I Love a Great Financial Huddle

In my early 20s, a business owner named David Shepherd used to hand me a check every month. Annually, he handed me a bigger check.

But here's the part I didn't like--I had no control over the totals printed on those checks. I never knew the score nor the rules that determined each person's payout. While my peers loved those checks, I was trying to figure how to augment that manna from heaven. It never happened.

Thank You, Dennis Karstens

Flash forward about 7 years later, and the President of Orscheln Farm & Home hands me a book. "Mark, want this?"

Over the next few evenings, I devoured the book, The Great Game of Business, by Jack Stack. And all of a sudden, something clicked. I knew deep down inside I would do everything possible to promote Open Book Management to every business that would listen. I still am.

What is a Financial Huddle?

I love the underlying message of Open Book Management. I just don't like some of the jargon.

Take for instance finance huddles. I'm not keen on that name. Can't we name a meeting where employees up and down the organization are discussing company financial information something other than a financial huddle? Unfortunately, I don't have that kind of clout.

You'll never find Peyton Manning or Tom Brady in these huddles. You will, however, find the CEO or CFO leading a team meeting with company employees talking about key numbers, income statements, and other financial-related information. That's a financial huddle whether you like the name or not.

I Know a Company in Mid-Missouri That's Nailing It with Their Financial Huddles

A few years ago, I became the Dennis Karstens to one of my favorite CEOs, Shawn Burcham, the founder and President of PFSbrands based in Holts Summit, Missouri. Yes, he read the book that Dennis handed me in 1993. I think he loved it (a lot).

For the first several years after adopting Open Book Management principles in his company, Shawn ran all of the financial huddles.

Today, CFO Trevor Monnig runs the financial huddles in the corporate dining hall and kitchen area (my prediction is that the meetings will be moved to the warehouse in a year).

I caught up with Trevor to gain additional insights on his approach to financial huddles and how they are impacting the company as a whole.

Question 1 of 5 - Trevor, give us the PFSbrands definition of financial huddles.

Trevor: A financial huddle is a quick, collaborative session to create visibility and a clear line of sight to key performance indicators of the company. The huddle provides a rhythm of communication to keep everyone informed and involved in the company activities. 

My experience has been that when people are informed and involved, engagement levels skyrocket. Each company’s financial huddle may contain different information or data points that are critical numbers to success. However, all financial huddles should be quick, collaborative, and encourage questions and provide a friendly atmosphere to challenge assumptions.

Question 2 of 5 - Can you share more the origins of financial huddles at your company?

Trevor: Mark, that's really the perfect question for Shawn. Here's what I got from him.

I started the weekly and monthly huddles in an effort to get more people involved in managing the general ledger codes. It was an early step in working toward a culture of “ownership thinking”. 

Sharing GL codes and Key Performance Indicators (KPIs) helped to get team members from all departments involved at a different level, thus helping to show them and their departments how they can impact the success of the company. 

I’m sure there are various and different views out there on how to implement Open Book Management (OBM). However, for me, assigning GL codes and getting together routinely was a first step toward financial literacy. 

Shawn Burchum, PFSbrands Founder and President

Question 3 of 5 - What have been some of the benefits?

Trevor: Our financial huddle, parallel to our business model, is all about continuous improvement. It has changed over the years and continues to change from time to time to improve the session. 

They started out as a reporting session of company performance from the previous month. While keeping the monthly huddle, weekly key performance indicator sessions were born to share more real-time information and [a clear] line of sight to how the company was performing on a weekly basis. 

While historical reporting is critical, forward thinking was introduced to our sessions by forecasting next week’s performance. Today, we are early in a rhythm of forecasting numbers for the upcoming month and measuring how good we are at predictions! 

There will be forecasts that show a negative trend before it happens. Imagine being proactive on how to avoid those negative trends instead of searching for a solution after you are weeks or months into it.

Question 4 of 5 - Could you elaborate more on your typical agenda?

Trevor: The agenda is really simple and it never changes so that we keep the rhythm. We start at the beginning and go through our forecasts and results in the same order every week. 

That’s not to say the conversation is consistent. It is critical that everyone comes prepared and explains variances to forecasts. 

This discussion regularly spills over into deeper explanations of the numbers and assumptions in the forecasts. You will be amazed at the collaboration and sharing of information that goes much deeper than any agenda will ever produce!

Question 5 of 5: What is your advice for other business owners contemplating financial huddles?

Trevor: Be committed. It is a learning process and continuous improvement opportunities will surface quickly. 

Certainly, put thought into your session and the key performance indicators that are critical to your business. However, don’t let the planning drag on and keep you from jumping in.  

If you stay committed to the sessions and continuous improvement, the collaboration will drive the journey, and the group will identify key performance indicators that you may not even know are critical to the business units.

Said differently, the wisdom of the crowd is much smarter than an elite few. 

Lastly, if it doesn’t make sense to have the entire organization attend the meeting, be sure to extend the results of the session to everyone. Invite every employee to attend at least once to understand the collaboration and forward thought taking place. Good luck!

Financial Huddles, Are You Ready?

If you are still not sure if financial huddles are for you, I recommend the book I read in 1993 and multiple times thereafter--The Great Game of Business by Jack Stack. It's not a detailed playbook on how to start financial huddles. Instead, you'll gain a mindset behind the driver of financial huddles--Open Book Management.

I also recommend a second book peppered with case studies of small businesses practicing Open Book Management by John Case. It's aptly named, Open-Book Management: The Coming Business Revolution.

Need help getting started? I'm a click away here on LinkedIn. Plus, I think I can get you connected with Shawn and Trevor if you want to hear more from them.

I almost forgot. Are you an Executive Director of a non-profit? Financial huddles are for your organization too.

About the Author

Mark is no Mike Wallace when it comes to journalism, but as time permits, he enjoys writing in another small sliver of cyberspace--his website G3CFO.

Mark has been a practicing Free Agent CFO™ since 2001 serving small to mid-sized business owners helping them to expand their top and bottom lines while improving their business values at the same time.