How do you formulate and execute a plan for getting to the next level of excellence in your treasury, keep it relevant, or stay in the forefront? Whether the impetus is new management, an acquisition, sudden turnover, undertaking a strategic planning process can prove to be a winning proposition for a treasury organization. Here are a few tips for getting the project going and keeping it going.
According presenters at a recent session at the NeuGroup’s Engineering and Construction Treasurers’ Peer Group, a good start to creating a plan is to take the long view. “There is a difference between the longer-term strategic plan and a shorter-term tactical plan,” one of the presenters noted. He suggested treasurers look at the department’s mission and set future goals that are aligned with the company’s overall plan. One key: obtain the necessary buy-in from upper management.
Next, start with a vision. Brainstorm with members of treasury and others in finance to come up with an image of treasury’s purpose in the organization. In the session, members came up with several vision elements including creating shareholder value, people development, and partnering and collaborating with other business units.
Once the vision is nailed down, treasurers should establish objectives to support that vision. One presenter explained that his company’s goal was to optimize employee efficiency. Unfortunately, the team he had when he took over the 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 tough part was this member had 100 percent turnover in 18 months, which was painful in the short-term but worked out in the long-term. The new hires all had finance degrees, some with relevant certifications. There were also some were recent college grads that had a lot of room to grow and learn new skills.
“Celebrate the successes,” was another suggestion by presenters. 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 recommended: keeping the feedback channels open; i.e., get feedback on improvements made and continue those improvements.
Take advantage of partner capability. You can get a lot done by leveraging banks, technology vendors and outsourcing to providers. These types of partner companies are often able to provide research and recommendations, typically at no cost. For example, one company in the group is pursuing the objective of having enough capital to support the business. But the company’s bank structure doesn’t align with business/company strategy. In the end the treasurer had to take on the task of restructuring his bank group to get the right banks in place that were a better strategic fit for the company.
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. Treasurers may often have a plan in their head that is a less structured plan than described here, that is getting executed effectively. But the advantage of the approach discussed in the session is the benefits treasury may receive from formally communicating their plans with senior management and receiving buy-in and support.