Why is a financial culture important?
A financial culture is one in which every employee is aligned with the commercial goals of the company and seeks to meet and boost them in all that they do. It’s perhaps surprising for many who work in finance to learn that those who work outside of the sector are not always committed or even understanding of the company’s financial needs. One study published in Personnel Today for example, found that over four in 10 workers believed that their company’s financial culture meant that they felt they were able to submit false expense claims without any risk of follow-up. Just because a person works for and derives a salary from a private business, it does not mean that person is not necessarily a prudent financial practitioner!
How exactly a financial culture manifests itself will depend on the exact role of the employee. In the case of teams that manage quite large budgets, such as marketing departments that are responsible for boosting Facebook adverts or taking out ads in press outlets, making efficiencies may seem like an irrelevance. A good financial culture would ensure that these employees have the skills necessary to negotiate with their suppliers and to practice prudence and restraint as a first resort. For HR, it could mean finding ways to whittle down shortlists more efficiently. Given that figures show every vacant job can receive an average of 250 applications, this is a wise move.
The FD’s role: embedding the culture
Many people are responsible for embedding a financial culture in their business, but the person with the most amount of responsibility is the financial director. A financial director’s role is varied, but it’s important that they create the sort of financial basis from which the company can grow and become profitable. In order to do this, especially for medium to large organisations with multimillion-pound turnovers, they need a range of skills including an analytical mindset and a capacity for strategic thinking – and an ability to shape company culture.
In theory, embedding a financial culture in a business should be pretty simple. An FD could go down the educational route and organise some seminars that explain the basics of efficiencies. They could back this up by making personal interventions when obvious examples of financial mismanagement occur, such as following up with colleagues who regularly exceed annual departmental budgets.
But in practice, these modes of culture implementation are harder than they look. With 44% of employees in Great Britain blaming their workload as the cause of suffering work-related stress, it could be difficult for everyone to carve out time to attend a seminar – and if attendance is low, then the overall return on investment may make it pointless going ahead. With 97.8% of FDs reporting that they are so time-strapped that they are unable to properly prioritise strategy, a policy of speaking to staff members to help improve financial processes within their teams is an unsustainable and time-sapping approach in itself.
Perhaps a more effective and holistic strategic approach is to outsource the problem to technology. In an age in which 58% of big businesses already use cloud-based accounting software, there may even be an element of competitive disadvantage in choosing not to do this. Financial software can automate many aspects of the process. By bringing together data from across a business, it’s possible for everything from corporation tax returns to payroll to be automated, accurate and work effectively on the first try.
As any successful business leader will confirm, building the right culture within an organisation is essential to its future success and growth. Just as building a positive employee culture in which workers feel comfortable giving the job their all, building a culture in which everyone knows how to behave with sound financial principles in mind can also help a business to reap the rewards.