Take Your Career To The Next Level With Enhanced Finance Knowledge
Ever hear an artist or a communications professional say that they chose their career path in part because they weren’t good at math? Perhaps your own educational and career choices were the result of your discomfort with numbers.
Sure, we all have our strengths and weaknesses. Not everyone needs to be a financial guru, especially if that is not one’s particular skillset. But, if you really want to grow in your career as a manager or professional working in a non-financial role, then it is imperative to enhance your knowledge of finance, says Duke Corporate Education professor Joe Perfetti. In the following Q and A, he shares why this is the case and offers guidance on how to improve your financial knowledge.
Why is it so important for managers who lack financial fluency to improve their financial/business acumen?
Finance is the universal language in business. If you do not speak it, you are at a clear disadvantage. I run across many employees who cannot get their projects funded, budgets approved or they sit through meetings and have no idea what is being said. Many of them have great ideas. But opportunities get lost because they don’t know how to communicate the cost and benefit in a way that they are heard.
Why is it a challenge for non-finance professionals to improve in this area?
Finance does not have to be complicated. A lot of it is common sense. But someone has to take the time to explain it in an understandable way. Many finance people are not the best of communicators and that becomes a challenge.
What are some daily habits/routines that will help increase financial fluency?
My first recommendation is to pay attention to the financial world around you. So, scan websites like Bloomberg and the WSJ and look for news about the company you work for or your industry. If you work for a publicly traded company, go to your company’s investor relations website and read the documents they put together for investors and regulators. For extra credit, listen to your company’s quarterly analyst calls. If you can’t make it to the live calls, listen to the recordings. Failing that, get a hold of an analyst report of your company. Analyst reports are the Cliffs Notes summary of what’s going on in your company and your industry. You may be surprised to learn how your workplace is viewed from the outside. And for those of you who work for a private company, find your closest competitor that is publicly traded and look at their investors relations website and analyst reports to get a sense of what’s happing in your industry.
Can you share an example of how a team or individual reaped benefited as a result of stepping up knowledge around finance?
Finance departments act as gatekeepers, deciding which projects, initiatives, and growth strategies will get funding. So, I do a lot of work with companies to help non-financial managers develop real world business cases that are responsive to the concerns of the CFOs and VPs of finance who approve projects. Recently, I was coaching a team from a Fortune 500 company on the idea of creating a kiosk to be deployed at airports, train stations and other high-volume sites for business travelers to purchase last minute personal needs. It was very satisfying to see one of the kiosks deployed at an airport as I was travelling on a connecting flight!
How can managers address gaps in financial fluency and demystify the world of finance?
The number one suggestion is to be curious. You must want to know about finance and the numbers. Managers also must ask questions. When I speak with senior leaders at companies, I’m surprised how few know what their hurdle rate is. So, I give them a “homework assignment”: I tell them to speak with their finance team and ask them what their hurdle rate is. This assignment isn’t just about getting an exact hurdle rate figure; it’s about starting a dialogue between managers and the finance folks.
Professor Joe Perfetti is an expert in corporate finance and strategy. He teaches the Building Financial Acumen online course for Duke Corporate Education.