If you want to get into management you need to understand the dos and don’ts of being a manager. Getting promoted to the next level of your career isn’t just about being good at your job or working hard. You can probably think of a number of people that work hard and are good at their jobs but will never be promoted to the management team.
Understanding the culture of your organisation and your industry is essential to your progress, underlying all of this is knowledge of the financial performance of the business. Successful managers are the ones who avoid making these mistakes:
1. Ignoring the Numbers
It often comes as a surprise for aspiring managers that being a star performer will only get you so far; unless you have a grasp of the numbers your chances of promotion to management decrease every day. Ignoring the numbers means that you do not know how your team, department or business is performing in terms of the numbers: for most organisations this is measured directly or indirectly in financial reports. Focusing on your job without an understanding of the financial implications is a surefire way of making sure you never get to the top.
2. Being unknown to the Finance team
Being a Manager is about making decisions; many of these decisions are informed by regularly distributed performance reports like the monthly management accounts. The clue is in the name, people who receive management accounts are decision makers, which make them valuable to the business. The Finance team provides this information to the managers; if the finance team doesn’t know who you are then it is likely that you are not a decision maker. Reducing the distance in the hierarchy between you and the manager that receives management accounting information increases your profile as management potential.
3. Managing the wrong things
It is important to understand what the business is focused on and how you can influence it. Peter Drucker said that what gets measured, gets managed. Many organisations try to manage every conceivable performance measure that they can create. This keeps the accountants and analysts busy but it is amazing how much of the information that is generated that does not help anyone to improve the business. Managing the ratios on a widely distributed financial report is not the same thing as managing the relevant performance measures
4. Consistently spending over budget
Budgets are primarily a form of control for managers; their role is to communicate the strategic priorities of the business. Failing to stay within budget suggests a lack of control; understandably this concerns management because it creates a risk to the strategic plans. If you keep going over budget it suggests that you are not in line with business objectives, not the sort of behavior that gets you invited into the boardroom
5. Keeping bad news to yourself
Senior management don’t like surprises and finance teams go to a lot of trouble to ensure that the income and expenditure is predictable. In times of uncertainty, performance based on predicted sales or volume can be vulnerable to changes. A regular flow of information, good or bad is something that the management team relies on. There is often a temptation to keep bad news to yourself or until the potential outcome is known. This creates peaks and troughs in the flow of information and reduces the predictability of their revenue and expenditure.
Are there any other mistakes involving finance that you think really hold back a career? let me know your thoughts.