Everything has a Dollar Consequence (why everyone must be a financial manager)


Very early in my career a manager of mine said to me “Everything has a dollar consequence and it is everyone’s responsibility to be a financial manager and use resources well”.

That statement and the truth of his words has stayed with me always.

Many times over the years, including recently while working with two organisations facing challenges in living within their budgets, I have encountered feedback from managers and staff that financial issues are the responsibility of the Chief Financial Officer (CFO), or the accounts area, or the Chief Executive Office (CEO) and senior executive team.  Typically the refrain is along the lines of: “It’s their job”; “Nothing I can do in my role will make a difference”; “I don’t have a budget allocation and so its not my responsibility”; “The budget I have is not realistic so they cant expect me to live with it”.

It is true that the CEO, the CFO, the executive leadership team and the accounts area all have important roles to play.  It is equally true that “Everything WE do has a dollar consequence”, each and every one of us. Our time costs the organisation money, the power that lights the office we sit in, the computer we work on, the paper we print on, … I could go on but you get the picture.  Not everyone in an organisation has a budget but we all use resources and how efficiently we use them has a direct bearing on the financial sustainability of the organisation.  We may not control budgets but we can, all of us, be mindful of both how we individually use resources and how the organisation is uses resources.  Often there is scope individually or collectively to influence how resources are used.

Being mindful of the cost of everything we do and working collectively to use resources in the best way possible makes a difference.  If we leave it just to the CEO, CFO and others to find the way to manage within budget we will likely have measures imposed on us that are seen as draconian, unfair and less than optimal.  We can only achieve substantial improvement if we have a culture where everyone recognises and takes individual and collective responsibility.

To achieve the culture where everyone accepts responsibility for managing and influencing efficient resource use does need leadership from the top:

  • communicating why it matters (we have to be able to live sustainably within our resources for the good of the organisation, its clients and every member of staff)
  • ensuring engagement in business planning and subsequently allocating budgets through a process where people understand what they have, why they have that level budget and the expectations of their performance;
  • maintaining ongoing dialogue up and down the organisational hierarchy on resource use and accountability;
  • managers and staff need to be empowered to manage resources properly:
    • a working knowledge of  good financial management principles;
    • policies that guide how various expenses and revenues should be brought to account;
    • appropriate reporting and systems so they can track their budgets; and
    • given appropriate levels of delegated responsibility for finances.

Failure to invest in such a culture inevitably leads to ‘Learned helplessness syndrome’ where people feel dis-empowered and that good resource management is all someone else’s responsibility. The organisation inevitably suffers. My experience is that wherever such a culture is established staff are more engaged and the organisation prospers.

Image:   Robyn Mackenzie/Shutterstock.com

(If you would like to receive notification of future blog posts please send an email, at the link on the contact page, with the word ‘Subscribe’ in the message field.)