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

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.

What techniques have you used to explain finance to the frontline?
Filed Under:   Career & Learning, Communication
 
 
Karin Hurt
Karin Hurt
Karin Hurt is an experienced executive, speaker, and writer with a diverse background in sales, marketing, customer service, merger integration, training and organizational leadership. Her company, Let’s Grow Leaders, helps companies gain a competitive edge by building extraordinary front-line teams. She was recently named to the Top 100 Thought Leaders in Trusted Business Behavior by Trust Across America. Karin knows the stillness of a yogi, the reflective road of the marathon runner, and the joy of being a mom raising emerging leaders.
 

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What People Are Saying

John   |   05 February 2013   |   Reply

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.

letsgrowleaders   |   05 February 2013   |   Reply

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.

karencatlin   |   05 February 2013   |   Reply

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.

letsgrowleaders   |   05 February 2013   |   Reply

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.

Don Yäger   |   06 February 2013   |   Reply

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.

letsgrowleaders   |   06 February 2013   |   Reply

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

Jim Johnson   |   07 February 2013   |   Reply

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.

letsgrowleaders   |   07 February 2013   |   Reply

Jim, Thanks so much. It’s exciting to hear that your techniques are working. I am curious, what do you find works the best? Any tips to share?

Almae   |   07 February 2013   |   Reply

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!!

letsgrowleaders   |   07 February 2013   |   Reply

Almae, So great to have you join the conversation. What a great analogy of the buffet!