October 2022 – People Should Know (Some) of What the CFO Knows

Believe it or not, scientific research has shown that Chief Financial Officers tend to be people who like numbers. Unfortunately, it’s likely that not all of the other people at their companies do. HBR found that 93% of Americans have “math anxiety”, typically caused by “math trauma” in childhood. And check out the results of the 2018 Maths Anxiety Summit from the University of London…

Given that CFOs have tremendous insight and input into their company’s strategies and how results and performance are measured, everyone at the company should know something about what the CFO knows – whether they like math and numbers or not. If the CFO says that a number matters then it probably does, and people should understand what it is and what drives it.

As you develop a new business simulation class, incorporate the numbers and financial concepts that matter to the CFO. You won’t turn all of the participants into future CFOs, but they should understand the impact that their actions, decisions, and ultimately their jobs, have on the company’s results.

And what would the CFOs of your clients say that everyone at their company should know? CFOs are responsible for a multitude of mind-bendingly complex financial matters such as cash-flow forecasting, risk management, taxation, and even Libor transition (see PriSim’s previous post about what’s keeping CFOs awake at night). But the CFO of one of PriSim’s insurance-industry clients said they would be happy if people simply understood “how the company actually makes money.”

CFOs can help not only with the calculations used in a business simulation, but also to communicate exactly why people should learn the numbers. At PriSim, we interview CFOs and finance SMEs as we design and develop our business simulations and classes to:

  1. Help get the algorithms and math right. For example, many of the dynamics built into PriSim’s Insurance Challenge™ business simulation are based on input from the CFO of a top-10 global P&C insurance carrier.
  2. Be a “stamp of approval” for the class. People pay attention when they know the information they’re hearing has come from their own CFO.
  3. Design presentation slides covering “What the CFO Wants You to Know” about the company’s income statement and balance sheet. PriSim’s client CFOs have provided company-specific content and perspectives including:
    • Sources of Revenue
    • Costs to acquire a new customer vs. retaining an existing customer
    • Debt vs. equity financing
    • Cash “float”, including the impacts of collecting accounts receivable
    • Dividends vs. retained earnings
  4. Be a guest speaker during classes. Besides being finance experts, CFOs can be skilled and even entertaining speakers; as part of the company’s top management team, they often speak at public events including shareholder meetings.

Your business simulation classes should be designed so that they help participants become familiar with the numbers that really matter. Do that, and you will make your clients’ CFOs even happier than they already are – because when they’re not doing finance, CFOs already know how to have a good time