The notion of providing a sound understanding of basic financial literacy is not new. It is, however, a notion that grows in importance, as finances permeate further and further downwards within company structures. In addition, individuals can use what they learn from work-based sources to aid them in their private lives.
Financial literacy under the spotlight
A 2010 Canadian report defines financial literacy as “having the knowledge, confidence and skills to make responsible financial decisions”. A more recent publication in 2014 highlighted the need for Canadians to develop better financial habits. The aim of this was to educate the population to better manage their household debt. Elementary processes such as budgets, spending and credit management were included in the approach.
Closer to home, figures from Statistics SA indicate that despite a decrease since 2008, household debt-to-disposable-income ratio was 77,8% during 2015. Stricter lending criteria have not been enough to curb consumer cash-flow woes. In addition, knowledge at the individual level is somewhat lacking. People often struggle with daily finances, retirement planning and the like.
Clearly there remains much to do in order to educate people towards improving their application of sound finances. Fortunately, basic knowledge is within easy reach, and business has a straightforward role to play in encouraging financial learning.
Why business can (and should) help
There are multiple financial concepts which apply equally well to both business and home. Think of budgeting, responsible spending, basic accounting documents and preparing for future funding. While there are some differences in application, the underlying principles are essentially the same.
Organisations conducting business usually have personnel dedicated to their financial well-being. It is a simple step to translate the knowledge of these individuals into information which can be instructed unto others. Furthermore, the advent of online courses using the MOOC approach means that it is easier than ever to learn via correspondence.
In addition to this, the financial education of staff can lead to a better business operation. This is evident in a number of business operations. A project manager may have the ability to run the project finances, but not comprehend their effect the organisation overall. Team members may not have the experience to understand and accept a department’s budgeting decisions. Non-finance managers could likely benefit from better ways to plan budgets or make forecasts.
Finally, organisations will benefit directly from more financially savvy staff. Indicators show that financial stress has a direct adverse impact on work productivity. Conversely, there is a strong case that possessing a stronger financial literacy equates to more focused and productive employees.
Means for improving financial literacy
While there are various ways to achieve this goal, there are some points that you should not overlook. We set out a draft path below.
1. Have a policy or framework in place
Unless you are confident that all your staff are financially prepped, acknowledge that there is a knowledge gap. Not all countries have a policy at the national level, so the onus falls to organisations to do so internally.
One of the better ways to achieve this is to make relevant training mandatory for incoming staff. The effect of this is twofold. Firstly, you prepare non-finance staff to understand the basics of financial literacy. Secondly, you set the financial knowledge bar, and everyone is aware of it. Your staff will thus know what their peers know and can engage at that same level.
2. Identify knowledge that covers both business and individual requirements
In order to maximise the gains for both entities, material should largely be applicable to both household and business entities. This strikes a balance between business improvement and employee well-being. Such a balance is important. When using resources such as time and funds to train, it needs to be to the benefit of both parties. Good ways to strike this balance are to ask professionals, or surveying what the recipients would like to receive.
3. Use as many tools as you can
You have no shortage of resources when it comes to education. Online materials, self-study, internal training and professional courses are a few examples of learning avenues. The more you use, the better the results – each has different advantages within the learning paradigm.
For the best output, consider at least one external source that comes with an evaluation and some form of accreditation. It is vital to have a stage during which a learner is tested as to what they know and can apply. Furthermore, an accreditation is valuable as demonstrable employee education and advancement.
4. Leverage information into application
It is one thing to have a theoretical knowledge of financial literacy. It is even better, however, to put that knowledge to good use. For one, it can increase productivity as the new skills contribute to staff output. Furthermore, staff will find it easier to keep their skills sharp if they have ample opportunity to apply them.
The simplest manner to achieve this is to diversify staff tasks to a small degree. Let non-finance personnel attempt to perform simple financial tasks, such as bookkeeping and budgeting, under supervision. Alternatively, you can include minor financial functions to more staff portfolios.
5. Keep it all in line with company culture
Most importantly, ensure that any such initiatives are in parallel with your company values. The encouragement of better financial behaviour will be accepted more easily if it is part of your culture. You can promote this further by mentioning business and personal successes. In addition, keep promoting the importance of securing the knowledge provided. This allows you to take a holistic approach that employees can appreciate.
The author would like to acknowledge Adept’s finance-based personnel for their knowledge, and for forming the initiative to share it. Click here to read our views on continued education.