Frontline Finance Fundamentals: How To Talk With Your Team about Money

February 5, 2013 — 11 Comments

iStock 000019656781XSmall 300x300 Frontline Finance Fundamentals: How To Talk With Your Team about MoneyDo you bore your team with finance slides full of terms they may not understand?  Does your frontline team know how your business makes money?  Do they understand enough about the basic financials of your business to make the right decisions?  If they have incentive-based pay, do they really understand how it works?  Do you understand the behaviors that plan is really driving?

Keeping Finance Simple

When we were growing up we had a “math couch” in our home.  Many nights my siblings and I would take our turns sitting with my dad and his graph paper, sharpened pencils, and kleenex (there were often tears involved).  He made everything from Algebra I to  Differential Equations feel like common sense.  He spoke English.  He drew pictures.

Every time I watch someone try to explain the financials of a business to large groups of employees in meetings or kickoffs, I picture that couch.  Most employees aren’t inspired by an alphabet soup of financial terms.  It’s hard to relate to a call to action to improve IBITDA, and yet I am surprised at how many presentations do just that.  I’ve also seen it go the other way, where a leader assumes the teams don’t care about (or can’t understand) the financials, so avoid the topic all together.

4 Good Finance Questions

Start with the finance fundamentals.  Are your frontline leaders prepared to answer these 4 questions?  If not, how could you best prepare them?  If you are a frontline leader do you know the answers?  If not, where would you go to find them?  Give it a shot.  Try answering these finance questions for your organization in a “math couch” sort of way.

Is the company financially sound?

It’s still a scary time.  If your situation is strong, explain why.  If it’s not, share what you can, and your strategies for dealing with it.

How does our company make money?

Don’t assume they know.  Is the business evolving?  When’s the last time someone explained the big picture approach?

Why are we making decisions that seem weird?

Every time I read the results of employee surveys I am always struck by how “weird” some very logical decisions can seem at the front line. To the extent you can, provide a linkage to the bigger picture.  If you can’t explain your “weird” decisions in a palatable way… maybe that’s an indicator too.

How do I impact the bottom line?

Doing a bit of math can be helpful here.  “For every x you sell…”  “Every wasted x costs x….” I’ve even used toy money and made it a game.  If your team works on any kind of incentive-based pay, ensure they REALLY understand how it works.  Don’t take anything for granted.

Please share.  What techniques have you used to explain finance to the frontline?

See Also:

 Business Terms and Ratios (a useful glossary of terms and what they mean).

How To Share Company Financials With Your Employees

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11 responses to Frontline Finance Fundamentals: How To Talk With Your Team about Money

  1. I really appreciate your post today. One of my earliest supervisors in my current job sat me down and had a very similar conversation with me. That has helped me keep things in “big picture perspective” throughout my career. You don’t have to have an empowerment conversation with a subordinate when they believe in the financial success of the company and make every decision as an owner of the business. Another manager later told me “if you have to spend money, make it make a difference.” After 12 years, these two conversations stand out as the most fundamental to view on the financial success of my company.

    • John, Thanks so much. It sound like your early supervisor really invested in your growth as a leader. FANTASTIC. It’s so much fun to collect advice and frameworks as we grow. Thanks so much for adding this to the conversation.

  2. Great article. It got me wondering if we are doing enough at home to teach our kids about finance fundamentals so that they are better prepared to enter the workforce. Growing up, my parents paid bills by hauling out a large checkbook, going through a pile of mail, discussing the bills, and writing checks. I was aware that this was an activity that adults had to do. I heard them talking about the cost of things. Today, I pay bills online, and my teens see me just working on the computer. They have little insight into the family finances.

    Do we want to worry our kids with questions like is the family financially sound and how much money we make? Not necessarily, but I do want them think about financial decisions that may seem weird or how they can impact the bottom line. I definitely need to work on explaining finance to my family’s front line.

    Your article is yet another example of the intersection of leadership and parenting. Thanks for writing it.

    • Karen, thanks so much for joining the conversation. You raise a really excellent point. I think sometimes we shield our kids and make it look easier than it is. It’s a lot like teaching them about leadership, helping them to understand how we make the decisions we do could go a long way. You have made me think…. I could do this more than I do. Thanks for your great thoughts.

  3. Great and timely subject Karin. You are talking about education and awareness, without which gives way to fear of the unknown, which in turn stifles growth and decisions. Taking the steps you and others suggest is empowering so that we can make the right decisions and not be controlled by finances but flip that and ensure growth and opportunities are not missed.

  4. Don, thanks so much for joining the conversation. Ahhh yes, how do we empower creativity and growth.

  5. Excellent post! I’ve been improving in this area for the past few years. It pays off! New ideas are coming from my team. They are looking for ways to increase revenue while identifying and eliminating wasteful processes or procedures.

  6. Agreed, what an excellent post! I recently observed a great leader take to the white board and use a very academic approach to illustrate our goals for grow over the next several years. The room lit up to be included is such a vision, it was simple but amazing to observe. I like the comments around eliminating waste. In a recent conversation about maximizing returns I heard, “it’s like paying for the buffet and just having one side of macaroni, now where is the value in that?” What an awesome example. It helps me remember how fun this can really be, we can all relate. To the “math couch” everyone!!

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