Strategic planning is the act of articulating where or what an organization wants to be in the future and includes the design of a vision and identification of goals and objectives. It relates to long-term financial planning, developing financial policies, capital improvement planning, and budgeting, but is inherently different. Each process fulfills a different combination of planning purposes. As such, strategic planning is most valuable when accompanied by these other planning processes.
GFOA recommends that governments engage in strategic planning to provide a vision for the future that can be used to align budgeting with organizational priorities.
Governments engaging in strategic planning should:
- Initiate strategic planning: It is essential that strategic planning be initiated and conducted under the authorization of the organization's chief executive (CEO), either appointed or elected. As stated in the design principles, the inclusion of other stakeholders is critical, but a strategic plan that is not supported by the CEO has little chance of influencing an organization's future.
- Analyze and assess the environment: A thorough analysis of the government's internal and external environment sets the stage for an effective strategic plan. A frequently used methodology for conducting an environmental assessment is a "SWOT" (Strengths, Weaknesses, Opportunities, Threats) analysis. Strengths and weaknesses relate to the internal environment, while analysis of opportunities and threats focuses on the environment external to the organization.
Local, regional, national, and global factors affecting the community should be analyzed, including (a) economic and financial factors, (b) demographic trends, (c) legal or regulatory issues, (d) social and cultural trends, (e) physical (e.g., community development), (f) intergovernmental issues, and (g) technological change.
- Define the problem(s): Once the environmental analysis has been completed, the next step is to use the information to identify the most critical problems facing the organization and the community.
- Develop a vision to address each problem: A vision (which might also be called a goal or a priority) is an aspirational state for the community; a strategic plan could outline different visions to address different areas of the community’s cares and concerns. For example, a strategic plan might include a vision for high-school graduation rates, as well as a vision for providing broadband access and another for decreasing violent crime.
- Develop strategies to realize your visions and implement strategies using tactics: After an organization has defined its visions, it can then focus on developing strategies, which define how the organization will achieve the vision, and tactics, which put a strategy into action.
- Obtain approval of the plan: Policymakers (i.e., the governing body) should formally approve
the strategic plan so it can guide policy and budget decisions.
- Execute and monitor tactics: The budget development process is an opportunity for governments to execute specific tactics and to monitor the success of those tactics as they relate to strategy implementation. Governments can execute their strategic plans by allocating funding for specific tactics during the budget development process. The budget development process can also be used to monitor and measure whether or not the tactics are working well to implement the strategies put in place to achieve the visions. If they are not working well, new tactics can be considered during the next budget development process.
- Evaluate and reassess: Governments should utilize a rolling plan process to continually evaluate and reassess the vision and strategies. This could mean conducting interim reviews every one to three years, and more comprehensive strategic planning processes every five to ten years, depending on how quickly conditions change.
- Committees: Governmental Budgeting and Fiscal Policy (BUDGET)
- Board approval date: Friday, March 3, 2023