Yesterday, I had the privilege of teaching the LeaderWork class to a group of ten leaders spanning the spectrum from a CEO to four frontline leaders. The discussions reaffirmed what I believe is one of the greatest missed opportunities in leadership: financial literacy.
Finance is the common language of business. It bridges the gap between actions and outcomes, enabling leaders to understand how their decisions impact financial statements. Yet, for many, finance and accounting feel like a foreign language, leading to disengagement and missed opportunities.
This reminds me of my first trip to Germany. Lacking any knowledge of the language, I felt intimidated and withdrew from engaging in the culture. When I returned, I sought basic German language training, which transformed my subsequent trips. With even a rudimentary grasp of the language, I felt more confident and connected.
Similarly, many leaders withdraw from financial discussions because they don’t fully understand concepts like balance sheets or budgets. While they don’t need to become finance experts—that’s why we have finance teams—they do need to bridge the gap between their operational roles and financial outcomes. Leaders must learn to ask the right questions, enabling finance teams to support them in making better decisions.
A simple yet critical concept is line of sight: every leader should be able to trace their team’s operational activities directly to an account on the income statement, understanding its significance. When I overcame my own intimidation with finance, thanks to mentors like Ron Winowiecki and Ken Wagner, my understanding of business skyrocketed.
Imagine a workplace where every leader—and perhaps every employee—understood budgets, income statements, and the importance of cash flow. This vision aligns with the principles in Jack Stack’s The Great Game of Business. Financial literacy empowers better decision-making and demystifies the numbers, reducing fear and alienation.
By connecting the financial “what” and “why” to the operational “how,” leaders foster healthier, more aligned organizations. When finance becomes a shared language, businesses thrive—and so do the people within them.