larger businesses who in turn will bring additional core deposits and additional/new non-interest fee income!

Continue the strategic conversations in your Asset/Liability Committee (ALCO) meetings. Watch your financials closely and stay in constant communication with the Board of Directors. Regulators expect Directors and senior leadership to have a full understanding of your Balance Sheet and the effect of Interest Rate Risk on your Income Statement and bottom line.

Fight, fight, fight. No matter what!

Community banks and credit unions—especially under $1 billion asset size—must continue to fight no matter what. The fight is in several areas: The fight to attract and retain talent as mentioned above continues. The fight to compete against larger financial institutions and Fintechs also continues to be a challenge. And the fight against increased regulation must continue as well. Lastly, you can never rest on the fight against cybercrime.

So as the NASCAR truck race driver said, “Fight, fight, fight. No matter what!” Ending a race on second place is not bad. But everyone wants to win the race and be first. These days, staying in the race and not giving up is what truly matters. You cannot win every race, but you can enjoy small wins by retaining your best talent, ensuring your customers’ data is secure, and knowing your institution is safe and sound during these uncertain times.

Strategic Planning in uncertain times presents many challenges. I hope these strategies help you finalize your budgets and your strategic plan for 2023. We’re here if you need help!

During your strategic sessions, when planning for leadership succession, focus on the talent. Succession planning is on everyone’s top strategic objectives. And you must choose the right successors for each leadership position. The leadership team comprises of a variety of talent, skill, and experience. So how do you choose successors to the top-level leaders successfully?
Below are five talents to look for as you look for successors to the top positions of your organization:

The Talent of Leadership.

You can argue that leaders are born or made. I believe it’s both. The best leaders are those who are naturally good influencers of people which is the top talent to look for in your senior leadership team. Leaders take the initiative to lead. They are excellent decision makers with the information they have available at the time. They also own their decisions and consequences of those decisions.
Influential leaders don’t “tell” others what to do. They “coach” others to discover the answers for themselves. Top leaders must trust their employees that they know how to perform the job the company hired them to do.
Lastly, it is crucial to understand the difference between leadership and management. Leaders impart the vision to others. Managers execute the vision. Leadership is a talent. Management is a skill. The best leaders are also successful managers. Top leaders must be willing to develop their leadership talent and to enhance their management skills.

The Talent of Communication.

The talent of communication includes the ability to communicate well in every area and in a variety of ways. Good communicators are well spoken and can also communicate successfully in writing. They have the common sense to discern when an in-person conversation is better than an email or voice mail based on the circumstances. They choose words wisely to ensure others understand the message correctly and avoid misunderstandings or hurting other people’s feelings.
Excellent communicators listen well and repeat what others say to ensure they understood the message. Leaders who possess this talent mold their communication style to others’ styles to ensure a successful interaction. They take the initiative to understand the communication style of those they interact with and confront situations as they arise.

The Talent of Strategic.

Top leadership must be strategic about the future on how to direct the company’s endeavors. Collaborating with the other top leaders as a team, leaders make decisions that impact all stakeholders. People who possess the Strategic talent, according to the CliftonStrengths themes, create alternative ways to proceed after they explore at all the options.
Even when a company has a vision, without strategy at the top level of leadership, the company wonders around and does not accomplish its goals nor the vision. As a strategic team, they select members based on the knowledge gaps and needs of the team. It is crucial for the future success of the organization to choose the right successors for the top positions of the company.

The Talent of Includer.

Not one person can lead an organization without consulting and including the rest of the team—not even the CEO. Therefore, it is imperative for a Senior Leadership Team to look for leaders who include others in the decision-making process and that listen to others’ perspectives and points of view. Just as important, once a decision is made, whether everyone agreed or not, the team must support the decision.
According to the CliftonStrengths themes, those who possess the talent of includer simply “accept others.” Even though this talent is important, on one hand, the team must ensure the entire staff is represented at the leadership level. On the other hand, they must ensure that confidential information does not get out prematurely to the staff in an effort to “include everyone.” Doing so can present legal risks to the company if they share information that is not appropriate to be shared until the right time.

The Talent of Responsibility.

Top leaders must accept the huge responsibility it is to lead others. Some people only want the title but don’t want to take on the additional responsibilities that go with the title. Ensure your C-Level leaders embrace and own the responsibility given to them. They hold each other accountable.
Leaders with the talent of responsibility get things done. And precisely because they do what they say, they typically don’t understand others who don’t follow through. For them this is inconceivable. That’s when the communication gift comes in handy to understand others who don’t possess that talent and talk about it.
I will leave you with these related questions as you search for successors:

• How deep is your talent pool? Could you find successors to the top leadership positions internally?
• Are you focusing on depth of talent to include talent, skill, experience, and expertise to fill the open seats?
• Are you looking for people who share your core values and the skills to match the business needs?

Succession planning is a great way to introduce new set of skills and expertise you may have been missing in the past. Therefore, when planning for leadership succession, focus on the talent. I hope searching for these five talents in your top leaders’ successors helps you form a successful team.