Financial ratios are important tools that help credit union leaders evaluate performance, set goals, and benchmark success. Being familiar with a range of ratios is an essential first step toward successful benchmarking. In the past, CreditUnions.com has covered questions to ask in different situations to help decision-makers understand the pros and cons of various ratios as well as addressed how to tailor traditional metrics to meet a credit union’s distinct needs.
One of the site's most popular articles ever is geared toward educating board members about key metrics that help credit union leaders better understand the link between economic trends and credit union performance. Callahan clients can read that one again here.
Building off the success of the past, this week CreditUnions.com highlights ratios all credit unions should be tracking according to the roles that should be tracking them.
The most effective chief executive officers have a high-level understanding of everything happening at their institution. The metrics included in 5 Ratios Every CEO Must Know will help chief executives achieve a baseline knowledge about the general health of their credit union.
Chief operating officers have a finger on the pulse of all areas of the credit union — from revenue to asset growth, and ROA to operating expenses. COOs must monitor it all and have an in-depth understanding of now only what is happening but why. The benchmarks included in 3 Ratios Every COO Must Know monitor different areas of a credit union’s health and performance and should be on the quarterly performance reports of all COOs.
With the ever-changing rate environment and constant pressure to produce loans, it can be difficult for CLOs to sort through the clutter and determine how well the credit union is reaching members and the quality of loans it is writing. The measures included in 5 Ratios Every CLO Should Know are a good place to start to gain a big-picture understanding of a credit union’s lending operations and performance.
Managing people is difficult in and of itself, but quantifying employees’ contributions and efficiencies can be downright daunting. Staffing costs are typically a credit union’s largest operating expense; therefore, tracking the performance of the workforce is crucial. The benchmarks handpicked for the human resources professional in 4 Ratios Every HR Professional Should Know gauges a workforce’s productivity and ties that productivity into the performance of the credit union.
And for those out there who aren't sold on the value of benchmarking, check out the Graphic Of The Week Why Credit Unions Need To Benchmark And How To Avoid Pitfalls. Analyst Sam Taft breaks down five reasons to start benchmarking today and three strategies to make the most of benchmarking efforts.
Finally, astute readers of CreditUnions.com might notice a lot of Sam Taft on the site this week. That's because Sam stepped in as guest editor. As guest editor, Sam not only pitched the idea for a whole theme based around performance ratios, he also contributed the content. So, a special "thank you" to Sam.