Unless you’ve fallen into a net full of accountants, numbers are not the magic word for engagement. The tried and true nature of financial learning means that traditional programs can be, in a word, dry. Customizing financial learning to an organization’s specific business drivers and challenges, and then relaying valuable information via computer-based simulation technology, increases the chances of higher learner retention and adoption rates.
“The traditional way to teach financial learning is to hire a professor from one of the universities or an independent consultant to come in and put together a finance-for-managers or nonmanagers-type initiative, and usually those are driven by concepts — they tend to leverage PowerPoint, maybe some basic exercises and examples,” said Rommin Adl, president and CEO of Strategic Management Group Inc., a BTS company. “The traditional way of teaching tends to be good but may not be as effective as it could be. Computer-based simulation technology brings financial concepts to life and makes it much more engaging.
“The simulation may be around running a company and seeing the financial ramifications, but they actually get to practice the concepts in a very holistic way. Simulations are a very powerful way to bring the financial concepts fun for the learner.”
Adl said there are two schools of thought around financial training delivery methodology. On the one hand, the learning organization can deliver a course on basic financials and teach learners about the company’s income statement, balance sheet, cash flow statement, key ratios, etc.
Alternatively, it can tailor financial learning to companies’ specifics. The latter approach offers the additional benefit of enabling learners to place the material in working contexts and gain insight about specific areas in which finances drive company performance, both of which can contribute to behavioral change on the job.
“You can teach people finance, but if they don’t understand how the finance applies to their own company and what they deal with, it may be more difficult to get action out of it,” Adl said. “It’s really a discussion around an approach that’s very generic or very customized. Use a discovery-based, experiential learning approach via some form of simulation technology and customize it to the company’s specific business and key strategic priorities so that when they walk away from the learning experience, they go back to their job and do something different to drive financial results.”
Financial acumen always has been important for managers and employees because it is part of employees’ job to create value for shareholders. To do that, they need to understand the specific levers in the company that drive financial performance they personally can affect. But Adl said, nowadays, financial learning has become even more important.
“You have commoditization across a lot of different industries, and you really need to differentiate yourself,” Adl explained. “You have competition from all kinds of global players that require companies to think smarter than ever before. You have regulatory type changes such as Sarbanes-Oxley, which has changed what companies can report and what they can’t. There are a host of things that make it more important for employees to have a good grasp of financial business levers so that they can be more competitive.”
The next question is: Who should get financial training? Should it be for managers, senior managers or everyone? There is no catch-all answer — some organizations want the learning organization to include financial learning as a piece of the onboarding process so all employees have some basic or fundamental financial exposure, and other companies offer only the more advanced financial topics regarding shareholder value, cost of capital and value metrics for senior managers who have greater accountability to the shareholders.
To answer the question, each company’s learning organization must evaluate and then scale content to meet various audience needs.
“It’s really important that people know how they fit into the big picture of the business,” Adl said. “That’s true across every function. I was just talking to a friend who runs organizational development for a very large corporation, and he was doing a review with one of his people. This person had a perceived gap in their capability around financial acumen. When they sat down with people in the lines of business, the people in the lines of business would talk about their financial targets and key ratios, and this L&D person couldn’t follow what was going on because they didn’t speak the lingo, and they didn’t know what the issues were. That person should build financial acumen so that they can have effective dialogue with people from the business.”