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