MADISON, Wis. (5/24/13)--Key performance indicators (KPIs) such as return on assets, net promoter score and loan to assets, are used by credit unions because they are the easiest to measure, aggregate and compare, according to a new paper from the Filene Research Institute. However, they do not address credit unions' identity crisis--the need to form and describe a business model that is different from noncooperative financial institutions.
The report, "An Examination of Key Performance Indicators Reported by Credit Unions In North America," surveys the key performance indicator practices of 23 medium to large U.S. and Canadian credit unions.
Most credit union managers are so devoted to their established KPIs that they don't stop to imagine what metrics are right for measuring a credit union's values and its value to members, said the report's author Daphne Rixon, associate professor and executive director, Centre of Excellence in Accounting and Reporting for Cooperatives, Saint Mary's University, Novia Scotia, Canada.
"Even though credit unions measure these and other common financial indicators, something is missing from a cooperative that obsesses about financial metrics while ignoring other important points," Rixon wrote. "Credit unions have to consider strategy, regulation, their own users, and industry benchmarks. But what about community engagement and social responsibility? What about engaging stakeholders, not just shareholders? What about meaningful reporting to shareholders and stakeholders?"
She offered several suggestions:
To download the report, use the link.