The influence of the manager on the economic effectiveness of his financial institution

The director of the credit union branch is usually seen as the cornerstone of economic decisions in his organization, even if he has to proceed under numerous constraints. But few empirical studies have sought to examine this assumption. This study examines the extent to which the financial results of the institution are dependent on its managers. Ninety-two credit union managers from small and medium sized credit union branches served as respondents. Performance data were obtained from the federation's accounting reports for a period of three full years. Data on managers' characteristics were gathered from different questionnaires. The first result is the surprising and radical difference between small and medium-sized branches in terms of the ability to predict financial performance. More than 80% of the financial performance of a small branch is due to factors other than the ones considered in this study. However, in medium-sized branches, characteristics of the director explain 50% to 63% of variance, and this with a parsimonious number of predictive variables. While personal and environmental factors are both important, their effects differ. The second issue is the predictive supremacy of organizational values vs leadership style. Research and related literature have canonized leadership style, and organizational values have received scant attention. There is a need to include in models nor only how a manager leads (leadership style) but where he wants to lead (axiological orientation). Another point needs to be made concerning empowerment. None of the variables predicting profitability indices, assets-development and loan losses are related to the recent trend of mobilization and empowerment. Only the productivity index, a ratio of total transactions to total salary, relates to this trend. There is a negative correlation between financial indicators and adherence to << mobilizing >> principles. It appears that perhaps the effect of empowerment on financial results should be down played, but not on its ability to lead to action.