This blog series, Accelerate Performance through Planning, has reviewed the importance of strategic planning in delivering value and creating competitive advantage in Why It Matters to Financial Institutions, and how to prepare for the planning process in How to Ensure Your Creation of a Data-Driven Plan. In this final blog in the series, I discuss best practices and approaches for delivering value in the planning process.

Preparations for the 2018 budgeting process are underway in financial institutions. Few people relish the experience, which is often characterized by long hours and vast differences between the future financial performance executive stakeholders want and what management can deliver. Aligning strategic plans with tactical plans and associated budgets often does not occur or the linkages among these pieces are weak.

A New Mindset

My experience with budgeting has been different. I have worked with numerous financial institutions whose leaders use budgeting as a tool to reinforce a growth mindset. Because the budget expresses how resources will be allocated and what measures will be used to evaluate progress, budget development is more effective when it is linked to overall corporate strategy. Linking the two gives managers and employees a clearer understanding of strategic goals. This understanding, in turn, leads to greater support for goals, better coordination of tactics, and ultimately to stronger performance across the institution.

The best practices outlined below can help all financial institutions achieve similar results.

Five Best Practices for the Planning Process

Consider including the following best practices in the budget process to help ensure an accurate and timely plan that is aligned to the institution’s goals.

  1. Clearly define the budgeting process. Spell out the budgeting timeline, objectives, resources, and key performance indicators. Communicate clearly to ensure that team members understand the overall process, their roles and responsibilities, and expectations for how they contribute to the strategic plan.

  2. Use modern technology. Excel® has been the de facto tool for financial budgeting and forecasting for many years, despite being error-prone and time-consuming. Other resources are available to make the budgeting and planning process less stressful and more accurate. Modern tools allow finance teams to reduce the time required to consolidate data, make better use of historical information, and leverage an analytical framework. Technology also can aid CFOs and finance teams in creating more advanced and collaborative budgeting and planning processes.

  3. Ensure accuracy. To achieve a truly accurate budget, finance teams must combine the cash flows of existing instruments with the expected volumes and rate spreads of the institution’s new business. Budgets also must include detailed operating expenses, workforce costs, and capital expenditure plans. Having one solution that tracks all of these data and allows for adjustments helps teams develop plans more quickly and accurately.

  4. Create alignment and accountability. If the planning process is limited to a set of stakeholders who are not involved in day-to day business activities or not aligned with strategic decisions made by the management team, managers can feel undervalued and remote from the targets and processes being imposed upon them. Tactical budgets and plans should be aligned with strategic plans, with owners held accountable for driving the plan.

  5. Perform driver-based planning on an integrated platform. Apart from consuming too much time and effort, the traditional budgeting process typically yields many inaccurate assumptions. Driver-based planning makes use of mathematical and linked relationships to create very detailed budgeting, forecasting, and planning models. When implemented on an integrated platform, these models require fewer inputs and result in fewer errors. This best practice not only increases accuracy, but also sets the stage for scenario analysis, which helps leadership understand how different economic conditions might affect business drivers and how to adapt if they do.


As finance teams embark on the 2018 planning season, these practices will help improve competitive performance, and ultimately, better serve customers/members and shareholders.