How to Sharpen Financial Competence for Directors and Executives

Financial competence is not a static variable, in that it is something that is ever-changing, and the skills associated with being financially competent must be sharpened consistently. The fact is that failure to have financially competent decision makers can be highly destructive to an organization. What is meant by “financially competent” goes well beyond being able to identify credits or debits or being able to properly read financial reports. Being financially competent should focus on one’s ability to break down the financial information provided in those reports and analyze how they should be used to determine the financial path of the organization going forward.

Furthermore, a person must be able to understand how risk factors into the financial decision making matrix and how that risk should affect the courses of action taken by the company. These are the things that separate competent financial management from incompetent financial management. This is likely a major reason why roughly 21% of all CEOs serve in a financial oversight position prior to becoming a CEO and why almost a third of CEOs have served in a financial capacity at some point in their careers. It is also important to realize that the outcome of certain situations has no bearing on the competence of the decisions that have been made. The fact is that poor financial leadership can still yield success from a periodic standpoint. In the same manner that an unskilled Poker player can have a run of “good luck” and win big in a night of gambling, so to can incompetent financial managers “GET LUCKY”.

The problem with depending on luck to manage the financial infrastructure of an organization is two-fold:

1. Luck does; and will always run out at some point in time
2. Financial management isn’t gambling; especially when considering what’s at stake whether it is the shareholders, the market, the employees, or the customers; there is simply too much at stake to make financial management a “Coin Flip.”

To ensure that the key decision-makers are financially competent it is incumbent upon management to analyze the knowledge of these individuals and provide opportunities for them to update and hone their skills as it relates to financial management. The good news is that most organizations generally select the financial decision-makers within their organization by doing a thorough search; this generally allows them the opportunity to select the person that they feel best can handle the position.

Furthermore, most organizations that utilize committees to help manage operations have a financial management committee (as it is considered to be the most common among companies with three or more committees). The problem is that many companies don’t understand the position enough to fully handle this search, so they end up hiring people that have had past success without determining whether the source of that success was luck or skill.

If the current global economic calamity has taught us anything; it has taught us this: When the economic climate is advantageous to organizations it is much easier to seem competent than when things go bad. In a good economic climate decision-makers can take huge risks and if they win they are superstars; if they lose there are generally opportunities to mitigate that loss (either by acquiring debt capital; increasing sales, or raising equity funds just to name a few).

In a bad market we have discovered that THE SAFETY NETS ARE GONE; and risky decisions have real consequences. In this market we are finally paying the price to learn that there is a real difference between corporate sponsored gambling and effective financial management. What we need to do now is train current and future financial decision-makers about what makes an executive financially competent, and what does not. This will produce more effective financial decision-makers and more importantly it will provide a future asset for companies that will assist them in diverse market situations; NOT JUST WHEN TIMES ARE GOOD.

The solution: The following are some of the steps that key decision-makers need to take in order to assist the company in building a more competent and more effective financial management infrastructure.

1) Your executive Finance team: To have a financially competent executive team; YOU NEED A TEAM; there is ALWAYS an inherent danger in leaving major financial decisions to a few individuals. The fact is that we are talking about money; and when that is the subject then many times self interest replaces corporate interest in the decision making hierarchy. Furthermore a company that has a properly chosen team of individuals to make decisions provides a system of checks and balances which mitigate the risks associated with these decisions.

2) Training Courses in Finance: Another conduit would be to get a day or two day workshop in financial training where current decision makers receive tutelage in financial decision making from an application standpoint instead of an academic or theoretical standpoint. Bringing in people that have a history of being competent financial managers will be helpful. But also teaching examples of how poor decisions have destroyed companies would be helpful as well. Many course offer sound coverage of financial topics of importance. However, it is important to check background, experience and credentials of the trainer before embarking on a course.

3) Get a Coach or Corporate Consultant: Coaching at executive level has proven to be popular in many parts of the world. Experts believe that the value an executive coach (whether it is a successful consultant, former executive, or entrepreneur) adds, significantly impacts progression and drives performance to a higher level. There are many coaches available but you need to ensure you get a coach who will listen to your concerns at the same time offer the right and relevant professional advice. With the advent of the internet, organizations also offer virtual coaching support.

4) Have self-analysis meetings: At least once a year all organizations should seek to have a meeting with all people involved in the financial decision making process (executives, senior financial/accounting personnel, board members, etc.) and simply have a brain-storming session that focuses on the direction of the organization; future financial needs, current financial position, etc. These meetings have a way of bringing issues to light that otherwise would stay in the dark; and furthermore you want all of these people to work well with each other, and this is a good platform to start from.

While most organizations believe that the decision making aspect of their financial infrastructure is at least competent; the fact is that many organizations aren’t aware of what constitutes competence as it relates to financial decision making. The fact is that, no matter where your organization is located, the WORLD HAS CHANGED for companies; to stay prosperous companies must focus on sustainability and not luck; they must focus on consistency and not major peaks. Financial competence has little to do with an education in finance, it has everything to do with how your executives can use that information and analyze the health and the future of the organization. Those that understand this are in an advantageous position; those that don’t are playing with fire.

CAUTION: While all the above (and others) may prove useful, the idea is not to micromanage and get bogged in deep financials. Keeping it simple is the message. I believe if boards can set criteria through Executive Policy Development from the onset, keeping it simple yet covering all financials of your organization is the way forward. Subsequent monitoring of the financial health at appropriate intervals will help you shape your organisation’s financial strength further. After all, it is all about accountability at board level.

scwamindshoc.xyz lincolntrail.xyz istopover.xyz healthsavi.xyz ngsatlanta.xyz thefairmontt.xyz amarakshcoun.xyz erasmusbriti.xyz fairmonttamara.xyz thenakedphoto.xyz floridaperfe.xyz musikkskole.xyz ezmortgageohio.xyz ogdnutriti.xyz onanalysis.xyz systemecrois.xyz northcaroli.xyz hillaryclint.xyz projmanonoffice.xyz linkcarenadigit.xyz rentmamasance.xyz globalmim.xyz unwomenindia.xyz storehip.xyz lighttojustice.xyz irisneworleans.xyz freephotostation.xyz scitechsoft.xyz cleanshave.xyz windfallrafting.xyz medinter.xyz ajaxlaunch.xyz assetauctions.xyz increasedirec.xyz greenacresnat.xyz thedistrict.xyz etrecos.xyz thisiswhyimfat.xyz kwhptory.xyz nuronuralf.xyz weeklyshepac.xyz plexion.xyz childrensedu.xyz myvitaminguide.xyz ohvambassadors.xyz raingardens.xyz fodreams.xyz frontierpathways.xyz instanttaxservice.xyz insidetxbi.xyz mklmweteachgroup.xyz theboogieblog.xyz rogerssystems.xyz blackhistori.xyz calmusaudrie.xyz northridge.xyz publishings.xyz elegantbridal.xyz columbiafire.xyz dailyhealthart.xyz slotmachineso.xyz wordpresscon.xyz agfibertechno.xyz evanewyork.xyz airelibre.xyz topdtvstudio.xyz ajuamaya.xyz istopover.xyz renovationsf.xyz dnaclothing.xyz metawatch.xyz hqartsblogs.xyz sugarplumdreams.xyz royalparadisespa.xyz pingram.me.xyz unitedwayac.xyz mastimovie.xyz localsoccergames.xyz vrijemp.ws.xyz generalmusic.xyz luxhomedecor.xyz aoapartnerships.xyz healthyfuturesva.xyz divinefits.xyz scwamindshocktv.xyz theboroughraleig.xyz hufnagleinsurance.xyz skiprism.xyz rocksolid.xyz perspective.xyz teusner.xyz magnoliagreens.xyz gotoergo.xyz calgarysoccerfeder.xyz measuringmeasures.xyz prvisudas.xyz tourdeskylinedrive.xyz jdidexambot.xyz thepalacesonwheel.xyz dropchat.xyz worldofmacros.xyz balboamarina.xyz springhillsuite.xyz domainnameninja.xyz seedstitchfineyarn.xyz carshowsusa.xyz oregondataproject.xyz ameseats.xyz andrasuchy.xyz onlinebanking.xyz populardogs.xyz changhongac.xyz lincolntrail.xyz ochbergsociety.xyz godlikedevelopers.xyz ftatips.xyz myzestyliving.xyz protvstream.xyz isaitamil.xyz babynamesgirl.xyz projman.xyz extraordinary.xyz guiderestaurant.xyz werecookingresta.xyz italianluxury.xyz bailuantienganh.xyz edmondswater.xyz soulrebelsbra.xyz aialone.xyz usasianwire.xyz focusinstitute.xyz newcomfg.xyz sustainable.xyz lafayette.xyz pianoforpre.xyz schoolers.xyz jizztech.xyz northstarautot.xyz likichat.xyz floridaperfe.xyz midvalleyrex.xyz freedownloadword.xyz cartcompare.xyz hawaiianlion.xyz coloradoveterans.xyz softinn.xyz truklink.xyz memorialofrecovere.xyz stmarysf.xyz zippyhosting.xyz stopsmokingdetox.xyz skiblackmtnofme.xyz alliowens.xyz awesomeweightlosss.xyz nationalanthemgirl.xyz limelightnashville.xyz panareausa.xyz tallahasseegut.xyz pctelecom.xyz artloopwilming.xyz accidenton.xyz harborcrestbh.xyz lovefireclothing.xyz tharunayanews.xyz erichutton.xyz celebritylovescene.xyz fairviewlacrosse.xyz tigersix.xyz thescratchingpost.xyz lnlclothing.xyz boehrconstruction.xyz hobbydo.xyz airportcoc.xyz saintaugustinechur.xyz klitoradio.xyz management.xyz wannabethere.xyz fastfreewebs.xyz texasflats.xyz sagebookstore.xyz healthydietsupplem.xyz outlawclothingink.xyz homeshopplus.xyz womanspiritireland.xyz fratellimuratori.xyz allpawsmobile.xyz powersmdwellness.xyz simsterest.xyz oliviamorgan.xyz gandftrailers.xyz majesticchil.xyz metalosis.xyz freelifereadings.xyz bladepublishing.xyz arkansashome.xyz maplestory.xyz ghanalatest.xyz vipermotorsports.xyz travelguideorlando.xyz speakeasybargrill.xyz playtimemagazine.xyz pzriley.xyz journeytowardforgi.xyz apollodentalcentre.xyz nashvillecosmeti.xyz anyebooks.xyz innatstonebriar.xyz philipslater.xyz medicalsalesjobs.xyz magicaldefinition.xyz electriccityhd.xyz liensadultes.xyz concordmotor.xyz khuranapsychic.xyz arizonasport.xyz blazingwebhosting.xyz pchannel.xyz wondercitynyc.xyz freilichjewelers.xyz healingthenatural.xyz bluegrassint.xyz howtowriteabook.xyz harvestmanager.xyz firstrate.xyz autotrans.xyz tomsplacefor.xyz pcsolutionso.xyz geminikitchen.xyz mundohis.xyz panonewsny.xyz elmorlaco.xyz realitykingporn.xyz searchdj.xyz thebabelog.xyz microinv.xyz betrbeagle.xyz visionxcreative.xyz zabeelinstitute.xyz biancabarnett.xyz extraordinary.xyz abriendoinn.xyz knowthebus.xyz parlaybetwinners.xyz foodusa.xyz flippinkrazy.xyz africastartup.xyz arlingtontigersbas.xyz norcotires.xyz karenbadgleylaw.xyz clearwaterproduct.xyz gogreendigest.xyz trendygirlsh.xyz farmerdanrn.xyz dennisdaimusic.xyz babayagabg.xyz salidapainting.xyz usatobaccorive.xyz palmeritasurf.xyz hcleadership.xyz rompyourdomp.xyz lebronjamesshoes.xyz mbexpress.xyz supermarkets.xyz medicalmarijuana.xyz coliseummedia.xyz cosmeticsurgeon.xyz creekside.xyz fraldinha.xyz beaconfaqs.xyz springerproduc.xyz dashkeymask.xyz maskdashkey.xyz healthytreats.xyz fourfountains.xyz reportingan.xyz hostedvilla.xyz presynct.xyz goldpaysoff.xyz heartmonitor.xyz piscesrockband.xyz buynetsites.xyz garciniacambo.xyz sneakersbuy.xyz strongisland.xyz fitnessberkeley.xyz niyadwanaag.xyz cmartie.xyz afrikahost.xyz fatfanclub.xyz gemfieldresour.xyz eonlinerelat.xyz quantumparadigm.xyz fakultask.xyz edokteran.xyz carlsbadlu.xyz xuryhotels.xyz healfactor.xyz fontconsultant.xyz michaelshawnm.xyz typeconsultant.xyz getcanviz.xyz thecanviz.xyz theflexerzone.xyz craigrobertspl.xyz umbingandheati.xyz lessguttepark.xyz pelisdivx.xyz wherecani.xyz finddresses.xyz lindsaymcquinn.xyz onesocialonline.xyz kaplanpers.xyz onalityquiz.xyz mikekowalski.xyz fayettevilleu.xyz cincinnatiu.xyz mybazephones.xyz juridicototonac.xyz wemeantocleaning.xyz crimefocusnews.xyz generalcont.xyz ractorbelgrade.xyz echogold.xyz theuniversalgrill.xyz mpdroid.xyz laprogress.xyz eflyfisher.xyz rentonly.xyz nuwebdesign.xyz naguarakarepas.xyz webdaddyit.xyz fetlinks.xyz eubitcoins.xyz bitcoinseu.xyz bstelvozip.xyz hawaiiislandtv.xyz brightongrowlights.xyz northtexastv.xyz igulfshores.xyz heladospipos.xyz togoapp.xyz vivieenne.xyz centariuss.xyz writingiswork.xyz eonlinerules.xyz kirkandmichelle.xyz sitesdeencontros.xyz idlewildhoney.xyz shopcoupons.xyz easttennessee.xyz charterschoole.xyz macklemorefan.xyz cabinetmak.xyz ermontgomery.xyz raggaeboat.xyz