Financial confusion harms the journey to future value

Some years ago, I began to write about financial confusions I kept coming across in the non-profit world. Those confusions are not any better and may be growing. Even more, I'm starting to see more confusion like this in the for-profit space.

Here is my untested hunch. Enterprise executives get selected for their subject matter expertise and performance. That expertise may have launched them into the role but what they need to succeed is different. What do you think?

Here are those four errors in non and for-profit versions:

 You might ask yourself the following questions. Then, you might ask your executive team how they would answer:

• When asked about my organization's income, what figure do I give? Why?
• Does my organization do cash or accrual accounting? If accrual, are we doing the translation of financial reports to those managing the operations, or are we expecting them to do their own translation?
• Do we look at monthly reports at board or executive meetings? Do we start with what our balance sheet is telling us? What numbers do we look at the most? Why? 
• Do we focus on cost reduction, income expansion, or the difference between them as the bottom line of organizational performance?

Robust answers to these questions point toward a better Maestro-level leader journey into future value, succession, and legacy.  

If you don't know where to start, I'm happy to cover most of these with your team in a brief, 20-minute seminar. If you have long traveled beyond these errors, I'd love to know how you did it. And, if you are battling other errors than these, I would enjoy hearing about them.

-mark l vincent