So what is the "right kind of success"?
Most of us have probably heard the phrase "Cash is King", perhaps more times than we would have liked. But there is no denying the important message that is so tightly packed in those three little words. But still, to the dismay and bewilderment of us "financial types", we watch as companies devote little attention to serving the king.
Many might say it is the job of the CFO to handle it; but when did you ever see a king with only one servant? Sure, depending on the organization, the CFO may be tasked with managing the overall cash flow of the company, but the effort requires the support of the entire organization.
I thought it would be interesting to look at ways of appreciating (in both senses of the word) cash and what help develop your business for real success.
Everything starts with the people. When it comes to focusing your business on cash, it is more important than ever to put the right people in the right roles. Training is important, but not all talents are trainable, and there's no point in training someone whose mind is not in the right space. Find those employees that share the passion and vision of the business, and who are also always thinking about the fiscal implications of every decision or every action. Find the ones who tend to treat the company's assets as their own. Find the ones who appreciate the numbers to the right of the decimal point as much as the numbers to the left. Those will typically be the ones who will flourish in roles that are more closely aligned with the company's cash. I am talking about roles, for example, in collections, treasury, payables, and commercial activities.
Once you've identified the right people, only then should you invest in training. Be sure that your training program highlights the monetary aspect in every function, as every function has it. These topics will vary depending on type of business (service, manufacturing, etc.), but the key is to drive home the notion of how the fiscal outcome is determined from the very beginning of the process, and is either enhanced or diminished with every other decision along the way. It is also important to get people thinking in terms of the overall enterprise, and not within individual silos.
How do you know if you've been successful? Besides your increasing cash flow (if that weren't enough), you would want to develop metrics for evaluating employees' performance. Many metrics are already in place in your standard performance appraisal systems, but you might now want to incorporate some of the cash-focused metrics. You would want metrics that can be measured at the individual level, as well as some at the enterprise level to reinforce the no-silo culture.
Over the next 2 weeks we will look at how process and product will drive real success – increasing the value of your business, creating strong cash flows and CASH!