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The Cost of Financial Illiteracy Part II

January 10th, 2009 | No Comments | Posted in Financial Literacy, Management, Product Management

 This week I will turn my focus back to a few topics I started in December.  If you read the first post in this series and had your marketing and sales staff take the test you were probably disappointed in the results.  While people think that they are financially literate, it is a different thing when they have to apply it in day to day business situations.  The good news is that it is relatively easy to close skill gaps like this.  This post will talk about a simple program you can put in place in your company to increase your team’s basic financial literacy.  Other posts will delve into the application of financial literacy to help you sell more stuff and generate more profits.

Every employee and manager should have some basic financial literacy.  They should be able to:

You are not going to learn these basics by reading a couple of blog posts – a little more effort will be required.  Here’s an approach that has been used pretty successfully before:

  1. Find a Few Internal Mentors. Talk to your CFO and see if you can get a couple key members of his or her staff to put together a basic financial literacy program. This approach provides a chance for the finance team to step and share their expertise. It also gives your team members some internal resources they can leverage over time.
  2. Build a basic financial literacy curriculum. Have the finance team build four, half hour lessons on financial basics. It doesn’t have to be a Harvard MBA course – just enough to get the core concepts across. Lunch and learn sessions work really well. Some pizza, a half hour of lecture, and a half hour of discussion.
  3. Homework. After each session the team should be assigned one piece of financial literacy homework to reinforce that week’s lesson. This exercise should take no more than a half hour to complete. It’s one thing to listen to a presentation; it’s another thing to actually have to apply it.
  4. Class Project. After the fourth class, have the team spend the next week working part time on a class project. Pick 4 or 5 of your larger customers / prospects that are public companies. Have the team prepare a basic financial summary of each company (P&L Trends, Balance Sheet Summary, Cash Flow Summary). Nothing too fancy – perhaps one summary slide and 3 to five other slides. Have them focus on not just regurgitating numbers from public filings but on discerning a few key trends or takeaways. Bring the group back together to present and discuss what they have put together. Then schedule a short meeting with the key sales people and customer service people associated with these customers and share your findings with them.

If you are looking for a little more information or structure for your discussions there are millions of books and resources on the web.  Two books that I would recommend are Reading Financial Reports For Dummies and Excel 2007 For Dummies

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