The need for all of your managers to understand finance stems from the core business goal: to generate profit. If your general management does not understand the processes and strategies involved in managing finances, then your company is reducing its chance of business survival and success.
Here are the core areas of finance that all of your managers should be aware of:
- How the business generates profit (the income statement drivers)
- How capital is invested (the balance sheet drivers)
- How cash is generated and consumed in a business (why profit is different from cash)
- How the business increases cash flow generation
- Commercial KPIs and how they are used to drive performance (what measures of return are typically used and what drives this return)
- How the business measures and manages commercial performance
- How clients measure and manage their commercial performance
- How the business’ products deliver a successful commercial outcome for its clients (demonstrating the value to clients of the products and services the business supplies)
All managers have a role to play in driving performance and reducing risk in their day-to-day activities. To this end, providing them with a practical understanding of finance is critical.
Using Business Simulations in Finance Training
Through activities and simulations designed to emulate genuine workplace context and scenarios, employees have the opportunity to develop their understanding and skills through first-hand practice. Finance training in the form of business simulations helps enable non-finance managers to gain a broader view of the business and appreciate how some decisions can ripple out and affect other areas of the business and, ultimately, the bottom line. Business simulations also allow for the collection of quantitative and qualitative data, which more traditional training methods simply can’t accommodate, helping learners make more informed decisions and change their behavior to better to contribute to the bottom line.
This experiential method of training is highly effective in building practical skills, insights and confidence, while giving managers a safe environment in which to learn and practice new skills. Simulations inject a level of competitiveness, increasing participants’ desire to achieve the learning objectives. The heightened engagement often stimulates accelerated performance and while generating data that can be used for feedback.
Simulations also give learners an opportunity to internalize new ideas and reflect on their effectiveness areas that need further support. They encourage learners to actually use new skills and capabilities in the workplace following the success of their experiences during the learning process.
Business simulations engage learners at a much deeper level than other learning solutions such as seminars or e-learning. When they are immersed in an engaging business simulation, they quickly make the link between how their actions actually impact the numbers and, as a result, they work in a more business-focused way. For example, in a business simulation, managers might run a company from start-up through maturity, managing finance throughout. This simulation gives them first-hand experience and provides a memorable learning experience to draw on back in the workplace.