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All senior and aspiring leaders need a practical working knowledge of financial management to make informed business decisions. Yet finance is an area rich in jargon and jealously protected by finance professionals. So, acquiring this knowledge can be daunting and not something easily done during the normal working week.
It is not understanding finance itself that is critical it is the ability to use financial information to make strategic decisions that deliver better performance and shareholder value - an ability that is important in virtually every area of a business, be it sales, marketing, HR, production, or IT.
The Imperial Foundations in Finance Program at London’s Imperial College Business School focuses on the need for senior managers to know more about how their jobs relate to finance, enabling them to have informed conversations with finance professionals and to be able to contribute effectively when financial issues are discussed.
Understanding financial and accounting issues are key for career progression in any sector. But it is not just about the individual. It is essential in any organization that senior managers, with no formal financial training, have the ability to critically analyse the financial implications of their actions in order to make sound business decisions.
According to program director Professor John Percival “Most important decisions that drive finance in a business are not made by finance people. They are made by people in the operations of the business.” Consequently, the need to tie the link between operations people and finance is a critical business need.
Accounting terminology has become the language of business and in companies of all sorts it is important that senior managers learn it. The word ‘reading’ as applied to reading financial information does not involve a deep knowledge of financial instruments or the mechanics of accounting. Rather, it is about understanding the metrics that measure performance so as to gain a perspective on the business and in turn to see where financial tools might be applied to improve future performance.
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