How you handle the budget for your department can make a huge impact on the fortunes of the entire business. So why do so many companies fail to properly equip department managers? It’s a problem that stretching from Dubai to Rio de Janeiro, and here’s the main culprits.
Without proper training managers often fall into the trap of being too scared to make the decisions necessary to keep their departments on track. The fear takes over.
The best way to overcome the fear is through training. While someone may have the best skills to do their job in their sector, without the financial know-how they could turn into a massive drain on company finances.
Lack of an overall plan
Putting your everyday decisions into the context of the company finances can seem like wading through wet sand. How do the actions of one department impact another? Are there points where departments overlap?
To get around this issue requires the financial director meeting up with each department manager at least twice a year. By working with the financial director, each non-financial manager can see how their departments should be working in harmony with the whole company.
Inability to understand financial jargon
Trying to interpret a whole new set of terms can be daunting. For many the jargon itself is off-putting. Imagine you’d never heard of financial statements, overheads, working capital, profit margin, ROCE, ROI, COGS, balance sheet, cashflow, gross profits, to name just a few. Faced with a wall of unfamiliar terms can make people feel insecure and is a massive stumbling block to keeping their department’s finances in check.
It may appear cheaper to tell those fumbling around with the new terms to read a book. However, the most efficient way to help managers is to put them on a course. They can work alongside someone knowledgeable, whose job is purely to train them and their progress can be monitored.
Poor budgeting skills
Some people just don’t get a budget. They unconsciously believe that whatever they need will magically appear from the bottomless pit of company cash reserves. This attitude can come from a lack of knowledge of the business, which can be addressed by involving managers in high level discussion about where the company is heading and how much money is available to achieve the goals. More seriously is the manager who simply doesn’t understand budgets on a more basic level. Training is the key to addressing this fundamental lack in business skills.
Defending your corner
Sometimes departments can go to war over the way the budget is portioned out. The result can be a very defensive mentality that can damage the company’s financial health.
This can be a deep-rooted, long lived battle that requires careful intervention by directors. Getting everyone around the table to discuss the causes of the conflict may be difficult and emotions can run high. However, to keep the business on track, it’s necessary. In some instances bringing in a business coach can be highly effective. By having a third party, with no affiliations to the company, brings a fresh perspective and can have a profound impact on the negative dynamics that have built up within the company.
For more information on training your non-financial managers in Dubai, please visit the ISM website: https://www.ismdubai.com. We run finance courses regularly and can tailor in-house training sessions to your company’s particular needs.