Would you like your employees to be as concerned about costs as you are?

//Would you like your employees to be as concerned about costs as you are?

Would you like your employees to be as concerned about costs as you are?

Benefits of financial literacy training for employees

Develop Financial Literacy Throughout Your Organization

An Introduction to Financial Literacy

Guest Post by Dr. Bonita Russell, January 29, 2018

You may run your business by the numbers, but do your staff know what numbers you pay attention to or how the decisions they make on a daily basis impact those numbers?  Savvy business owners know that providing their employees with financial literacy training improves communication between operations and finance and leads to better business decisions at all levels of the organization.

An Example of Why Employees Need Financial Literacy Training

Let’s suppose you track sales per month and cost of goods sold – two important metrics for any business – and you employ a receptionist in your establishment.  This person greets visitors, signs for deliveries, answers the telephone, responds to email inquiries, distributes the mail, orders the office supplies and the like.  You might be thinking what decisions could the receptionist be making that could impact sales and/or costs?  Well, your receptionist could make visitors feel welcome by offering them a cup of coffee and a copy of the morning paper; keep a good supply of prepaid courier envelopes on hand to expedite outgoing shipments; put telephone callers on hold if a call cannot be forwarded to go and find someone else to take the call; socialize when distributing the incoming mail to build morale; and order supplies in bulk to avoid stockouts.

All of these activities intended to foster good customer relations, promote efficiency, and make for a collegial working environment have a cost attached to them.  The hard costs are those of (a) hospitality for visitors that may or may not be in the budget, (b) cash tied up in inventories that may or may not get used, and (c) reduced productivity due to time spent managing inventories, seeking out employees to take a telephone call, and socializing.

So how would workplace financial literacy training improve this situation?  A typical financial literacy program for employees covers budgeting, financial reporting, and financial policies.  Organizations we have worked with have seen immediate benefits in terms of a more thoughtful approach to budgeting, a more careful consideration of buying decisions, and a reduction in instances of non-compliance regarding financial policies.

What level of financial literacy do your employees have now?

At your next all employee meeting, consider asking the following five questions:

  1. Is cash the same as profit?
  2. If you overspend in one budget category is it OK to underspend in another to even things out?
  3. How does inventory affect cash?
  4. Why would we prefer to have our customers pay early? Why do our customers want to pay late?
  5. Why can’t you approve your own expense claim?

You might be surprised at the answers you get.  Few employees understand the difference between cash and profitability, particularly if the sales numbers are strong.  Budgeting is often seen by employees as a make-work project for management.  And when it comes to inventories, operating departments tend to take a ‘just-in-case’ approach, whereas, the finance department would prefer operations took a more ‘just-in-time’ approach.  And, few employees appreciate money tied up in inventory is not available for other uses such as a new laptop or a training course.

Develop Financial Literacy Throughout Your Organization

If you would like your employees to manage to the numbers, be they sales targets, budget numbers, or days sales outstanding, just like you do, you might want to consider developing a financial literacy program for your employees.

Dr. Bonita Russell of Russell Roundtable Consultants Inc. is an associate consultant of NMC Strategic Manager – partnering with us to deliver on the full range of client needs.  Bonnie is an experienced management consultant, university researcher, facilitator, and adult educator, specializing in Strategic Management, Organizational Development, and Environmental Stewardship. She brings not only her specialized knowledge and experience to her consulting projects but also her unique client engagement process that leads to innovative solutions to complex management issues.

Learn more about implementing a Financial Literacy Training Program

Whether you are looking for advice to set up your own program or looking for someone to conduct financial literacy training – we can help!  Contact us to discuss your needs.

Contact us to discuss your needs

 

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By | 2018-05-10T06:44:51+00:00 January 31st, 2018|Finance|Comments Off on Would you like your employees to be as concerned about costs as you are?

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