You want your non-financial managers to take ownership of their financial results and be engaged in the financial conversation about their decisions. You know what I’m talking about – the conversations about whether to invest in a new product line, or how much to allocate to a technology upgrade, or any other decision that requires budget and headcount.
They are experts at their area of responsibility, but you observed that they often feel sidelined when it comes to the financial aspects of their decisions.
How can they enter the financial conversation and inject their expertise?
Simply by asking a short four-word question: What are your assumptions?
Voila! The ball is now in their court!
Why? your finance staff evaluates your manager’s decision with a forecast based on assumptions.
For instance, your finance staff forecasts revenue from a decision using an assumption about the volume of units sold and the price per unit.
Who has the best information about expected volume and price? Your managers do, of course. They’re closest to the market, the customer, and the competitors? It’s their project. It’s their area of expertise.
So they simply need to ask the finance staff about the assumptions behind each number and the ball’s now in their court. It will quickly become obvious that their expertise is vital in vetting the assumptions and making the forecast more reliable. You will see your managers become more confident and engaged.
So inspire more ownership from your managers by coaching them to enter the financial conversation with the simple four-word question: What are your assumptions?