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5 Golden Rules of Teaching Financials to Employees

5 golden rules of teaching financials  (1)

If you approached an employee at your company and asked them who creates the financial numbers in your company, what would they say?

Odds are, they’d probably point to the accounting department. Sure, accounting has a lot to do with your company financials, but they don’t really create them. Your employees create the financials through the decisions they make and the actions they take.

So how do you help your employees understand their part in creating the numbers and how their actions can affect those numbers? We recommend you follow the five golden rules of teaching employees about company financials:


1. Teach Numbers, Not Accounting

Focus on numbers that matter most to your company, not those that appear in an Accounting 101 textbook. This includes understanding how profitability is driven, how assets are used, how cash is generated, but most importantly: how employees’ day-to-day actions and decisions impact business success. Employees rarely need to know about debits and credits or how to do an adjusting entry.  But, depending on the company, they may very well need to know how production efficiency is calculated, or why receivable days matter, or how the purchase of a new computer system will affect the income statement and balance sheet.

The bottom line is this: people remember what they find relevant and useful.  The purpose of financial literacy training is to give everyone in the company a common language so they can understand the numbers that measure their performance, talk intelligently about improvements and make better, more informed decisions.

2. Teach Business, Not Just the Numbers

Remember, your employees aren’t learning the financials to pass a CPA exam. They’re learning so that they can understand what their company is about, how it makes money, where it’s headed and how success is ultimately measured.  Business can be exciting!  It’s where you match wits with the marketplace—and where, if you’re successful, you can create real wealth.  So convey a little of this excitement. Gather your people together and talk about the big picture. People are curious about the company’s market, its strategy, its competitive advantages, and what it’s focusing on over the next couple of years.  They want to know what’s in store for them.  Without that context, they won’t have any reason to care about the numbers.

3. Establish a Line of Sight

Ultimately your employees want to know how they can make a difference.  It’s critical to the success of your financial literacy efforts to always make a connection between what they do every day, both individually and as a team, and the financial outcomes of the business.

4. Repeat. Repeat. Repeat.

Give your employees the opportunity to see and use numbers regularly. Eventually, they will begin to understand and remember them.

5. Support Formal Training with Informal Practices

Use The Game to teach people the business.  Continue to put things in context for people, and then reinforce the lessons in frequent engagements around the real numbers.  At SRC, we often use a blend of formal training and informal practices such as short Training Bites like this one to teach basic concepts during our weekly Huddles.

This excerpt from our newest book, Get in the Game, drives home the importance of financial literacy training, whether it be formal or informal:

"If the strategy is to create a business of businesspeople, it follows that employees must learn the language of business—the financials. But nothing can duplicate the informal, practical learning that comes with keeping score and following the real numbers day in and day out.

"How did you learn the numbers? Many seasoned managers understand their numbers not because they went to business school but because they use the numbers every day. Employees will learn the basics of business no differently. If they get an opportunity to see and use the numbers regularly, they’ll remember them and begin to understand them. That’s why you can’t separate financial literacy training from the other parts of your management system, such as frequently tracking and communicating the company’s real numbers.

"Ultimately, you want your business literacy efforts to become just another part of your everyday culture."


Would taking this approach help your employees to better understand your financials?  Learn more in our new book, Get in the Game.

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About The Great Game of Business

Our approach to running a company was developed to help close one of the biggest gaps in business: the gap between managers and employees. We call our open-book approach The Great Game of Business. What lies at the heart of The Game is a very simple proposition: The best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in saying how the company is run and a stake in the outcome. Let us teach you how to develop a culture of ownership, where employees think, act and feel like owners.