The Manager's Role in Company Finance | Lesson 1/3

The Manager’s Connection to Financial Performance

4 Mins

Financial knowledge can incentivize smarter work habits, and that is especially important for managers, since they’re responsible for setting workflows not only for themselves, but for their teams.

There are two sides to staying in the know when it comes to your company’s finances. On one hand, you need to make sure your employees understand how their work contributes to overall results. On the other, you need to make sure you understand how the company is doing.

Be proactive. Go to your manager and ask if you can view the latest financial documents. Even if you can’t view the actual figures, try to at least get a big-picture update.

  • How does profit compare with past quarters?
  • How is the operating-expense ratio looking?
  • What’s our profit target?

Getting answers to questions like these will help give you a feel for where the company is headed, and how your team can play a role.

From there, be transparent with your employees — to the extent it’s appropriate. You want them engaged in the business, to contribute meaningfully. And to do that, you need to give them the information they need to take full ownership over their decisions.

Keeping your people informed about seemingly trivial financial decisions can help them feel included too. Imagine you’re ordering food for a team event and deciding between a caterer and a taco truck. If you choose the truck because it’s cheaper, you might explain the choice to your team.

Some executives might have reservations about sharing company data with you — and by extension, your team. They worry about information being sold to competitors, or that you might ask for a raise if you see that profits are looking good.

But these fears are generally misplaced. According to Karen Berman and Joe Knight, people who are trusted with data almost always respect that trust.

As the decision-maker on your team, you set the tone for both your work and that of your employees. And with a firm understanding of company finances, you can ensure that your collective contributions will be that much more valuable.

Quiz 1 of 1

How and why can financial transparency within a company be a good thing?

It keeps employees informed and allows them to keep their leaders accountable
It makes employees feel included, keeps them informed, and helps them better understand how their work contributes to company goals
It makes employees feel included and allows them to affect their managers’ financial decisions
It prevents employees from being in the dark when their company is doing poorly

Lesson complete

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