Page 22 - Finance for Non-Financial Managers
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Counting the Beans
computer. Senior managers and company executives a genera-
tion ago were challenged by their lack of knowledge of this new
tool, no matter how firmly they knew their own particular areas 3
of expertise. The young professionals coming into the business
often made their bosses look old-fashioned with their mastery of
this impressive and intimidating technology. Soon, as we discov-
ered, those young professionals had children, whose computer
acumen after being on the planet for only a few years made
even their savvy parents sit up and take notice. And so it goes.
Now, as we are learning, finance and accounting are having
an impact on many companies in ways never before thought of
by managers outside the financial department. The accounting
scandals of 2002 showed that financial incompetence, or care-
lessness, or simply lack of integrity, could wipe out the efforts of
thousands of loyal, hard-working employees. The report card, it
seems, has become more important than it ever was when we
were in school.
Today we’re finding out that we need to know how to read a
report card so we can just keep our jobs, let alone advance in our
careers. Boards of directors now need to delve into the reports
they have routinely received for years to a degree never before
contemplated. They need to understand financial terminology and
accounting methods they might previously have taken for grant-
ed. CEOs now need to be completely aware of what their people
are doing and the financial ramifications, because they will no
longer be able to credibly say they didn’t know. And finally, man-
agers within a company, whether large or small, are going to
need to understand the rules of accounting and the boundaries of
proper finance well enough to avoid getting into trouble just
because they were aggressively trying to make their goals. As for
those who aspire to become managers, they might not even get
started up the ladder until they can demonstrate this kind of
knowledge. So you see, it touches everyone.
Now, it’s all well and good to say that accounting scandals
will make everyone learn more about finance and accounting,
but is that the only reason to know this stuff? Of course not!