How do you formulate and execute a plan for getting to the next level of excellence in your treasury department, keep it relevant, or stay in the forefront? These are a few of the questions members of the NeuGroup’s Engineering and Construction Peer Group grappled with at a recent meeting.
Whether the impetus is new management, an acquisition, sudden turnover, undertaking a strategic planning process can prove to be a difficult proposition for any treasury organization. But with the proper planning and execution, challenges can be overcome.
Follows are a few of the takeaways from the meeting session, which one group member and a member of the bank sponsor team helped facilitate.
At a long-term view. “There is a difference between the longer-term strategic plan and a shorter-term tactical plan,” the banker noted. As such, treasurers should look at the function’s mission and set future goals. They should then ensure the mission is aligned with the company’s overall long-term strategic plan, and obtain the necessary buy-in from upper management.
Start with a vision. To help set the stage for the session the leaders organized small groups of members and instructed them to create a vision statement for treasury. The breakout exercise saw members brainstorming to put into a few words their image of treasury’s purpose in the organization. Members came up with several vision elements which included creating shareholder value, people development, and partnering and collaborating with the business units.
Establish objectives to support the vision. The member presenter said one of his company’s goals was to optimize employee efficiency. Unfortunately, the team he had when he took over the treasury department wasn’t going to get him there. Consequently, he needed to hire people, continuously educate them, and promote creativity in order to achieve this objective. The downside was the member had 100 percent turnover in 18 months, which was painful in the short-term but ultimately much better in the long-term. His new hires all had finance degrees, some with relevant certifications. Some were recent college grads who had a lot of room to grow and learn new skills.
Set measurable objectives. One of this treasury’s efficiency goals was to reduce transactional activities to 20 percent. It was recommended to treasurers that they take a look at their current capabilities, assess their competencies and figure out how things should change. Then put a value on it that can be reasonably tracked.
Celebrate the successes. Developing a treasury strategic plan can be taxing and possibly unnerving to the staff. Executing it can be even more so, which is why it is important to pause at appropriate points to celebrate key objectives that have been accomplished and acknowledge those who were instrumental in making it happen. Also, it’s important to keep the feedback channels open.
Treasurers are challenged to be more deliberate in their strategy and to use strategy planning to influence goals for the company. Creating a strategic plan for treasury is clearly a task that involves a considerable investment of time, thought and action. But formally communicating plans with senior management and receiving buy-in and support and then faithfully following that plan can go a long way toward long-term success.