Communicating bad financial data can be good!

In business life, here and there we come across situations in which numbers and figures must be communicated from top downwards or vice versa. Having dealt with situations like those in my life, I have noticed that business people, specially the most important decision makers, are just addicted to numbers and cash accounts – and there is something wrong about it!

Numbers do give us the information necessary to evaluate performance and financial results; it also gives enough insights on changes in both the internal and external dimensions of a company. Good figures are great and are certainly much more welcome than bad ones, but bad ones can also help us make decisions and they do work as sources of insights for future planning. The thing is: while focusing on causes and consequences or gains and losses, many people simply ignore the “so what? what happens next?” factor.

While working as operations officer for a small business solution development company, I had the opportunity to observe how financial communications became a catastrophe! Boring, confusing, unreadable and very dry data did not only NOT communicate the necessary information, but it also made things seem much worse than they actually were.

In a small company, communicating results involves meeting pretty much the whole staff and making them ‘feel’ the results. Had analogies been chosen, for example, even those at the basis of the pyramid would have understood things more clearly. Had honesty been chosen, confidence about the future would have turned out as result, instead of the actual demotivating and ‘I need to look for a new job’ feeling that took over back then.

Bad figures can be an excellent tool for making people understand the challenge and the importance of change. It helps mobilizing the whole company to work hard towards new challenges and new goals.

The “so what? what happens next?” questions must be asked in time and are the most important tools at the ‘communicating numbers’ meeting. They will be the backbone of the necessary change and they will help the team understand the situation and engage in taking the necessary action from them on.

In summary, financial data can be bad news indeed. And normally, this requires changes within a system to allow a company to adapt and/or adjust itself to the several influencers of this result. When backward perspective is used, that is, tackling the errors, the mistakes and the things they ‘should have done’, the needed positive change is then hindered. On the other hand, when the “so what? what happens next” questions are used, the fuel necessary to change, motivate and guide through is at hand.

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