Apr 01 2013

An Examination of Key Performance Indicators Reported by Credit Unions in North America


Professor Daphne Rixon surveys the key performance indicator (KPI) practices of two dozen medium to large credit unions, and she uses that analysis of KPIs to imagine what credit unions should be measuring. Most credit union managers are so devoted to their established and well-considered KPIs that they don’t stop to imagine what metrics are right for measuring a credit union’s values and its value to members. A fundamental question suffuses this research: Are we measuring the right things?

Rixon interviews credit union leaders across North America to understand which KPIs they use and why. Not surprisingly, she finds that most talk about a balanced scorecard approach, which pits financial, customer, learning, and process behaviors against each other. Digging another level down, however, Rixon finds that financial measures dominate. Efficiency ratios, profitability, return on investment, and income growth are the common denominators. Credit unions’ trade is financial services, so shouldn’t the principal measures be financial? Yes, but that’s not enough, Rixon argues.

Financial KPIs are so prevalent because they are the easiest to measure, the easiest to aggregate, and the easiest to compare. But they do not address credit unions’ identity crisis—the need to formulate and describe a business model that is somehow different from noncooperative financial institutions. The critique is not about ignoring competitors but about comparing to the wrong ones. Rixon's report offers several suggestions.

Thank you to Credit Union Central of Canada for their generous support of this research.

Report Number 296