Are you finding yourself trapped in a web of numbers, balance sheets, and other financial reports? Are you trying to pitch a new product, but can’t explain exactly why it would make sense financially? Well, you’re not alone.
Many executives from a range of backgrounds don’t completely grasp finance, says Lou Centini, who directs executive education programs at University of Virginia’s Darden School of Business.
“It doesn't matter where they are,” says Centini. “What matters is they don't understand the stuff, and they need to.”
Fortunately, there are executive education courses and seminars that can help these executives polish their financial skills so that they can better interact with complex financial information. Most of these courses last just a couple of days, and quickly provide a solid quantitative background for participants to understand the basics of finance.
Whether they admit it or not, many executives struggle with the basics. Even the fundamental terminology can be problematic, says Chuck Krueger, who has taught the “Finance & Accounting for the Nonfinancial Executive” seminar at the Wisconsin School of Business Executive Education since 1983.
Krueger says that he conveys the meaning of financial terminology not by giving the definition and having participants memorize it, but by framing it in the context of business.
“We introduce the terminology as it relates to the material, rather than just define it,” says Krueger.
Likewise, many courses employ real-world case studies to illustrate financial concepts to demonstrate the material’s relevance and usefulness.
Lou Centini says Darden’s “Financial Management for Non-Financial Managers” regularly uses current-year financial reports from well-known companies like Pepsi to illuminate how a company’s finances can be analyzed to illustrate internal strategy and decision-making. The thinking is that this kind of reality-based teaching can have a relevance that pure theory might lack.
“We are not trying to teach people to be accountants,” Centini says, “What we're trying to emphasize is the application and understanding of financial information to then make good business decisions.”
Chuck Krueger says that because his classes are generally very diverse in terms of participant backgrounds, he takes advantage of group dynamics to illustrate complex concepts.
“People often discuss their own challenges,” Krueger says, “and they find that more often than not, other people are running into the same issues.”
According to Lou Centini, this group connection is a very valuable aspect of financial courses for non-financial executives, in that they provide a neutral ground where managers can safely admit that they don’t know something.
“If you're a vice president of sales, for example, you're not going to admit inside your company that, ‘Gee, I really don't know how to read this financial statement,’ or ‘if I make this decision I don't know what impact it will have on the financials,’” says Centini.
Speaking the language of finance
For many executives, a lasting value of taking these courses is that they are able to engage more effectively with financial people in their own firms.According to Mark Kizilos, assistant dean for executive education at the University of Minnesota's Carlson School of Management, mid- and high-level executives who rely on financial information from their advisors or other employees are able to better analyze information and more effectively make decisions.
“That's the primary outcome people are looking for in these programs,” says Kizilos, “the ability to understand the basic use of financial information, and to be able to speak the language.”
Chuck Krueger agrees. He says what seminar participants come away with “are general tools that they can use to understand important aspects of their businesses, like P&Ls and balance sheets.”
Acquiring or sharpening this toolkit appeals to managers and executives of all kinds; not just the unseasoned.
“We’re getting people from boards of directors” taking this course, Krueger says, “they want to know exactly what’s going on in their businesses.”