Finance can be seen as a bit of a dry subject, especially if you’re not a finance manager. But every organisation knows that getting their employees to understand finance is vital to success.
We spoke to Executive Education Programme Director, Facilitator and Coach Kate Scott about how organisations can use training to increase engagement with finance. Having trained as an accountant at Deloitte, Kate has spent the last 25 years coaching and training executives and senior leaders. She specialises in teaching financial skills and helping individuals deepen their understanding of the commercial implications of their decisions.
Why do you think finance training is necessary, even for non-finance managers?
“Whether you work at a public listed company, a private company or a non-profit organisation, at a graduate level, middle or senior management, understanding finance is vital. At a company owned by shareholders, individuals or private equity, you need to see where you fit in the cycle of generating return. Appreciating company financials puts business decisions into context.
If you work at a non-profit-making organisation, an appreciation of financial resources is arguably even more critical. Your financial resource is other people’s donated money. Every single person in the organisation is a steward of that precious investment and must use it to deliver on the organisation’s promise to its donors.
Whatever level you are at in a company, financial training has a significant role to play. For senior leaders, it’s more about strategic decision making, seeing how individual decisions affect financial value creation for the whole organisation. For graduates, it’s more about understanding financial terms and being comfortable applying them in a real-life context.
Watching and listening to people when they arrive for a finance development session is fascinating.
You can see the ones expecting the training to be boring, who have come with low expectations. Sometimes this is driven by negative maths experiences at school or previous finance training experiences. It can be because they haven’t connected what they do with the numbers; they don’t see what’s in it for them. If they don’t work in a finance role, why do they need to know?
This is where simulations, in particular, can be so powerful. In contrast to other forms of finance training, the simulation pulls them in and immerses them in the world of finance. They have no choice but to get involved in debate and decision-making. Working in a team, they connect with the people aspect of financial decisions as well as the numbers.
When did you first start using simulations in finance training?
I first came across simulations about 15 years ago. At the time, they were board game based. I liked the kinesthetic aspect; physically sitting around a board together, moving pieces in front of you could become quite intense and powerful. But they were quite clunky, and some participants struggled to transfer the learnings from the game into everyday business life.
Today’s digital simulations adapt much more to everyday business experiences. In simulations, you can explore the trade-offs and tensions of financial decision-making. Especially for people who don’t use finance a lot in their role, it’s another way of learning about the financial implications of business decisions. An opportunity to try things out, make decisions and see the output.
A rounded learning experience, well facilitated digital simulations can enable the experience, give time for the reflective observation, encourage the conceptualisation and stimulate the active experimentation all in one activity, completing the entire learning cycle.
Why do you think simulations are so engaging?
Participants I have worked with seem to love the competitive element of simulations. That’s interesting as competition has sometimes been removed from our learning. Teams want to win – to beat their peers or the leaderboard and prove their ability.
The financial simulations that I work with are very fast-paced. To begin with, participants are often frustrated. They don’t have time to look through all the information and are forced to make decisions with limited time. That’s important as people are regularly pushed to make decisions based on incomplete data and short timescales in business. The frustration then lifts as they get further into the simulation and understand more about the situation they are dealing with. They realise it’s ok to make decisions without all the information.
As a facilitator, the most enjoyable moments are listening to someone who has never really explored finance before talking about margins, working capital and rate of return in group discussions. It fills me with joy to hear them discussing financial terms as if they are totally normal, as they are so immersed in the experience. At the end of the simulation, it is rewarding to hear participants comment, “it all makes sense to me now” or “I never thought finance could be fun”. For the long term, it’s comments like “I never thought I would understand economic value and the value I add in my everyday decisions” that are the most valuable. These comments demonstrate that the individual has connected the learning experience with their day job, delivering a long-term return on training investment for the organisation.
Due to pandemic travel restrictions, we have seen a marked shift towards virtual learning. How does this impact the learning experience?
The virtual environment is more demanding for facilitators. You have to work hard to create an atmosphere where people feel they can contribute and be involved, and I am more conscious about managing the energy in the room. Everything has to be more intentional than when you are working face-to-face.
For learners, there is some research underway about whether introverts prefer virtual learning whilst extroverts find it harder to engage.
I run a four-day transformational programme which actually works as well virtually as there is a certain amount of security for participants. Being face-to-face might be too much for some for such an intensive learning journey.
Will finance training change in the future, or will the principles remain the same?
I think there will be more links made between value creation from a financial perspective and a people perspective in the future.
People, planet and profitability.
I already see this happening, with connections being made between why companies are trying to make a profit and who that profit is for. Businesses are asking questions about how much of their profit should be put to sustainability and identifying ways to generate economic value sustainably. I expect the way we approach finance and finance training to become more rooted in this sustainable perspective as we move forward, rather than a purely commercial approach.
Kate Scott is an Executive Education Programme Director at Henley Business School and London Business School and an Associate Fellow at Said Business School. She develops, delivers and facilitates learning events in leadership, strategy, commercial acumen, change, finance and accounting to major global PLCs at all levels of management. She is also an Executive Coach.
As an associate of Ososim, Kate facilitates our Clean Sweep simulation with international clients. This competitive business acumen simulation is designed to improve knowledge of financial value creation and market drivers. Participants experience the impact of management decisions on financial statements and the effect of competitive market dynamics on the short and long-term results of an organisation.
Working in over 85 countries with major global companies, as well as government institutions, leading business schools and non-profit organisations, our digital learning experiences enable individuals, teams and companies to perform at their best.
To find out more about our business simulations, please contact us on +44 (0)1223 421 034 or email email@example.com.