---
title: "You Can’t Manage What You Can’t Measure"
id: "6443"
type: "post"
slug: "you-cant-manage-what-you-cant-measure"
published_at: "2024-10-10T00:00:00+00:00"
modified_at: "2026-03-14T21:45:20+00:00"
url: "https://associationsnow.com/2024/10/10/you-cant-manage-what-you-cant-measure/"
markdown_url: "https://associationsnow.com/2024/10/10/you-cant-manage-what-you-cant-measure.md"
excerpt: "You’ve perhaps heard the phrase, “If you can’t measure it, you can’t manage it,” typically attributed to famed management expert Peter Drucker. It’s why employees get performance reviews, why our children get report cards, even why we nervously step on..."
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  - "Benchmarking"
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  - "job performance"
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---

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 » You Can’t Manage What You Can’t Measure

You’ve perhaps heard the phrase, “If you can’t measure it, you can’t manage it,” typically attributed to  
 famed management expert Peter Drucker. It’s why employees get performance reviews, why our  
 children get report cards, even why we nervously step on the bathroom scale after the holidays.

It’s also why associations should benchmark the performance of their investment portfolios. Every  
 association with an investment portfolio has made a conscious decision to leave the relative safety of  
 bank deposits to take on investment risk in pursuit of higher returns. The benefits (or lack thereof) of this  
 decision cannot be gauged without proper measurement. ASAE’s annual study, “Association Investment  
 Policies, Practices, and Performance,” can be a valuable tool in this effort.

The study seeks to assist associations in benchmarking their investment programs from a variety of  
 perspectives, covering not only performance but also investment strategy and governance practices. In  
 reviewing the study, associations can compare themselves against other comparably sized associations  
 and answer:

- How does our governance structure (investment policy, committees, etc.) compare with that of our peers?
- How does our investment strategy align with or differ from others’?
- Have our investments outperformed, or underperformed, our peers’?
- Are we holding too much in investment reserves relative to peers? Not enough?

Of course, these are just a sampling of many areas that the study covers. The 2024 edition received more  
 than 150 responses and, as always, brought with it insightful takeaways. Here are just a few of them.

### **The Importance of Size**

When looking at the performance of associations with investment portfolios larger than $10 million  
 versus those associations with portfolios of $1 million or less, the data is fairly consistent. In seven of the  
 10 years in the study’s existence, the median return for larger associations has outperformed that of  
 smaller associations.

This is most likely because larger associations have been more willing to take risk, reporting consistently  
 higher allocations to equities and lower allocations to cash. Not surprisingly, the three years where  
 smaller associations outperformed (2015, 2018, and 2022) were negative years for the equity markets.

The price paid for these excess returns has been volatility-larger associations experienced meaningful  
 swings in performance from year to year whereas the median return for smaller associations has yet to  
 record a calendar year loss.

### **The Importance of Discipline**

Those associations that agreed that their investment reserves were meeting their intended objectives  
 shared two common characteristics: the presence of a written investment policy and a relationship with  
 an outside investment advisor. Those without a policy or an advisor were far less likely to be satisfied  
 with the performance of their investments.

### **The Importance of Patience**

During periods of market distress, particularly when coupled with economic uncertainty, there can be  
 the temptation to sell risk assets, such as stocks, and flee for the safety of cash. However, associations  
 demonstrate the patience to be able to weather these market storms; just 10% of respondents report  
 that they raise cash during periods of volatility.Of those that reported doing so, most were smaller  
 associations as the practice was far less common with larger respondents, who shared they were just as  
 likely to strategically add additional funds during periods of market volatility.

### **The Importance of Benchmarking**

Drucker would agree, measurement is essential to long-term success. Associations use a variety of  
 methods to monitor the performance of their investments, but most common is a blend of market  
 indices-either static or dynamic.

This is not surprising. Most respondents maintain a diversified portfolio of a variety of asset classes,  
 widely considered a fiduciary best practice. Therefore, no single index, such as the S&P 500, is likely to  
 be representative of an association’s portfolio and, hence, provides little actionable insights.

While all respondent populations reported looking at the performance of other associations, which can  
 be useful, usage is not as common as index blends. This was not surprising for two reasons: First, even  
 associations of the same size can have different liquidity needs and risk appetites, so their investment  
 approaches are likely to differ. Second, unlike market indices, association peer data is not available in real  
 time, making it impractical as a primary measurement yardstick.

### **In Summary**

It’s worth noting that benchmarks are best viewed as guidance, not gospel. Every deviation from a  
 benchmark-be it from a market index or your fellow association-can be explained if you know what to  
 look for. The question we must answer as fiduciaries is, are those explanations defensible or not.

*Content is made available for informational and educational purposes only and does not represent a  
 specific recommendation. Always seek the advice of qualified professionals familiar with your unique  
 circumstances.*

[Ahmed Farruk](https://associationsnow.com/author/ahmed-farruk/)

Ahmed Farruk, CIMA®, is a principal, regional director, and senior consultant at Fiducient Advisors in McLean, Virginia. He coleads the firm’s Associations Business Council and is also a coauthor of the ASAE study, “Association Investment Policies, Practices, and Performance.”

[More articles by this author](https://associationsnow.com/author/ahmed-farruk/)

Tags: [#Accounting](https://associationsnow.com/tag/accounting/)
 [#Asset Management](https://associationsnow.com/tag/asset-management/)
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 [#Benchmarking](https://associationsnow.com/tag/benchmarking/)
 [#C-suite](https://associationsnow.com/tag/c-suite/)
 [#Finance](https://associationsnow.com/tag/finance/)
 [#Financial Reporting](https://associationsnow.com/tag/financial-reporting/)
 [#Governance](https://associationsnow.com/tag/governance/)
 [#job performance](https://associationsnow.com/tag/job-performance/)

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