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Budgeting as a Team Sport

Which best describes your credit unions budgeting:

  1. Some basic assumptions are provided our CFO. After a few days of wizard-like work with our software system, the curtain is lifted to show the fiscal realities of our input.
  2. The CFO comes down from the mountain with the tablets (numbers) for the next year.
  3. We deliberate as a Senior Strategy Team to discuss market potential, operating capabilities, and strategic implications for the next fiscal year. We model a number of assumptions – collectively – and choose two or three operable scenarios to further assess with our detailed budget software.

In my experience the first and second options are as likely, and probably more accurate a reflection of reality, than the clearly preferred third option.

I am frequently asked to assist to expand the strategic thinking, perspectiveand performance of the senior management team. This is not a knock on those teams or individuals. The basic facts are that nearly all senior managers have achieved their “C Suite” positions by virtue of extraordinary performance in their functional disciplines.

The strongest organizations believe that all C Suite executives should possess and demonstrate strategic capabilities and perspectives. For perspective, any credit union in excess of $250 million in assets, should perform at this level. It is certainly necessary, if not critical, when a credit union exceeds one billion dollars in assets.

Clearly these executives should be exposed and trained in the key elements of strategy that drive credit unions. In fact, many of the executives I have worked with are well schooled via the multitude of executive development opportunities available.

So, what else is needed? In my opinion team development is the specific often lacking. As individuals frequent the variety of leadership development options, they often do it individually. The opportunity for collaborative learning within the C suite team is missing.

I have found the best training is “real time” exercises. The best example is the budget development process. Executing the third option mentioned above is ideal for real time training.  

I have also found that “real-time” modeling with visual result outputs is extremely valuable in providing the “aha moment” for those executives without extensive balance sheet experience. The reality of a credit union is that the result of all strategic initiatives will, at some point, be reflected in the balance sheet.

Now for the Sales Pitch. We at Cooperative Clout have developed a Strategy Starter as part of work to define the fiscal value of credit union membership. It allows for multiple scenarios to be assessed and viewed in a single meeting. It requires no special software or training.  Simply populate some growth and rate assumptions to see the work effort necessary to meet the objectives and the financial outcome it produces.  The result is exactly described in the third option.

There is tremendous value in this approach. Beyond the extended knowledge of the senior team we have found a greatly strengthened understanding of the budget assumptions and options. This translates into valuable strategic dialogues among the team throughout the year. It also drives collaborative directing of the resources of the organization versus the silos mentality that often drives that allocation.

John P. Gregoire

About Author:
John P. Gregoire is a partner in Koker, Nelson and Gregoire (KNG), a consulting firm dedicated to executive  compensation, succession planning and performance management in credit unions. With more than forty years of  experience in the financial services industry and having held senior management positions in state and national  trade associations and credit unions, his is a broad-based perspective reaching to board governance, team leadership, CEO appraisal, score carding, succession planning, mergers, and the alignment between executive  compensation and organizational strategy.

John also founded the ProCon Group Ltd., now in its twentieth year of serving a client base comprising over forty percent of credit unions with a billion dollars or more in assets. A founding member of the Filene Research Institute, he was instrumental in the development and publishing of the report on Board Responsibilities and Work Styles in Effective Credit Unions. He has authored a variety of articles on strategy, the balanced scorecard and governance. John earned his master’s degree in management from the Claremont Graduate School – Peter B. Drucker School of Management Program, working directly with Drucker on topics of executive management. He is a former board member of the National Credit Union Foundation. You can reach John at 608-239-3449 or John.Gregoire@kngco.com.

For more information, please contact me at 608-239-3449 or through our website cooperativeclout.com.

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