41. How to Link the Financial to Execution?

SUMMARY

How to Link the Financial to Execution?

Many companies do not have a sound strategy that links behaviour to financial outcomes. One possible reason is the lack of a model which clearly shows the linkages between behaviour and financial outcomes.


Transcription

How to Link the Financial to Execution?

Okay, so today I'm gonna talk about how to link the financial to execution. So what are the activities you do each day and the tool that I'm going to use today is called the Function Accountability Chart. And it is from a Scaling Up and it's a great book and I'd recommend everyone to read it and I'll put a link to where you can download the chart on their website. They're very generous and allow anyone to use their stuff.

Linking provides alignment

And so why you wanna use a Function Accountability Chart when you're linking the financial execution cause it provides alignment. So you are only focusing on the the activities that link back to the financial so it will help you get rid of the activities that aren't increasing the financial performance.

Highlights Gaps

It then also highlights if there are any gaps in your leadership. If someone spread too thin so if someone got a lot of roles they are in charge of and then there may be someone who doesn't have many at all. Or maybe well maybe the some of kind of things our accountability that no one's actually looking at, at the moment.

Accountability

And so and that leads us down to the third thing are All financial line items accounted for. So is every line item in the profit and loss, the income statement and the balance sheet. Is there someone who's accountable for each of those lines. And so the way that it works is you'll have a function and so let's just say sales, then you'll have someone who is being held accountable and I'll just say it's Jane is accountable and so then you'll have your KPIs.

So what are some of the leading indicators, so it might be website hits, leads generated, and then what are the results are the line items in your profit and loss on your balance sheet. So in this case it could be your sales and you know, your costs a good sale whatever. And so you want to make sure that once you're finished, filling it all way out that you've got all your functions covered and then you've got all your lines in your profit and loss and your balance sheet covered. And then you've only got a couple of indicators for each of these things and that there is someone accountable for each line where in each function.

And that's not unless you're in a small business no-one does it and you have to do everything yourself, but there's not someone who's got a whole heap and there's not someone who has nothing. So this is a it's a great tool for just bringing more accountability and linking your activities back to your financials. So thank you for the for watching this video and I'll see you in the next one.

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