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c. myers live – Elevate Your Team’s Financial Foundation for Enhanced Decision-Making

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Many leaders in financial institutions are discovering gaps in their team’s thinking and decision-making processes when it comes to ALM, especially those who don’t come from a financial background.  In this episode of c. myers live, we highlight the importance of intentional ALM education and building a solid financial foundation within leadership teams.  Listen to learn how leadership can bridge these knowledge gaps and enhance their team’s effectiveness in managing financial assets and liabilities. 

This podcast references different interactive tools and resources that can be used in training for enhancing ALM understanding.  Click here to use these free tools on our website.

About the Hosts:

Brian McHenry

brian mchenry headshotBrian, one of c. myers’ owners, has worked closely with financial institution Boards and managements of all sizes in a variety of capacities. As a strategic planning facilitator, CEOs regularly praise Brian’s industry knowledge, calming communication skills, ability to authentically engage anyone with whom he interacts, and ability to keep discussions focused on linking strategy with desired measures of success.

Learn more about Brian

Charlene Leland

Charlene LelandSince joining c. myers in 2004, Charlene has become one of the most diverse facilitators within the industry, especially with regard to helping financial institutions of all sizes address three necessary business objectives: relevancy, differentiation, and sustainability. Over the years, she has honed her skills for facilitating various types of sessions, including Strategic Planning, Strategic Implementation, Member Journey and Experience Improvement, and Strategic Financial Planning.

Learn more about Charlene

Other ways to listen to c. myers live:

listen on apple podcastslisten on spotify

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10 THINGS THAT STIFLE CRITICAL THINKING + 5 WAYS TO HELP IT FLOURISH

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5 minute read – The following blog post was written by c. myers and originally published by CUES on May 15, 2024.

Dictionary.com defines critical thinking as disciplined thinking that is clear, rational, open-minded, and informed by evidence.  It is foundational for good decision-making.  What organization couldn’t use plenty of critical thinkers?  But there are some common stumbling blocks and some key practices to avoid them. 

10 Things that Stifle Critical Thinking: 

  1. Unclear objectives – lack of clarity around the purpose of the discussion, desired outcomes, or the decision being made 
  2. Hidden biases, assumptions, decision filters – being unaware of these (which we all have) and therefore, not considering their validity 
  3. Not questioning others – deference to authority, taking things at face value, groupthink  
  4. Not looking for unstated challenges and opportunities – assuming that everything will work out fine and that the necessary thinking has already been done 
  5. Defensiveness – needing to be right 
  6. Seeking input from those who won’t disagree – avoiding alternate opinions  
  7. Lack of the tendency to embrace change – not having an open mind, avoiding the discomfort of change 
  8. Lack of information or misinformation – assuming all needed data/information has been supplied and that the data/information is right, not doing a reasonableness check  
  9. Waiting until the last minute to make a decision – working with limited options due to time constraints 
  10. Not assessing whether past decisions were good or not and why – no feedback loop to improve critical thinking in the future 

5 Practices to Help Critical Thinking Flourish: 

  1. Seeking clarity on the objective of the discussion or decision at hand.  Ensure that the participants are clear on what you’re thinking critically about and why.  Ask them to state their understanding of the desired outcomes of the discussion.  This sounds incredibly simple yet is often misaligned.  Clarity on the objective must occur before productive conversations can occur. 
  2. Cultivate genuine curiosity.  Participants need to believe that they have a responsibility and a right to fully understand, ask questions, and question each other.  Encourage creativity and practice “Why to the power of 5,” asking “Why?” at least 5 times to get to the root of the problem.  This also applies to data and other types of information that have been supplied.  Ensure it is fully understood by applying common sense and asking questions.  Try approaching data and information as though there is a mistake that must be found. 
  3. Surface biases, assumptions, and decision filters.  Human brains are made to rely on shortcuts based on past experiences when full information isn’t available.  The challenge is becoming aware of them so they can be examined.  There are many books and articles written on this, but a simple way to start is to ask people to intentionally consider what assumptions, biases, and decision filters are at work that have not been stated. 
  4. Authentically consider other options.  There are usually multiple solutions available and being open to those options and understanding the tradeoffs leads to better decisions.  Debate is an excellent tool for creating an atmosphere that embraces challenges to ideas as a thought exercise rather than a personal attack.  Have people debate in favor of an idea that is not their own.  Being open to change and assuming there are better ways to achieve the objective are helpful mindsets. 
  5. Blend data with instinct.  Colin Powell’s famous 40/70 rule says that leaders need at least 40% of the available information to make a decision, but not more than 70% because the opportunity may pass you by.  Where data is lacking, we must blend data with instinct.   

Building critical thinking skills takes practice.  Some of the behaviors and mindsets that help critical thinking may not be typical within your organization.  One way to approach that challenge is to start by creating working agreements that pertain only to the meeting or discussion at hand and ensuring everyone is on board at the start of the meeting.  Example working agreements could include, We must identify at least 4 solutions to our problem or Everyone must ask “Why?” at least once.  A leader can also help others think critically by ensuring objectives are clear and asking specific questions related to the above.  Help your team start building critical thinking skills and reap the rewards with better decision making. 

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Vendor Relationships: Signs You Should Be More Strategic

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Vendor and partner relationships are essential to financial institutions, therefore we are reposting this blog in light of recent conversations with our clients.  Taking a strategic approach to these important relationships can better position the organization for future moves, boost performance, save resources, and maybe even lessen the total number of relationships required.  Optimizing these relationships helps add value for your customers and employees, yet the complexity and sheer volume of relationships can be overwhelming.  As the industry continues to evolve, institutions will have to rely even more on third parties, which means this challenge is growing.  Taking action, sooner rather than later, will help.

Most have an objective of leveraging vendor and partner relationships to their fullest advantage for the benefit of the customers employees, and other key stakeholders.  Many have systems in place for contract management, due diligence, and managing/monitoring third party risk.  While those foundational functions are critical, there is far more opportunity to leverage relationships for higher performance and efficiency.

Here are a few signs that opportunities are being missed:

  • Contracts are renewed even though the partner has no plans to offer key capabilities that you will soon need to support your strategy
  • Multiple pieces of software or service providers are performing the same function in different areas of the organization. Downstream effects are compounded when you’re left managing extra relationships and updating more software than is needed
  • Features and capabilities that are planned for implementation are never made available because they were postponed during a complicated rollout with the best intentions to go back and activate them later
  • Desired features and capabilities are added by the vendor but not implemented. It’s possible no one knows they’re available, and it’s not uncommon for software to be branded “no good” or “out of date” because it was not updated regularly or features were not implemented
  • Products or services are contracted, but training is minimized. This is often due to time constraints, making the new products or services far less effective and beneficial

It’s important to understand your partners clearly, just like you would your employees.  Are they bringing the minimum requirements to the table or are they true extensions of your staff?  How forward-thinking are they?  How quickly do they adapt?  How does their strategy support your strategy?

As vendor and partner relationships grow in number and importance, determining how you will approach them going forward will provide clarity.

Here are a few questions we’re asking our clients as they shift to a strategic approach:

  • What is your strategic position on vendor and partner relationships?
  • Who owns the overall vendor and partner relationship process?
  • If the process is broken down into categories, such as software and non-software, who owns the different categories?
  • Who owns the individual relationships? If a vendor provides multiple products or services, is there a single owner or multiple owners?
    • The owner of the relationship is the person responsible for paying attention to what’s happening with the company, their software or service, their plans for the future, their representatives, etc. This includes understanding and choosing whether to implement updates and new features
    • Relationship ownership is a strategic decision. Why are the owners chosen?  How well do they understand the business and organizational priorities?  How well do they build relationships and drive results?
  • What should the relationship owner know about each vendor in order to understand how well their strategic positioning aligns with your strategy? For example:
    • If you are interested in artificial intelligence abilities/integration in the future, is the vendor planning to support those capabilities?
    • If you’re utilizing the cloud for some services, is it important for this partner’s services to be cloud-based?
    • What does this vendor’s development roadmap include, and how can you assess their ability to deliver on that roadmap?
    • What other products and services do they offer that may help you move forward strategically?
  • Is your organization using the products or services at the desired level (include upgrades, features, training)?
  • What type of customer do you want to be to your vendors, and what level of service do you expect in return? How difficult or easy are you to work with?  How difficult or easy are they to work with?
  • How should specific vendor/partner relationships be prioritized for the organization?
  • How much resource should you dedicate to ensuring that these integral relationships are optimized?

Strengthen your approach to vendor and partner relationships to meet today’s and tomorrow’s needs.  These relationships will only become more necessary, complex, and further ingrained in the fabric of your business.  Investing intentional effort in this area brings organization and efficiency, and a strategic approach helps leverage the institution’s relationships for optimal performance.

 

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Strategic Planning: Board Approach

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7 minute read –We have spent thousands of hours working with Boards and Leadership teams on strategic planning and we regularly get asked, “How can a Board, made up of individuals who often are only able to focus on the financial institution during monthly meetings or annual planning sessions, be more strategic in their thinking?” 

Most of the Boards we work with want to support the financial institution’s Senior Leadership Team and the long-term viability of the organization, but a challenge for many volunteers is the infrequency with which they get to immerse themselves in this world.  We have some suggestions on how Senior Leadership Teams can support their Board and how Boards can set themselves up for a rapidly changing future. 

  • Thinking for the sake of thinking – As suggested in a previous blog, we believe there is incredible value in making and taking time to think without the pressure of decisions.  This is just as important for Boards and can be an opportunity for Leadership and Boards to check in with each other as far as risk tolerance and awareness of potential game changers.  Taking time to work through possible future scenarios can help Leadership and the Board develop a clearer understanding of necessary steps for the longevity of the financial institution. 
  • Rework Board packets – In order to make time for thinking for the sake of thinking, many boards and leadership teams are reevaluating what goes into the board packet.  What does the board really need to know?  Imagine the board member only has 10 minutes to look at the packet.  How can you make it easy for them to zero in on what is most important?  How can industry jargon be made more digestible by volunteers who may not be in it every day?  Get agreement from the board on items you can stop including – are there reports that were requested in response to something that is no longer relevant?  
  • Committee structures – Another way some boards are working to create more time for thinking is by reducing the number of standing committees they have, opting instead for short-term committees created to address specific needs such as a Hiring Committee.  Otherwise, we have seen boards struggle to develop clear expectations of engagement and communication to work better together.   
  • Range of right mindset – Eventually, thinking does turn into decisions.  Historically, many organizations have set their goals for desired financial performance (such as ROA or Net Worth) as specific numbers.  Many of our clients are finding that this methodology and mindset is no longer serving them in a world of swift market changes and even faster consumer behavior changes.  Instead, organizations are aiming for a “range of right” – this allows for flexibility to respond to an unpredictable future. 

As we have mentioned before, more and more organizations are approaching strategic planning as a year-round process: this includes boards.  Taking time at each board meeting to practice thinking for the sake of thinking can help prepare for multi-year, multi-path possibilities, which can enable institutions to be more flexible and change to meet the challenges of tomorrow faster.   

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To Grow or Not to Grow? That is NOT the Right Question

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7 minute read – In the continually evolving landscape of finance, growth is not just a goal, but a necessity for survival and prosperity.  Financial institutions operate in highly competitive environments where growth not only helps to ensure but also signifies relevance and progress.  Not all growth strategies are created equal, and some may prove harmful if not guided by sustainability, value creation, and customer focus.  So, what types of growth are the most impactful?  This blog explores the benefits of growth for financial institutions while addressing concerns of growth strategies that may not yield favorable results, emphasizing the importance of sustainable and value-driven expansion.

In times when the cost of growth is higher, successful financial institutions may elect to focus on strategies that lay the foundation for higher growth in the future rather than “forcing” less meaningful types of growth.  This can come in many forms, including investments in talent and technology that better position the organization to deliver value to their future customers.  This can also include outreach to existing customers and communities to make more meaningful connections today that may yield higher growth in the future.  Keeping the focus on long-term growth potential is an overarching imperative.

  1. Enhanced Financial Performance: Growth typically leads to increased revenues and profitability, enabling financial institutions to reinvest in innovation, technology, and talent.  Expansion can allow for economies of scale, lowering average costs and improving overall efficiency.
  2. Greater Market Penetration: Growth can also enable financial institutions to reach new markets and demographics, expanding their customer base and diversifying their sources of revenue.  Increased market share helps to strengthen competitive positioning and fosters brand recognition and customer loyalty.
  3. Opportunities for Innovation: Growth often provides financial institutions with the resources and incentives to innovate, develop new products and services, and adopt emerging technologies.  Innovation not only potentially drives differentiation but also enhances customer experience and satisfaction.
  4. Risk Diversification: Growth can allow financial institutions to diversify their assets and revenue streams, reducing reliance on any single market or product.  Diversification potentially mitigates risks associated with economic downturns, regulatory changes, and industry disruptions, enhancing resilience and stability.
  5. Talent Attraction and Retention: Growth can also create opportunities for career advancement, skill development, and higher compensation, making financial institutions better able to attract top talent.  A talented workforce is essential for driving innovation, delivering superior customer value, and sustaining long-term viability.

Where Growth Strategies Can Go Wrong:

  1. Quantity Over Quality: Some growth strategies prioritize quantity over quality, focusing solely on expanding market share or asset size without regard for profitability, meaningful impact, or customer satisfaction.  Such strategies may lead to costly unsustainable growth, dilution of brand value, and increased operational risks.
  2. Short-Term Focus: Pursuing growth at any cost often leads to myopic short-term focus, where financial institutions prioritize immediate gains over long-term sustainability.  This can result in aggressive lending practices, speculative investments, and neglect of risk management, exposing institutions to heightened volatility and possible scrutiny.
  3. Regulatory Compliance Risks: Rapid growth can outpace the institution’s ability to ensure regulatory compliance, leading to legal and reputational risks.  Failure to comply with regulatory requirements can result in fines, sanctions, and damage to stakeholder trust, undermining the institution’s credibility and long-term viability.
  4. Cultural and Organizational Challenges: Inorganic growth through mergers, acquisitions, and some other indirect channels can introduce cultural clashes and organizational complexities, hindering integration efforts and potentially eroding employee morale.  Failure to address cultural and organizational challenges can impede synergies, disrupt operations, and undermine the intended benefits of growth.

Common drivers of short-term focus are the organization’s key performance indicators (KPIs) if they are not aligned with beneficial growth or are not adjusted for rapid environmental change.  If an organization’s growth KPIs focus only on short-term growth goals, which are frequently based on one calendar year, this might yield unintended consequences.  For example, if bonus payouts depend on reaching certain near-term growth goals, that could provide a powerful incentive for focusing on the wrong types of growth.  It is generally a better approach to consider growth goals that encompass a wider time frame perspective.  This can allow for the natural ups and downs of the cost of growth to level out.  Think of the last few years.  During the pandemic, growth was excessively easy and inexpensive, but more recently the cost of attracting growth has increased dramatically.  Having 3- or 5-year average growth goals can factor in this kind of overall environmental impact into account.  Take the time necessary to have thoughtful discussions with the Board and Management as you consider what KPIs are best for your organization.

In conclusion, growth is essential for financial institutions to thrive in dynamic and competitive markets.  However, the pursuit of growth must be guided by principles of sustainability, value creation, and customer-focus.  Financial institutions must prioritize meaningful growth strategies that enhance financial performance, foster innovation, and strengthen market positioning, while mitigating risks associated with short-term focus, regulatory compliance, and cultural challenges.  By embracing a balanced approach to growth, financial institutions can achieve enduring success and contribute to the prosperity of their stakeholders and the broader community.