Your Budget is a Statement of Values: Treat it with the Appropriate Diligence and Respect

The annual credit union budget is a statement of its values, the things the organization thinks are important. The values in that budget should reflect (and be directly tied to) the strategic plan that the board and senior management has developed together. It is critical that the board have a clear understanding of how the budget has been shaped, and takes pains to make sure that it’s appropriate.

Kevin Smith

I’m pretty sure that the fact that I’ve picked May to write about the budget is some sort of Freudian avoidance of trauma approach given what I’ve been through. I’ll be curious to hear about how you feel about the budget cycle. You’ve gathered some insight as to my feelings. Here we are in May, headlong into the 2023 budget but pretty far from next year’s budget development. That feels pretty safe. But come November things get a bit more messy.

Politicians from all sides and businessfolk like to spout the aphorism, “A budget is a statement of values.” And I agree with this. Where you’re putting your dollars reflects where your priorities are. But I’m not always sure how closely board members follow this idea even when they agree.


Here’s my broad stereotype from lots of experiences in this area: The board and senior management do their strategic planning sometime in the fall. Then not too long after, the CEO, after some voodoo, witchcraft, and pencil chewing with the staff in a secret room, submits a draft budget to the board that they will finalize by January. The board reviews the draft budget mostly by looking at the big round numbers on the right side of the page, and the amount and percentage that they went up from last year’s number. They ask a few questions for clarifications and it’s off to ratification/approval.

For Instance

Let’s play the “for instance” game. For instance, your strategic plan suggests that the organization is going to have to build a new focus on wealth management services for your older membership to keep them at the credit union. Building that out as a new service is going to require funds. The board should make sure that’s reflected in the budget.

For instance, the strategic plan involves a shift from front line staff to a heavier call center approach, but also a focus on sales and service. I’ve seen this one play out in a variety of ways where directors completely understand the amount of $ that goes to technology for the call center, but not get why the training budget has doubled and salaries for call center staff have to be raised. (Sales and service skills require a LOT of training and proper rewards.) Here’s the curve ball – six months later one rogue director yells after a trip to the lobby, “what do you mean we don’t have any money for MSRs?!?!” Because he hasn’t internalized the values that the budget reflects and are tied to the strategic plan.

What Should Board Members Do?

The review of the budget should be an exciting event, not a perfunctory task once a year met with a yawn. (I know. Some of you are skeptical.) The board’s efforts here are to ensure that the values of the organization are given the priority that you have discussed and agreed upon. To make sure that the budget is tied to the strategic plan in a noticeable way. It sounds like I’m inviting the board into the operational weeds to nitpick. Nothing could be further from the truth. This is a call for thoughtful analysis of the budget at a strategic level.

  1. Don’t underestimate the pain and suffering that may be involved when the staff creates a budget. Respect the process and the analysis they give you.
  2. Ask thoughtful questions about how the budget is tied to the plan, not just “why did line 12 go up so much?”
  3. Reel in your rogue directors if they aren’t getting this. (I know that some of you are thinking about how you understand this but there’s that one director on your board who just doesn’t.) It’s your job to hold them accountable and make them understand, for the sake of your CEO and staff.
  4. Make sure you incorporate ranges for results. The budget is not a crystal ball. This also means that you need to know how to adjust when the environment has changed along the way.
  5. Be prudent with the members’ money, which is not the same thing as being cheap with the members’ money. Support thoughtful investment and make sure that you understand what it costs to do business these days. (Versus comparing everything to the value of your first car, house, candy bar from decades ago.)

The annual budget is as important as the strategic planning process. In fact, they are intertwined. Often the budget gets short shrift. Don’t let your eyes glaze over in the volume of numbers in the spreadsheet. Get excited about the promise of value to the members that you instill in the budget and provide support to the CEO to execute this vision.

Board Members and Staff Surveys: Yes, get them AND be careful!

The staff survey is a long-standing, valuable way to get feedback about the organization for all involved, top to bottom. Board members should absolutely pay close attention to them, but they should also be very careful with them. They can be misleading.

By Kevin Smith

Board members are you getting the full value that the CU can get from the staff survey? Are you getting the results and do you know what’s being done as a result of the information? The value of staff surveys can be tremendous, for all involved. If you’re not using them, you’re missing out. But simply running a survey every year and “using” a survey to its full effectiveness are two very different things. Often, in the TEAM Resources experience, the board is not seeing the full value of this resource; they could be getting significantly more out of them. Boards must make sure they know what they’re looking at and how to understand the context of the survey so that they interpret the results correctly. It’s trickier than it sounds.

Value to Staff

  • Being heard
  • Being part of transparent two-way communication
  • Building a trusting environment

Staff members may or may not appreciate the survey. It depends. If there’s an annual survey but then no one ever hears about the results, then much of the value is gone. The board and management may be getting some great insights, but that’s one-sided value. There’s much more value if everyone hears about what the results are and, most importantly what action is happening as a result of information in the survey. (No this is not a knee jerk reaction to say that if the staff complains about stuff in the survey they automatically get what they want.) It does mean that, at an absolute bare minimum, the staff needs to know by clear communication and acknowledgement, that they have been heard by the board and senior management. And when the staff sees something, any kind of action, that comes as a result of the survey, it signals that the leadership is paying attention to some details. (You’d be surprised at how often this doesn’t happen.)

Real Scenario I’ve seen – We finally got around to the staff survey. We fully intended to share the results with everyone and to talk about the results. Then we got the results and they were really yucky. Someone then decided that we could no longer share them. They got buried.

Value to the Board and Sr. Management

  • Insights into the culture of the organization, good, mediocre and bad
  • Feedback that the board uses for their oversight of the CEO – among many other feedback options

Board Usage of the Survey Results

In general, I see the staff survey used by boards of directors as part of the governance feedback mechanism. That’s a great thing. Boards that have a wide range of feedback tools that are regular and easy to interpret are more likely to stay at the strategic level and less likely to micromanage or spend too much time “in the weeds.” This is one of many feedback tools the board needs.

And very commonly, board members use the staff survey as a CEO oversight tool. The responses provide a temperature gauge of the climate within the organization. Are the employees content? Do they find meaning and purpose in their work? Do employees feel like they are making an impact, moving the needle towards the stated goals? Are their roles clear? Are their operational and emotional needs met? Are they gruntled or disgruntled? All of which reflects on the CEO to whom you’ve delegated operational authority.  

Warning to Board Looking at Survey Results

Given the board’s distance from the staff in general, it’s important for directors to know how to look at staff survey results. This means that board members will need to get some context to the survey. There are many factors that can affect these results that the board will need to have a handle on.

For example: A new CEO (or new Sr. management member) … will cause some vibrations. This could be good shake up or simply time for settling in. If you hired a new CEO to make overdue changes, you can bet the survey results are going to be affected as well. But consider carefully the timing and the context to understand how they may affect the survey results.

The board may also need to take note of homogenous results. It may be counterintuitive but “Everything’s great” survey results may need some drill-down. Yes, it’s very easy see that kind of result, smile and move on. However (comma) in some organizations, particularly small ones, no matter how anonymous the claim of the survey is, there is sometimes a serious reluctance for employees to express their concerns honestly. Individuals fear that their comments will be transparent.

Sometimes this slips out when a director has a one on one conversation with a staff member that starts out casually. This is dangerous territory and the board should tread carefully. Anecdotal evidence is not a trend. Staff members grabbing the ears of board members is not a healthy communication method. But it may just reveal that there is not a safe enough environment for people to be honest about what’s going on. Which means it may be time to start asking questions.

*Sigh* Nothing is simple, is it?

Now What?

  • Surveys are valuable.
  • The board sets the tone at the top.
  • Consider results carefully.
  • Communicate widely and through the appropriate channels.
  • Make sure people feel heard.
  • Take heart when people tell the whole, ugly truth. It can show that they care about what happens to the organization.
  • Be willing to listen, and really
  • Foster transparency, dialogue and culture of safely and support.
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