Wednesday April 12, 2006

Financial Analysis As part of an MBA we all have to study Financial Analysis of course, and learn about corporate structure, principal agent problems, and other things financial. It's all good useful stuff, if sometimes a little intense. It is amazing though how many managers there are in corporations all over the world though who clearly know little or nothing about finance. They're everywhere in fact. Most managerial courses in corporations focus on how new people managers should manage people, and often spend little or not time whatsoever on what it means to be a fiduciary. If you are responsible for a team of employees, then you are directing the resources of the coroporation and that makes you a fiduiary of sorts. Most new managers who say get promoted from engineering roles for example, only figure this out when they have to submit their first appropriation request for some equipment or project and get nit picked to death because they didn't quite do enough diligence in the preparation of the request. This is the fiduciary in action. Their manager may also not be well versed in the financial process, but knows what kind of questions the boss aways asks and so the process goes on. Then eventually the request, depending on it's size eventually hits the desk of a real financial manager for processing. Imagine if every front line manager went through not only 5 days or more of critical people management skills, but the equivalent amount of financial skills training. Then from the get go new managers are brought into the picture as to the way the machine works, and make more informed decisions from day one. I guess that's why the rest of us go and get MBAs to learn this stuff in more detail, as we realise how critical it is to running a business. It's not required to be formally trained but knowing this stuff is critical whatever management role you're in. Well there you have it. (2006-04-12 21:53:24.0) Permalink