Quick - What are your bank's top 3 to 5 priorities, in order, for 2011? Is it to lift a regulatory order, build core deposits by 10% or double small business lending growth over last year? One reason banks fail to achieve objectives is because they don't have any that are clearly set in stone. If your objectives are not laid out and communicated to the entire organization, the good news is that you cannot fail. Conversely, the bad news is that you can't succeed either. Hopefully, at your strategic offsite, your number one priority was to produce a list of prioritized objectives. If not, there is still time. Here is a list of characteristics bankers should consider to achieve a high degree of success:
Be Clear - "Renovate the Main St. Branch" is too tactical. Good strategic objectives should be broad enough to impact the whole organization, yet specific enough to understand when they are achieved. "Increase marketing" is too broad, while "Identify and rollout a new brand" is probably just right.
Be Aligned - Make sure all of your priorities and potential risk reward tradeoffs are aligned. A common goal "to achieve greater loan volumes or net interest margins," without any regard to profitability or risk won't get it done. "Doubling loan originations" is a clear objective, but may come at the expense of profitability. "Increase small business lending profitability by 20%" strikes the perfect tone.
Achievability - This ties into #1 in that the goals should be specific enough so you know when you achieve them. "Be the best community bank" really says nothing. How do you measure that and what does it mean. Instead, consider picking a more measurable trait, such as customer satisfaction or deposit market share, and select an achievable percentage improvement.
Aspirational - It is hard to get fired up about the same things you did last year. The industry is changing quickly, so in every list of objectives there should be a priority that staff and customers can get emotionally connected to. Part of strategic development is not only to set the priorities for the bank, but also execute them. To do that, you need to appeal to people's emotions. Even if you have to break the above recommendations, make sure you have at least 1 core priority that you can rally the troops around.
Number and Communication - Many business schools, as well as famous business author Jim Collins, promote "the rule of 3." Focusing on 3 key objectives achieves clarity, but may lack the comprehensiveness that you need. Sometimes you might need a single objective, while other banks may need 5 to do the trick. For us, the real objective of objectives is to make sure everyone in your organization clearly understands them. Management should also be honest and open about the path required to achieve those objectives.
If you have nailed down your objectives for 2011, send them in because we would love to hear about them.