Managers are the driving force behind any company. They bear responsibility for achieving the company’s strategic goals, financial performance or competitiveness in the market. However, there are times when their actions bring losses and negatively affect the business. What could be the reason for this? Chiefly lack of financial knowledge and ability to analyze the economic situation of the company.
Reading reports, analyzing financial ratios, cash flow... A manager should properly interpret key data and ratios. Why is this so important? All financial decisions in a company are based on data, and the ability to analyze it helps to correctly identify problems. Insufficient financial knowledge can contribute to holding back key decisions and preventing the achievement of business goals.
Why should managers expand their financial awareness?
Today, a manager’s role is more difficult than ever before. A manager should be a strategist, coordinator, visionary, leader, and analyst at the same time. When trying to define the key skills of a manager, we most often mention strategic thinking skills, good organization of work or communicating clear messages. However, the essence of a manager’s job is effective team management. Financial knowledge comes next in the hierarchy of importance. For a non-financial manager, it is crucial not only to learn the concepts used by financial professionals. It is important to understand the basic tools of financial analysis and the ability to use them in a decision-making process. Why else is it important to have financial knowledge?
- Managers can make more accurate budgeting and investment choices.
- The ability to speak the language of finance can improve communication with senior managers and the finance department.
- Acquiring new competencies in finance can improve career opportunities.
- Financial knowledge helps achieve the company’s financial goals.
Shaping financial intelligence
People at different management levels should have different financial competencies. Financial analysis always supports decision-making processes. Sometimes a sales or marketing manager does not really see the impact of their actions on the company’s financial performance. Managers need knowledge of the impact of key decisions on the company’s financial standing. The manager’s workshop consists mainly of knowledge of the profit and loss account and the correct interpretation of financial ratios, statements, and balance sheet items.
In entrepreneurship, there is the concept of financial intelligence, which boils down to the ability to make sound financial decisions and properly utilize available funds. It may happen that, due to lack of knowledge, the manager does not use the potential of available solutions. Financial intelligence also means the ability to spot opportunities for further company growth. How to develop these qualities? First of all, strive for continuous professional development and acquisition of new knowledge. Managers can develop their competencies through courses, training or postgraduate studies.
Those interested in the topic of finance are invited to apply for a new postgraduate program: “Finance for Non-Financial Leaders”. The program is conducted in English for managers from all over the world. It was created for people from non-financial departments who play an important role in decision-making processes and want to have a real impact on financial performance in the organization. The modern educational format is designed to provide participants with the practical financial knowledge and skills needed to make sound business decisions. Managers will learn real-life case studies from Harvard Business School, financial simulations and receive a unique opportunity to get feedback from top managers.
