If you work on the Finance side of the table, how often have you been trying to explain certain strategic planning elements or changes to the Forecast and all you seem to get is a slight tilt of the head from your audience as if they’ve just adopted that dear-in-the-headlights look? I have learned enough from earlier situations that I’ve been able to effectively cater my discussions to the audience that I’m presenting to. The key comes down to understanding who you’re audience is and communicating technical data in a way that they can relate it to their function area.

     Recently we revamped our compensation and bonus plans for the 2009 fiscal year to be split between personal performance goals and corporate financial goals. It’s one thing to explain the achievement of personal goals to staff, regardless of their function. However, try taking that broad-based staff group and tell them their going to be incentivized on Revenue, Gross Margin, Operating Expenses, and Operating Income. Ok, the Revenue part is a slam dunk….that’s the easy one. Once you move on to Gross Margins or Operating Expenses, well….that’s a whole different story. It really comes down to not explaining the formulas or discussing the percentage goals, but discussing the different elements that make up that portion of the income statement. The same approach goes for the Operating Expenses.  Especially when it takes a little more commentary on explaining how you purchase new software or a trade show both but the expenses are amortized over a multi-year period!

     As frustrating as the process can be sometimes, or as many times as you might need to review the data with staff, the effort is entirely worth iftso that Finance and the rest of the company are on the same page.  It’s worthwhile for all members of the company to truly understand the financial results that are being presented to them and what their bonus is being calculated against. Did I say BONUS? As a matter of fact…I did!  Yes, we pulled all employees together at the close of Q1 and paid out bonuses based on both personal and corporate performance. As discussed with our employees when the Budget was presented, we communicated the expectations, and while I don’t believe fully understood, the new plan was embraced and pursued with vigor by our team. That made it all the more gratifying to pay out a bonus when revenue goals were surpassed and operating expenses were under plan.

     More often than not, it’s just a common fact that Finance will be speaking a different “language” when working with the other areas within a company. It’s that same “language” that will prompt staff to seek you out for clarification or guidance.  The cooperation and support you will get by keeping the conversation straightforward will be noticeable and it will eliminate any of the expected contention points between Finance and “everyone else”.  It’s probably worth your time to establish contact with new planets :-)

Thanks for reading . . . .

Jeffrey Ishmael