Learn the Numbers so Well that you Can Spend Less Time with Them

Credit union board members have to have a very good handle on the organization’s financials. This is often so time consuming that it takes away from valuable time that could be spent on important strategic initiatives/goals. Learning the numbers well enough to get past this is a valuable place that many take years to reach … while others may never get there at all. This holds the credit union back.  

By Kevin Smith

We in the credit union industry do love our ratios, don’t we? It’s a way to make better sense of raw numbers and an attempt to get closer to an “apples to apples” comparison that is of value for strategic or oversight purposes. Now we need to learn and know this stuff well enough that we can spend dramatically less time with it. Sounds a bit contradictory, right?

Problem: What we’ve seen across the country is that new, and relatively new, directors don’t have a reasonable handle on the ratios and financials for a significant amount of time. We measure that in years often, not weeks or even months. (The dirty little secret is that there are also long serving directors who don’t know this stuff well enough.) I remember way back when I joined the CU movement at CUNA, learning them myself. It took some time for this English major. I don’t hold this against the volunteers, but it has very real ramifications for many credit unions.

Context: Too often, board meetings are spending valuable time on reviewing the financials. This is a problem for a variety of reasons. For one, this is backwards-facing information. The financials are looking in the rear-view mirror and asking “how did we do?” This is necessary and is, of course, part of the fiduciary duty of the directors to keep track of. But what I see and hear is that this is requiring CEOs, CFOs and others to spend inordinate amounts of time reviewing these numbers, explaining them, teaching about them … mostly during the board meetings.

Also, board members – stop and think about this: How much time is your CEO, CFO or Chief-Whomever, spending preparing for these meetings? How much time are they spending teaching these things to directors. Remember this when it’s salary review time. You’re having your highest paid executives teach remedial financials to the board. Couldn’t this time be better spent?

Another significant angle to this is the fact that this is all valuable board meeting time that could be focused on strategic items, and planning for the beautiful future, for the things that you’d like to get to, the members you’d like to help. Let’s face it; things don’t typically happen very quickly in the credit union world. Can this be part of the reason why? We’re sucking our valuable time into a less valuable part of the agenda? Nobody wants to have 6-hour board meetings every month, right? The reality is that the board meets for a couple of hours a month and that limited resource should be used very wisely.

One more thing to consider here: Perhaps you want to chime in and tell me that you DON’T, in fact, spend that much time learning financials during the board meeting, and that your crew doesn’t have to ask much about these and that they DO know the ratios. Let me ask again – are you sure there’s true understanding among the board? Or are some directors simply nodding and smiling because they don’t want to admit what they’re not sure about? There are plenty of credit union executives who confide in us, off the record, that their directors are struggling with their understanding.

Solution: Now we’re back to my weird premise. The responsibility for directors to learn the ratios and financials SOOOO well, that they don’t need to spend much time with them. This means treating this like the skill that it is, and the learning curve that is honest and real. It means getting over our own egos and putting in the work. Admitting what we do and don’t know and solving that in a way that doesn’t take up others’ valuable time.

Think back to when you were first learning a sport, an instrument, a language, driving (driving is a really good one). Heck, this might even be back to basic addition. There was practice that you did, over and over in order to master the rudiments. Now you have them so locked in that you can do a lot without much effort and you get a lot of information in the blink of an eye. Heuristics – “a mental shortcut that allows an individual to make a decision, pass judgment, or solve a problem quickly and with minimal mental effort.” 

My goal with credit union financials, from a board member’s perspective, is to be able to squint at a chart and be able to get as much information as I need in order to know whether I need to start asking more questions.

Board members – you have a duty. You are serving the credit union (as a volunteer, I know), and this requires work. It doesn’t have to be onerous. In fact, I want to tell you that making sure you know the ratios well enough to spend less time with them, is an investment that yields great dividends. It saves time, focuses efforts towards the strategic, aka the more rewarding work.

Shameless plug TEAM Resources offers resources for learning this information. Most recently we build the Doorways to Success Series: Financial Mastery. See more about it here. Board members love it, but so do CEOs and CFOs who now have time for important work since their boards have adopted it.

Thanks for listening.
Have a nice day.

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