It’s a bustling Monday morning, and Sarah, a junior finance professional, is settling at her desk when the CFO, Mark, bursts into her office. “Sarah, I need a report for the board meeting this afternoon. We need to present our financial insights and recommendations for the next quarter.” Eager to impress, Sarah nods enthusiastically and gets to work.
Four hours and thirteen minutes later, Sarah hits the final slide on her deck. She nailed it. Every detail of the complex financial analyses was captured in graphs and charts. Any questions?
The silence lasts a little too long. Surveying the glazed eyes and confused expressions, Sarah’s confidence evaporates. The board adjourns without any concrete actions being taken.
This scenario is all too common in the realm of corporate strategy, where FP&A analysts and finance professionals often struggle to bridge the gap between their technical expertise and the decision-making needs of management.
In this article, we’ll explore three key strategies that finance professionals like Sarah can employ to effectively communicate their valuable insights, empowering management to make informed decisions and drive positive change within their organizations.
Strategy 1: Simplicity, Simplicity, Simplicity
When presenting financial data and recommendations, it’s crucial to identify the core message and convey it in a clear and concise manner. Simplicity helps management quickly grasp the basic points and understand their implications for the business.
This begins with thinking about your audience: identify the most critical data points and clearly interpret them for management. It’s not about you, it’s about them—they don’t need a demonstration of the depth and breadth of your analytical expertise.
Focus on what they care about: the key drivers of business performance and the insights that have the greatest potential impact on decision-making. Once you’ve identified these essential points, work on presenting them in a way that is easy to understand, even for non-finance professionals.
This isn’t to denigrate their intelligence, it’s to admit that they rarely have the time to get from a complicated analysis to a decision point in the limited time available.
You already know that complex financial data is best communicated by visuals such as graphs, charts, and infographics. But when it comes to interpreting the data, using analogies or real-world examples to make abstract financial concepts more relatable and easier to grasp is vital.
To further enhance the effectiveness of your simplified finance insights, consider the following tips:
- Use plain language and avoid jargon whenever possible.
- Highlight the most important information upfront.
- Use bullet points or numbered lists to break down complex ideas.
- Test your simplified messages with non-finance colleagues to ensure clarity.
One more point here. “Less is more” is good as a goal, but bad as an iron-clad rule. Sometimes the decisions in play require more context or explanation, and leaving it out would be a bad idea. The goal is to ensure that your audience grasps the essence of your findings and can make informed decisions based on the data, not just to shorten your presentation.
The following table illustrates how data professionals can effectively communicate their findings to board members by translating complex technical insights into clear, actionable messages:
| Jargon-filled, Overly Detailed | Clear, Concise, and Actionable |
| The company’s liquidity position has deteriorated over the past fiscal year, as evidenced by our comprehensive financial statement analysis and the application of key financial ratios. This deterioration, primarily due to increased short-term liabilities and decreased cash and cash equivalents, may lead to difficulties in meeting short-term obligations and potential financial distress. Management must implement immediate corrective measures, such as reducing discretionary expenses, optimizing working capital management, and exploring alternative financing options, to improve the company’s liquidity position. | The company’s liquidity has worsened due to increased short-term debt and reduced cash. To mitigate the risk of financial distress, we recommend: a) Cutting non-essential expenses. b) Improving working capital management. c) Seeking alternative financing sources. By implementing these strategies, the company can improve its liquidity and better position itself for long-term success. |
| Our in-depth analysis of the company’s revenue streams, segmented by product line and geographic region, reveals a significant decline in the sales of our flagship product in the North American market. This decline can be attributed to various factors, including increased competition, shifting consumer preferences, and a lack of effective marketing initiatives. Additionally, our market share has eroded by 3.2 percentage points over the past 12 months, as evidenced by my Herfindahl-Hirschman Index (HHI) calculations. To address this issue, it is imperative that management implements a comprehensive strategy encompassing product innovation, targeted marketing campaigns, and competitive pricing strategies to regain lost market share and boost sales performance in the affected region. | Sales of our main product in North America have dropped significantly due to: -Increased competition -Changing consumer preferences -Ineffective marketing To recover market share and improve sales, we recommend: a) Innovating our product line b) Launching targeted marketing campaigns c) Adjusting pricing to remain competitive |
| Based on our thorough examination of the company’s cost structure, including an analysis of fixed costs, variable costs, and semi-variable costs across all departments and business units, we have identified significant inefficiencies in the production process. The current capacity utilization rate of 72.5% is suboptimal, leading to higher unit costs and reduced profitability. Furthermore, our benchmarking study, which compared our cost structure to that of our key competitors using a normalized cost basis, revealed that our overhead costs are 18% higher than the industry average. To optimize our cost structure and improve profitability, it is crucial that management conducts a comprehensive review of the production process, identifies areas for automation and process improvement, and implements strict cost control measures across all departments. | Our production process is inefficient, with a low-capacity utilization rate and high overhead costs compared to competitors. To optimize costs and improve profitability, we recommend: a) Conducting a thorough review of the production process b) Identifying opportunities for automation and process improvement c) Implementing strict cost control measures across all departments By streamlining our production and reducing overhead, we can lower unit costs and increase profitability. |
By mastering the art of simplification, finance professionals can bridge the gap between their expertise and management’s need for actionable insights, ultimately driving better business decisions and outcomes.
Strategy 2: Make the Recommendations Practical
By all means, point out the best possible solutions, just don’t ignore reality when you do. Your company doesn’t operate in a fictional world where all factors are controlled and known—it’s your job to break these down for decision makers.
Once you’ve identified the “perfect” way forward, sketch out the potential limitations and challenges that may hinder its implementation. These may include budgetary constraints, resource limitations, risk tolerance, or competing priorities within the organization. By understanding these factors, you can work on developing solutions that are both feasible and more likely to be adopted by management.
To make your recommendations more practical, collaborate with other departments and stakeholders whose insights into operations, sales, or marketing can help you identify potential roadblocks early on. This collaborative approach also helps build support for your ideas and ensures that your solutions are well-aligned with the needs of the entire organization.
When presenting your practical recommendations to management, it’s crucial to effectively communicate the limitations and constraints you’ve considered—again, as simply as possible. Being transparent about the challenges and explaining how your proposed solutions address each builds trust and credibility with management, increasing the likelihood of your recommendations being acted upon.
Case studies can be a powerful tool for illustrating your recommendations. By highlighting real-world examples where companies have successfully navigated—or failed to navigate—constraints, you can help management visualize the way forward and act on your recommendations.
Strategy 3: Differentiate Between Interesting Insights and Actionable Ones
Let’s face it. You’re a finance nerd. So am I. What is interesting to us probably isn’t interesting to the busy manager who just needs a yes or a no. While it’s tempting to highlight the intricate details of a discounted cash flow analysis and how it reveals subtle nuances in the company’s valuation, keep your eye on the ball: keep it actionable and cut the interesting.
Unless, of course, the nerd point is also vital for the final decision. How can you tell the difference? Start with the KPIs (sorry, the key performance indicators). These are “key” for a reason: they have the greatest impact on the organization’s success, such as revenue growth, cost reduction, or operational efficiency.
By aligning your financial insights with these critical drivers, you align your recommendations with the company’s strategic objectives. If you get this dialed in right, your prospects within the company improve considerably.
One effective way to determine if your finance insights are actionable is to develop a simple (to management) framework for evaluation. This framework should consider factors such as the potential impact of the recommendation, the feasibility of implementation, and the alignment with the organization’s goals.
Again, don’t try to dazzle management with the thoroughness of your framework, just assess your insights against KPIs so you can prioritize the most actionable recommendations and present them to management with confidence.
When presenting recommendations to management, strike a balance between providing sufficient detail and keeping the information concise. Focus on a clear summary of the expected benefits and risks and be prepared to briefly outline the implementation steps.
This allows management to quickly grasp the essence of your recommendations without getting bogged down in minutiae. If they ask for more information, you have the green light to delve deeper while keeping it as simple as possible. Again, you’re paying attention to your audience and following their lead.
By consistently prioritizing actionable recommendations over merely interesting observations, finance professionals can establish themselves as strategic partners and trusted advisors to management, ultimately contributing to the organization’s long-term success.
Overcoming common challenges
Turning finance insights into management action is not without its challenges. One common obstacle is resistance to change from management, particularly when recommendations involve significant shifts in strategy or operations.
To overcome this, finance professionals must take the time to build trust and credibility with non-finance stakeholders by consistently demonstrating the value of their insights and recommendations.
A related challenge has to do with navigating organizational politics and competing priorities. Finance recommendations may sometimes conflict with the interests or objectives of other departments. To address this, get to know your peers in other departments and approach them in a spirit of collaboration. Understanding their perspectives and working towards mutually-beneficial solutions will gain you allies who share your desire to meet the overall goals of the organization.
Continuously refining and adapting finance communication strategies is also crucial for overcoming challenges. By actively seeking feedback from management and other stakeholders, finance professionals can identify areas for improvement and adjust their approach accordingly. This may involve simplifying messages further, providing more context for recommendations, or finding new ways to demonstrate the practicality and actionability of their insights.
By proactively addressing these common challenges and maintaining a flexible, collaborative approach, finance professionals can effectively navigate the complexities of turning insights into action and drive meaningful change within their organizations.
Conclusion
Presenting insights in a way that helps management take action is a critical skill for finance professionals. By focusing on simplicity, practicality, and actionability, finance pros like Sarah can effectively communicate their recommendations and inspire management to take decisive action.
In any healthy company, there will be—and should be—challenges to our recommendations. But through collaboration, adaptability, and a commitment to continuous improvement, finance professionals will be better positioned to establish themselves as strategic partners in driving business success.
By implementing these key strategies and maintaining a proactive, solution-oriented approach, finance teams can better help unlock a company’s full potential. And that is the real goal.
