Financial Skills for Self-Managers
Jim Hughes shares what are the must-skills for self-managers. Let's dive right in!
Nothing beats having developed yourself to be an efficient self-manager. This doesn’t only reflect that you are capable of bigger responsibilities, but this also goes to show, especially in a corporate setup, that you are capable of leading a team well and are definitely a great asset to the company.
👩🏽💻 Understanding Self-Management
Self-management covers the entire process of self-reflexive and self-critical work that we put out that targets optimal productivity. A great self-manager can handle the inevitable pressure that comes with things not always going according to plan, no matter how prepared we had set things up.
They are capable of remaining productive amidst crisis, can prevail and be focused on goals, and are tested reliably in the face of possible risks. In psychology, this can be traced as part of the manifestations of higher emotional intelligence through a more developed skill of self-regulation.
In a corporate setup, they’re trusted, especially in the aspects of financial matters, precisely for this skill set. People who can manage themselves can step up and even empower other employees in the company.
More importantly, the best part about having a self-manager in a company is that they’re the people who can make the crucial decisions, especially in terms of assessing the right time to consult or to ask for external help.
🔥 Article pick: Employee Experience: Self-Management vs. Traditional Hierarchy
⚙️ Developing the Skills
So, what are the skills that usually manifest in a self-manager; more accurately, what skills do self-managers develop within themselves, and how do you keep honing this?
👉 Adept at Financials
Since a self-manager can handle critical decisions, being adept at finances usually becomes their most important or biggest responsibility. This comes from having a finance mindset in place, improved greatly by the knowledge to understand key financial terms, and continues to develop by a manager’s instinct to work with the necessary people that can help them grow.
First, a finance mindset is one that understands the difference between accounting and finance itself. On the one hand, accounting allows you to see the decisions that you’ve made in the past and all the way up to the present. It allows you to review previously made decisions by seeing their results at present. On the other hand, finance considers the future cash flows of the company and the possibilities of financial growth. A great self-manager is not just skilled at reading accounting matters but also has the gift of critical foresight regarding how the company can financially grow.
Second, as a decision maker, a self-manager should be knowledgeable about basic financial terms. This includes knowing at least what the following terms mean:
- Current assets
- Fixed assets
- Current liabilities
- Long-term liabilities
- Owner’s equity
- United States General Accepted Accounting Principles (US GAAP)
- International Financial Reporting Standards (IFRS)
Third, with the added knowledge of key terms, a self-manager can read the financials of the company. This is a three-stage process that should be a habit developed within the self-manager:
- Reading the financials
- Meeting with the controller
- Making decisions based on the financials
If properly ensued, the self-manager can better understand the company by actually tapping into its resources: the controllers. By meeting with them, the self-manager can better learn the company's financials in order to make wise decisions based on the data.
👉 Pragmatic with Budget (Balance Sheet / Budget / Insurance)
Going back to the previous point on finance mindset, the self-manager is a trustworthy decision maker because they see the big picture. They understand the company’s previous decisions, current ones, and the next steps. Thus, forward-thinking is balanced by also knowing the accounting.
A pragmatic budget maker can read and understand income statements, can definitely create a new budget, and also considers important aspects such as the budget for insurance. Being able to read a balance sheet also means being able to find a way to keep things balanced. Whatever problem arises from the sheet, a self-manager should be able to solve it.
A great budget maker is one that doesn’t just see the numbers but can see how each item in the budget translates to the company’s goal–and can make the crucial decisions of modifying it to meet the objective. Setting the right employee salary, for example, along with due compensation, is something that a self-manager should be able to do without compromising the employees’ and the company’s budget. Preparation, management, and necessary revisions in the future are all part of this responsibility.
👉 Critical about Necessary Decisions
Variance is what you call the inevitable numbers that just don’t match up. When your balance sheet doesn’t come out balanced, when expectations go beyond the budget, or when income statements show that profit is inconsistent, this is called variance. And yes, variance is where you usually make the most critical decisions as a self-manager.
Begin by being able to find the variance. Follow this through with the ability to examine and determine what is causing the inconsistency–be it simple or complex. The critical thinking skill developed in doing this is also where you can make the deepest impact on the rest of the team or the company, as this greatly affects the company in the long run.
👉 Organized with Time
Time is the greatest resource a person ever has. As the adage says, it cannot be bought. A self-manager, therefore, should have a deep understanding of the value of time, especially when it comes to both short-term (e.g., employee schedules, payroll, attendance, due dates, deadlines) and long-term (e.g., salary recommendations, finance).
👉 Open to Feedback
A great manager always keeps an open mind to how they can still improve. This is why it is pertinent even for self-managers to be open to feedback from others–be it about requesting and evaluating proposals, dealing with changes and decisions made by the manager, and their work efficiency in general.
🔥Article pick: Individual Differences in Self-Managed Organizations
Self-management is both a skill and a mark of character development. It is something that any employee can actually learn and develop (i.e., self-regulation). It is a counter-cultural act of humbling the ego of skilled people while also challenging them to become better. Thus, a self-manager is of value to any company that pursues growth both now and in the future.
New ways of working for organizations of the future.