Ratio: Forward Looking to Backward Looking

Ratio: Forward Looking to Backward Looking

Too many credit union board members spend too much time looking at what happened last month, last quarter and last year. In the current environment of uncertainty and volatility, directors need to be able to spend as much time as possible on strategic thinking. Looking ahead to your “big picture goals.”

By Kevin Smith

Today we’re going to talk about a new ratio. Yeah, if it’s the credit union industry we do like to talk about our ratios, don’t we?! But this one might be a bit different than the financials that you’re used to seeing.

Let me ask you a question: How much time do you, as a board member, spend dealing with things that are strategic and future oriented? How much of your volunteer time are you using working on, or planning for the “beautiful future”? Dreaming of what your credit union could be and working towards that?

Forward/Backward Looking Time Spent

How much time are you spending looking at the strategic?

 

C’mon…be honest. What’s your number?

Do you have a number?

Now, in contrast, how much time do you spend looking in the rear-view mirror, focused on things that happened last month, or last quarter or last year? This is most of what is in your board packet, I’d be confident to guess, based on the number of directors I’ve worked with and the number of packets I’ve seen. All of that data that you review, that’s backward-looking information.

Don’t get me wrong – that’s part of your fiduciary duty. The oversight of the credit union. You have to do that.

But let’s think of this as the ratio now. What’s the ratio of forward-looking to backward-looking? Translate your numbers into percentages and your ratio should add up to 100%.

Is it 50/50, 40/60, 30/70?

At least one CPA watching this is going to need to push this out to three or more decimal points. Go for it!

We at TEAM Resources believe that you should be pushing that first number, the amount of time looking ahead to the strategic horizon, much higher. In our experience, most boards we work with are in the 30/70 or 40/60 zone. And we think you ought to be pushing to flip those numbers – try to make that 70/30 or 60/40. One consultant I’ve worked with suggested that the ideal number for this is 80/20. While I think that would be great, I also think that’s pushing it for most credit unions, particularly considering the regulators’ rules and involvement. But I do think that 60/40 is a great goal.

Getting to the Goal

How do you get to that? Intentionally. You work to make your environment support that goal.

Structure board meetings, and board packets to be in line with this.
Put all of the strategic areas and discussion time at the beginning of the board meeting for when everyone is fresh.
Use technology to ensure that your oversight duties are being met as quickly and efficiently as possible.
With the consent agenda, financials dashboards that quickly show trends and identify red flags, with strategic use of board software such as portals that get routine things done quickly and in between meetings.

You can set yourselves up for success.

Noted board expert, Dr. John Carver describes this as “Highly-Informed Dreaming.” The highly-informed part is your oversight role, but the focus is on the dreaming, the strategizing for the beautiful future.

So, what’s your ratio? I challenge you to answer this honestly and do this as an exercise with the whole board and find out where you stand.

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