Member-only story
“But this is how it has always been done ….”
While doing what you have always done might not be wrong, it is possible that it is not completely right.
As part of my volunteer work, I currently chair the Finance Committee of a non-profit organization where one of the terms of reference is to help grow the reserves to keep up with inflation.
As we are very conservative in terms of risk, we rely primarily on the use of Fixed Deposits (FD). As some of our FDs were deposited before the recent aggressive interest rate hikes by the Federal Reserve (Fed), I asked the finance staff if they had explored pre-maturely terminating some of our existing FDs and “re-depositing” them at the higher interest rates.
While not unexpected, their response was disappointing. They told me that they had not explored this option as “it is something they have never done before.” I shared that the Fed’s aggressive interest rate hikes from 0.25% in March 2022 to 3.25% in October was also something that had also never been done before. Hence, while relying on precedence is an efficient way to work, we also need to realize that in a VUCA world, the underlying premise that made past decisions correct may no longer be valid. The staff did the sums even after penalties for premature termination of the existing FDs, the decision to do so will add significantly more to our reserves this financial year.
As leaders, our job is to keep our eyes on the prize and to continually revisit the basis for past decisions. Allowing for things to be done the way they have always been done is, in my opinion, a dereliction of our duty as leaders.
