I like to mix technology reading with business reading. Why? I strongly believe that one of the quickest ways to lose credibility is to not understand what those above you are talking about. If you’re an IT manager, you need to know your field well and be able to discuss it with those in finance using the language they’re comfortable with. One of the best books to aid in this endeavor is Financial Intelligence for Entrepreneurs by Karen Berman and John Knight. Don’t let the “entrepreneurs” in the title throw you; this is a numbers book that will help anyone who needs to look at a balance sheet or income statement.
Financially intelligent managers, in HR and other departments, contribute to a business’ health because they can make better decisions, aver Berman and Knight. Financial intelligence, which ensures that people understand a company’s objectives and work to attain them, brings in transparency in communication and acts as ‘a simple antidote to politics.’ Describing financial information, as the nervous system of any business — which contains data on how the business is faring, and where its strengths, weaknesses, opportunities and threats are — the authors bemoan the fact that for too long, a relative handful of people in each company were the only ones who understood what the financial data meant. Well-presented.
“HR people are ambivalent about finance,” say authors Karen Berman and Joe Knight. “They seem to understand the importance of non-financial people learning the financial side of business — the statements, the measures, the tools. On the other hand, some HR folks aren’t sure about applying the lesson to themselves.” Yet, the authors continue in their new book, Financial Intelligence for HR Professionals, the discipline itself has been chipping away at this limitation for many years now until most senior HR leaders have gotten the message and are urging others to do the same. If you’re one of the hold outs, or if you’re still trying to learn about the financial side, this just may be the book for you.
Here’s the deal: human resources (HR) people need to speak the language of business if they want a seat at the strategic table. I am becoming more convinced of the need for HR people to participate more fully in the most important decisions of the company — the operational decisions. And you can’t participate if you don’t have financial intelligence — which is no more than a set of skills that must and can be learned. There is no shortage of books explaining the financial aspects of a company, but I have not come across one as useful as this for support people. Rather than simply presenting the usual basics of financial measurement, the income statement, balance sheet and cash flow statement as if they were science, the authors show why these are art as well.
Filled with clear examples, engaging case studies, and useful toolkits at the end of each chapter, along with all new practices at the end of the book, Financial Intelligence for HR Professionals provides managers with the four basic skill sets needed to hone their financial intelligence:
- Understanding the foundation: How to decipher income statements, balance sheets and cash flow statements.
- Understanding the art: How to identify when the artful aspects of finance have been applied to the numbers and what that means to drawing accurate conclusions.
- Understanding the analysis: How to make informed decisions based on the information underneath ratios and return on investment.
- Understanding the big picture: How to value the context created by changes in the economy and the competitive environment and what that means for interpreting a company’s financial numbers.
Beyond ensuring that HR managers have this core knowledge, this book will help them take the next step so that they can confidently speak the language of business; ask insightful questions about what is underneath the numbers; and most importantly, use this information to analyze data and make decisions that improve the bottom line and create better value for their company. Intelligence for HR Professionals is a must-read for the human resource experts who want to be able to talk confidently about the numbers and make a difference in their organization.
Triangle Business Journal
Berman and Knight, founders of the Business Literacy Institute, turn their attention to entrepreneurs in this book, the follow-up to their previous tome, Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean. The authors, who have trained thousands of people at companies worldwide, show entrepreneurs the basics of managing and measuring finances. Among the topics covered: how to use ratios to assess your organization’s financial health, how to properly calculate ROI and how to understand what income and cash-flow statements and balance sheets really tell you.
Finance for Geeks Does every holiday season leave you stumped about what to get your chief information officer (CIO)? Get a jump start this year and buy him or her Financial Intelligence for IT Professionals: What You Really Need to Know About the Numbers (Harvard Business Press, 2008) by John Case, Karen Berman, and Joe Knight. CIOs and IT managers are often in the driver’s seat or co-pilot’s seat when it comes to making decisions on investing in major software solutions. Without an understanding of the company’s finances, such decisions may be anxiety-ridden or result in poor choices and doomed deployments. This book addresses financial management basics; financial data assumptions and estimates; how to interpret company income statements, balance sheets, and cash flow statements; and how to calculate the financial health of an organization. Key for CIOs, there are activities and equations to determine return on IT investments, as well as methods to utilize financial data to support IT decisions.
The Money/Finance Shelf You get what you pay for is a commonly-repeated proverb because it is so commonly true. Co-authored by Karen Berman and Joe Knight, Financial Intelligence for IT Professionals: What You Really Need to Know About the Numbers is an informed and informative guide to understanding that IT requires an infusion of capital to get the best use out of it. With basic information on understanding IT-related statements and balances, estimates and their effects, challenging data, investments, and so much more. Highly recommended reading and a welcome addition to personal, professional, community, and academic library Business reference collections, “Financial Intelligence for IT Professionals” is essential reading for anyone wanting to get the most out of their IT dollar investment.
Book Review in California Bookwatch
“Financial Intelligence is an impressive compendium of guidelines and information including the basics of financial measurement, reading income statements, balancing sheets, cash flow statements, separating hard data from the assumptions and estimates, the mechanics of analysis, calculating ratios, return on investment, working on capital, knowing the difference between cash and profit, financial literacy and transparency and how to recognize how the two can boost performance.”
Book Review in HR Magazine
“Berman and Knight give special attention to cash because managers tend to ignore it. But managers affect cash in many ways, from sales managers who get customers to pay bills on time, to plant managers who order extra equipment just to have it on hand ‘in case,’ to credit managers who give credit too easily or who withhold it too readily.”
New Book Review on webcpa.com
“On any given subject, it’s safe to say that most people don’t know what they’re talking about. That goes double for finance and accounting…”
Book Review on BizBookTalk.com
“The truth is that financial intelligence is a vital skill in the business world. Even if you aren’t a ‘number cruncher,’ understanding the concepts behind the balance sheet, income statement, and the cash flow will aid you in your career.”
“Berman and Knight, co-owners of the Business Literacy Institute in Los Angeles, provide a concise tutorial, explaining the basics about income statements, balance sheets and cash-flow statements. They illustrate key concepts by showing how you can apply them: how to put together a capital expenditure proposal, for example.”
Excerpt showcased in the Harvard Business School Newsletter
How to Raise Your Firm’s Financial IQ “We all live and die by the numbers—but do we really understand what they mean? Here’s how managers can help all employees understand cash flows and liquidity ratios. From the new book Financial Intelligence.”
Blog Posted by Lisa Yoon
“CFOs who want to promote financial literacy among the non-financial managers they work with might consider recommending this book. It reads easily without dumbing down, and it’s comprehensive.”