All of the numbers on your company’s financial statements have a story about how they came to be. Communicating the numbers and the stories behind them shows employees why they matter. When employees have a clear understanding of how their day-to-day decisions and actions impact the company’s financials, they make more informed decisions in the organization’s best interest. This helps save the company money long-term.
Talk with your employees about the following financial concepts and why they matter as a way to encourage more effective decision-making.
While budgets are meant to be a best guess of forecasting what is going to happen there will be times when larger than normal variances occur between budget and actual. Displaying these in pie charts or bar graphs rather than just as numbers can be a helpful tool. By asking your team to explain variances from the budget that are plus or minus 5% will provide opportunities to troubleshoot an issue or plan for future opportunities.
Collect and analyze actionable information about your competitors and the marketplace at least twice a year to form a business strategy. This helps you understand your competitive environment and the challenges and opportunities it presents. Your team can better plan for issues before they arise and respond more quickly as the issues come up.
Make sure your team monitors industry trends. They serve as indicators for how your numbers may change. This helps maintain the effectiveness of your forecast. Using visual tools such as charts or graphs allows your team to see the effects of trends more easily than by showing them a set of numbers.
Celebrate every time your team sets a new record. This could be a new sales record by the sales team, closing the month in record time by the accounting team or hiring a new staff member in fewer days than usual by the HR team. Talk about how they got there and why the milestone is important. Ask your team what else they believe is possible because of their success.
Most people understand the relationship between expenses and payables, sales and receivables but what about the relationships that may not be obvious. For instance, when your company lands a large contract, educate them on the impact the growth will have on other areas of the organization. For example, this may result in an increase in Wages & Benefits or IT & Infrastructure.
Line of Sight
Continue to educate employees on how their actions impact the company’s most critical numbers. All employees need to think and act like business owners in order to make choices that align with the organization’s best interests. This helps improve the bottom line.
Have your team continually plan for potential outcomes within the organization. This emphasizes the importance of looking forward to the future rather than focusing on what happened in the past. You gain the competitive edge needed to grow and sustain the business.
Interested in Finding New Hires or a New Job?
The more trust and accountability you develop with your accounting and finance team, the more engaged and productive they will be. This helps build an attractive culture that candidates and employees want to work for long-term. Whether you are an employer in Winnipeg looking for new team members or a candidate looking for a new job, Mercer Bradley can help. Get in touch with us today!