Below is one of two case studies presented on this site by the Business Literacy Institute that illustrate the importance and effectiveness of financial intelligence for businesses and corporations. We invite you to use these case studies in your reporting.
The book authors, Michael Siegmund of MacDermid, and Laurie McGraw of the Gulf Coast Regional Blood Center are all available for interviews. To request interviews and/or more information, please contact Joanna Brody of Brody Public Relations at (310) 582-0085 or Joanna@brody-pr.com.
When MacDermid, Incorporated (NYSE:MRD), a global manufacturer of specialty chemical processes, conducted a human capital assessment, it revealed both good news and bad. The good news—their managers knew a lot about the company’s product line and how to satisfy their customers. The bad news—many managers did not understand the financial aspects of the business, how financial success is measured in the organization, and how their decisions affect MacDermid’s bottom line.
Though this lack of financial knowledge in corporate America is commonplace, MacDermid was especially concerned. A key—and distinctive—aspect of their business philosophy is to concentrate on the long-term financial health of the company—a la Warren Buffett—rather than quarterly results, which is what most public companies look at. MacDermid believed that focusing on their carefully defined set of financial measurements, designed to create value for their customers, would keep the company on a path that provides prosperity to both employees and stockholders. To successfully implement this approach, their leaders and managers needed a strong foundation in finance and knowledge about how to create value for shareholders.
MacDermid turned to Los Angeles-based Business Literacy Institute (BLI) to create “financial literacy” within the company. In 2001, BLI designed an intensive, customized course in financial management for the company’s top ranks—a sort of financial boot camp. The course had such a positive impact on communication about the business and how decisions were made that MacDermid and BLI created a course for mid-level managers and eventually expanded the program to all MacDermid employees around the world.
According to Michael Siegmund, an executive vice president at MacDermid, financial boot camp has had a phenomenal impact on the company. "Now that everyone speaks the language that is required for success at MacDermid, we can discuss our results, our plans, and our goals in terms of how they fit with our long term strategy and financial focus. Everyone concentrates on making decisions that fit into our financial model, one that we believe provides value to customers and to shareholders.”
Siegmund also remarks on the positive impact that financial boot camp has had on employees’ attitudes. “Everyone sees that we are investing in them and sharing financial information with them. They feel a greater connection to the company, which results in a more motivated and committed workforce.” Four years later, MacDermid continues to put all employees through the program.
After nearly 20 years of consulting to dozens of corporations like MacDermid and training thousands of managers, the owners of Business Literacy Institute, Karen Berman and Joe Knight, have put their collective wisdom into a book for all of corporate America to read. Appropriately titled FINANCIAL INTELLIGENCE: A Manager’s Guide to Understanding What the Numbers Really Mean (Harvard Business School Press; January 12, 2006; $24.95/hardcover), the book focuses on what managers need to know about finance. It also unveils some of what finance and accounting professionals know but managers haven’t discovered: that finance is an art, not a science, so managers must understand the estimates, assumptions and biases in the numbers to truly manage effectively.
Siegmund praises Financial Intelligence: “There was a void of useful accounting information for non-financial managers. This book is by far the best approach for managers to gain that knowledge. It’s a tremendous resource.”
About MacDermid
Founded in 1922 and headquartered in Denver, Colorado, MacDermid, Incorporated (NYSE:MRD) is a leading worldwide manufacturer of specialty chemical processes for the metal and plastic finishing, electronics, and graphic arts industries with operating facilities in 20 countries. The Corporation employs nearly 2,500 worldwide, many of whom are shareholders, with annual revenues of $750 million. For more information, visit www.macdermid.com.
