The intersection between strategy and performance can be difficult to maneuver for many credit unions.
A strategic plan is often the culmination of months of discussion and work that encompasses a range of factors and drivers that impact every area of the institution. For department heads responsible for ensuring the credit union’s business plan aligns with its strategy, a common but underappreciated challenge lies in determining how to quantify progress for their individual goals as well as the collective goals of the credit union.
Some indicators are leading. Others are lagging. Still others can only be gauged through correlation and proxy measures. However, without accurate, detailed knowledge of the credit union and its competition, decision-makers run the risk of being uninformed or one-sided.
By embracing performance benchmarking, leaders can build a culture of information and education for key players throughout the credit union.
Far from being uninformed or one-sided, today’s smart leaders are leveraging data to benchmark and track goals, identify opportunities, and uncover weaknesses.
Here are three ways any credit union can use data to validate strategy:
Relative Performance: The cooperative design of credit unions sets them apart from for-profit competitors. But even within the movement, in many ways, no single institution is alike. Whether it’s their field of membership or approach to lending, there are many differences among seemingly similar credit unions — and that’s a good thing. However, analyzing peer group performance based on similar traits — such as asset size, location, portfolio mix — paints a more accurate portrait of how the strategy and results of one credit union compares to another. This process also allows credit unions to note areas of high performance as well as identify areas of opportunity.
High-Level View: In isolation, even the best benchmark or key performance indicator (KPI) only provides one side of a small piece of the story. But when considered in combination with other measures — such as growth rates — or as part of a deconstructed model with interconnected benchmarks — such as spread analysis — leaders gain a much wider, comprehensive, and informed view of how all the pieces of the credit union’s strategy are working together.
Education And Awareness: Data and financials can be daunting for anyone without an accounting degree or a role in the finance department. However, by embracing performance benchmarking, leaders can build a culture of information and education for key players throughout the credit union, including board members. Such a culture is more likely to foster an environment where members from all departments want to — and have the ability to — track results, validate strategies, and make data-driven decisions for all projects across the organization.
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Interested in educating your board and executive team members about what key benchmarks mean for your institution? Bring Callahan to your next board meeting.
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