By Melissa Vuernick
If workplace waste isn’t a concern for financial executives, they need to take a walk around the office.
A recent survey of 2,000 workers found employees waste 759 hours each year due to workplace distractions such as overly talkative coworkers, smartphone notifications and the need to gaze outside the window for long periods of time. A survey by Salary.com reported 89 percent of respondents admitted they waste time at work each day. A small percentage even said they waste at least half of an eight-hour workday on non-work related tasks.
And another report found that of the nearly $1.3 billion dollars the federal government spends on printing every year, almost one-third — $440 million — is wasteful.
As a financial executive, are you confident your workforce knows how to spend the company’s money wisely? You should be. This isn’t just the responsibility of the CFO — but everyone in the organization from CEO down to the most junior staff. Why?
Because every decision that gets made in an organization affects its financial health — directly or indirectly. Even those who ‘don’t do numbers’ — if they are working on the company’s time, using its resources — they are doing numbers. And all those numbers can add up to produce a large amount of waste.
Most businesses — especially those in financial services — spend a huge amount of time and resources ensuring their people have the relevant qualifications and technical training for their role. And while many of their staff are financially educated to the correct technical level, they are quite often not financially literate.
Imagine if you could identify the people who are likely to make poor decisions before they do, exposing the risks they pose. The greater the financial implications (directly or indirectly) of the decisions they make, the greater that risk is.
Unfortunately, the financial competence many demonstrated as students hasn’t always led to them becoming financially literate employees. Financial literacy is not about being able to identify the ‘right answer’ or explain key principles in an exam room; to be financially literate is to have both the competence and confidence to make the right decisions in the daily context of the workplace.
Not convinced of the severity of the problem? Global insurance broker Marsh launched a mandatory finance education program for its 25,000 employees.
The challenge before you is assessing the levels of financial literacy in your organization at any level, answering the following:
- Does every person in your organization understand the financial implications of their workplace decisions?
- Are poor workplace financial decisions resulting in lost revenue?
- Do you trust your people to make the right financial decisions consistently?
- Are worries about workplace financial competency (not allowing your people to make decisions) inhibiting potential growth?
Once an organization has identified financial literacy risks and opportunities in their business, they will be freed to:
- Prioritize direct learning and development interventions with a laser focus to where it’s needed, optimizing budget and avoiding waste
- Identify financial risk — highlight people who are highly confident but making incorrect financial decisions
- Detect hidden talent – identify people with high competence but low confidence
- Provide a flexible and commercially relevant ‘before and after’ capability
- Benchmark individuals, offices, branches and teams — internally and against other organizations — with clear and relevant individual reports.
Your accumulated data should then come together as a “financial literacy heat-map,” identifying which individuals are likely to be a financial risk to an organization and those who represent untapped potential. This allows for targeted development of people who need to close those gaps.
And while it is possible to use various strategies to create value — and there may be an infinite number of positive solutions for a company — finance is the primary, perhaps only, way to quantify what the value creation of each actually is.
The danger is that leaders outside the finance function may see their financial acumen as a ‘nice-to-have’ skill rather than a ‘need-to-have,’ and that message becomes insidious down the line. So as decisions are made, ignored or delayed, the consequences can be detrimental. Additionally, a resulting lag in time to market that results can be the difference between revenue generation, brand awareness, gaining market share from the competition and, in extreme instances, survival.
By no means am I suggesting everyone needs to have the same level of skills as a CFO. But I am recommending a careful analysis to determine who in an organization needs which skills, and when, along their career path. An undertaking such as this is predicated upon the partnership between the finance organization and the talent development group within the organization.
Melissa Vuernick is executive director of Kaplan U.S. Leadership and Professional Development. To read more about financial literacy and view the Kaplan Financial Literacy Diagnostic tool, go to: http://kaplan.co.uk/lpd/diagnostics/financial-literacy.