Many discussions about the qualities necessary for great leadership focus on particular management styles, personality traits and the ability to motivate and inspire other people. While these are all sound principles, you may recognise the fact that all too often in the business world the importance of financial acumen is understated. Yet the fact is that knowledgeable commentators have long advocated the need to strengthen financial literacy among business managers in order to add value to a company’s resources. Here are a few of the reasons why:
To increase productivity
While most employers are confident that they can increase employee productivity via improved communication, engagement and training, many do not recognise the need to address issues such as improving employee inspiration and job satisfaction. You should know that a survey by the American Psychological Association in 2014 found that a lack of stress management was a major workplace issue, and that stress due to financial matters was a key factor.
Of course, stressed employees do not perform at optimum level, so as a leader you will want to seek out ways to address this. Any training that improves an employee’s ability to understand how finance works will have two benefits: the employee will be better able to manage their personal domestic budget and also gain insights into the financial drivers of the business. Managers who are financial specialists, with a sound knowledge of financial practices and how, for example, markets work are less likely to be troubled by money stress. Those who do not have this kind of background or training tend to rely instead on hiring the right people.
To gain a financial worldview
It’s debatable whether or not leaders without specialist financial management will ultimately succeed. Learning more about the financial markets in your particular sector is likely to give you an added advantage. Training in market trading is very accessible with a good success rate, whether you are learning the finer details of stock market trading or just hoping to pick up a few Forex trading strategies. Whether you choose to attend a workshop, use an eBook or video, the process is straightforward and will build financial confidence. It will also instil the ability to understand strategic decision-making – a bonus in any business sector.
To increase resources
Building a robust business case is an essential part of every commercial organisation and as a leader you need to be able to do this confidently, particularly if you want to be in a position to expand your operation. Understanding how finances work within your organisation and in the context of the wider financial scene helps you to draw up a compelling strategic development plan and that, in turn, will increase your business resources. Further, making sure your employees also gain financial knowledge helps to increase the internal resources of your business.
Finally, consumers also need to improve their understanding of how money works, which is why April 2016 has been designated National Financial Literacy Month in the US.