One of the more interesting discussions that often arises during planning sessions is how a credit union should define growth. It’s an important question, and your planning team should come to an agreement about it before making any decisions.
The reality is that everyone seems to have their own definitions of what it means to grow the credit union, with the most common views and their rationales including:
Memberships. If the number of members is increasing, then the credit union is growing because more members will use more services and that will lead to improved financial performance.
Assets. Assumes that as the credit union attracts more assets it is able to lend more money to its members and as loans grow, the credit union will grow.
ROA or ROI. When the rate of return is growing (or at least being maintained), then the credit union is (or at least holding its ground).
Net Worth. When net worth is being increased, the credit union is strengthening its financial position and therefore growing.
There are merits to each of these, and perhaps in many cases some combination of these or other measures is the best approach.
The real point is that it needs to be explicitly defined so that everyone on the planning team, as well as everyone on the staff, knows how growth is being measured, since it is often the primary goal of the strategic plan.
ACTION ADVICE: Block out some time during your planning session to discuss what growth means to your Board and Leadership Teams. Work to come to a consensus about how you will measure growth so that you can define clear performance targets. Be cautious not to just create a measure(s) that can be manipulated too easily or that will not accurately reflect the outcomes you are seeking for your credit union.
It’s Your Turn…How does your credit union define growth? What have you found works best to keep the team focused and to produce the results you want? How do you use growth as a guideline or outcome measure for your overall business strategy. Please post a comment and share your insights.