Why Your Management Personnel Need Financial Literacy

A greater sense of financial openness and transparency can transform company culture for the better in tough times.

Leading a business in a difficult economic environment brings a unique set of challenges. With the pandemic-wrought recession now facing the world, your company may be facing both internal and external uncertainty. One of the most essential elements to survive such a time is to have internal trust and unity between managers of various departments. To inspire this sense of camaraderie, you can focus on building financial literacy and transparency among team leaders.
Financial matters aren’t just for the finance department. The monetary health of a company is relevant to every employee, as the current and future prospects of a business depend on this performance. While it may at first be tempting to share very little information about finances in precarious times, taking the opposite approach and embracing openness is likely the better move. After all, it’s difficult to build a positive and unified company culture when employees feel they are being kept in the dark.

Financial Literacy and Transparency are More Important Than Ever

What are the company’s objectives? How does the business plan to pursue these goals? How has the present financial situation impacted its ability to do so? When employees outside of the accounting department understand finance, they can be more active participants in such discussions and use this knowledge to lead their own teams more effectively.
Inc. magazine acknowledged in a piece from before the pandemic that the desire for a greater understanding of financial performance is growing among employees. This means companies should find a way to increase their transparency. Great corporate culture, the kind that encourages staff members to commit fully to the organization and try their hardest, is based on trust and visibility. Bombas CEO David Heath told Inc. the absence of transparency creates a “sense of mystery” that makes employees uneasy and noted his organization opens its CFO’s monthly presentations to all employees on a voluntary basis.
As TomboyX CEO Fran Dunaway added, there should be context to companies sharing financial information. This means there is value in saying not just what the numbers are but why they matter. For instance, why is the business spending on a specific project but not another? In the era of tight budgeting that seems poised to follow the pandemic, this will be an important point for your company to master: If you want to run a truly transparent company, your employees should understand what the organization’s priorities are and why.
When employees don’t just get access to financial data but are also handed the tools to understand and use the numbers, the benefits can go beyond a greater sense of confidence and loyalty. For instance, Business.com suggested organizations solicit feedback on their efforts. When team members understand how much the company is investing in a particular initiative and what its priorities are, they can make informed and helpful suggestions and shape the future path of the organization.
Closing down access to information and being unclear with employees about the financial health of the organization can be alienating at the best of times. With challenges already here and a difficult recovery period on the horizon, encouraging well-informed team members to make contributions and feel more ownership of the company’s strategy is a way to keep your business strong. Training can create this more open environment.

Employee Education Can Boost Financial Knowledge Outside of Accounting

Offering optional training to employees is easier than ever in the present era of widely available online coursework. Today’s interactive, video-based materials are available on learners’ own schedules, and without the need to host in-person sessions, your organization can offer these training modules for whoever wants to engage with them. Financial literacy is a top subject to offer, helping your organization create a climate of openness and widespread engagement with the financial health of the business.
Courses on financial topics cover the material from several angles. For instance, some of these modules are based on teaching managers to understand how monetary key performance indicators affect their own departments. Learning about the process of fiscal reporting and projections can help leaders when it is time to make their own budgets and find out how they fit into the overall corporate strategy. Other courses are focused on singular aspects of finance, such as the balance sheet – what is this document and how do non-accounting employee read it? Still other lessons are based on introducing the role and practices of the financial department to the rest of the company.
When financial understanding is not concentrated in a single team, your company can move forward into uncertain times with a greater sense of confidence and unity. With less wondering about the state of the books – and what that might mean for their own jobs and responsibilities – well-informed workers can focus more on their own contributions. Financial training doesn’t have to be inaccessible, and makes a great addition to a slate of optional employee education offerings.
Source