Finance - understanding the numbers..

If I was asked to pick the number one area that must be understood early and would have the greatest impact if not, it would be finance.

I am not sure why (and I am sure there is more than one reason), however at mid management levels, if not already in a specific discipline, women tend to divert to primarily internal roles. These include operational – process and office based staff management, HR, technical and risk. All critical roles, however what I have heard from many women, is that once they have reached a mid to senior level here, they get “stuck” and are unable to move up easily.

We are starting to see more women in C Suite roles, such as Chief Customer and Chief Information, which is to be celebrated, however look across Australian business and in particular the Insurance sector. How many women are sitting in these C suite / direct CEO reporting roles? Not so many. Even fewer sitting at CEO level.

This post is not about digging into the why this diversion to internal roles, rather thinking about the critical skills needed to be able to move into large Divisional Head, Country Head and C-suite roles that may also position you in the longer term to be a CEO, if you so desire.

Anyone sitting in a senior leadership or executive role will be expected to be able to understand and speak to the company or divisional financials. Not as a CFO would (unless you are the CFO!), however a core understanding of the levers available, which underpin decisions made by the organisation, is critical.

Understanding the numbers is a skill set that anyone wanting to progress must have.

Picture this – you have landed that great leadership role. A large team and along with it new financial responsibility. You know you will be measured against top and bottom line results to a budget however that’s about it. You are now going to have to invest significant time understanding the intricacies of the financials. This is not a layer of complexity you need in addition to leading a new team and running a business!

Learn the fundamentals early in preparation for the time where you will have this financial responsibility – it will make the transition easier and will ensure you are focusing on the right things, when you are in the role.

For those of us who are not naturally strong in mathematics, this is something you will need to continue to spend time on right through your career, importantly as your roles become more complex.

For those of you who studied accounting or are in technical roles – lucky you. It will come easy. Your focus of course will be creating the breadth of other skills needed to lead a business.

Other reasons you need to develop your financial acumen, regardless of the path you follow are; the ability to understand the financial implications of strategic decisions, to understand your business customer and their needs, being able to have a business conversation in any forum and supporting development of your staff.

We will talk to some key areas of important focus later, however for now, a few things I suggest you start on.

• Find someone in the Finance department who will spend some time with you working through the business financials. If you can manage regular sessions over a period of time – this is your best option as it does take time.
  

• Study some basic accounting principals’. There will be a variety of courses available online. A great book that I have had for years and steps practically through core financial reports is Financial Statements – a step by step guide to understanding and creating financial reports by Thomas R. Ittelson.
  

• Jump online and start working through your company investor documents (if you don’t work for a listed company, any company in the same Industry). Annual reports and investor presentations will provide interesting insights into the figures and what drives them. Understanding annual reports takes time, so don't be too hard on yourself if you find this difficult

I am the first to admit I did not focus on understanding the figures until I reached my first role with financial responsibility. Regardless of what your current path or role is, if you have an aspiration to reach an executive level role, start now. Until next time Lisa