Numbers Talk!

The new economy has inspired a whole lexicon -- terms like knowledge worker, free agent, and Web-site stickiness. But one part of the corporate dialect remains unchanged: The native language of business is still numbers; a company's history is written in its financial statements.

Whether you're working in hr or marketing, whether you're soloing or flying tandem with a global titan like GE, your performance affects your organization's bottom line. Either you're generating revenues or realizing savings. If you're doing neither, you'd better start looking for a new gig.

So why don't more people take numbers into account in their day-to-day work? There's no single answer, but it's not a stretch to argue that some people are simply finance- phobic. "We're all a bunch of liberal-arts majors here," says Bruce Benidt, 49, chief learning officer (CLO) at Shandwick International, a big-time public-relations firm whose client list runs from Microsoft to Hormel. "We're even more afraid of talking about money than we are of talking about sex."

When Benidt took over the CLO post in July 1998, after 10 years of counseling and training employees for Shandwick, he resolved to help his colleagues think more like MBAs. He organized an in-house "university." One of the courses, "Business Literacy I," is a two-hour class about the agency's basic finances that every Shandwick employee is required to take. He also helped launch a "master's" program, a series of workshops for higher-level employees.

"I thought these classes would cover the basics of accounting," says Diana Harvey, 33, an account supervisor in the Minneapolis office, who concedes that she knew nothing about the agency's finances before she took the business-literacy class. "But the course really focuses on how our company makes money -- and has the potential to lose it -- on a daily basis."

As for Shandwick, its experience suggests that learning the numbers is good for your company: If you know what makes figures move in the right direction, you can do your job differently and push them in that direction. Your customers will also appreciate your fluency in finance. But the biggest payoff may well be in your own career.

"One critical component of evaluating people is whether they understand the ins and outs of how the agency makes money -- and that requires an understanding of business finance," says Mary Jeffries, 42, chief operating officer at Shandwick. She's not alone. Your boss, like Jeffries, must nail your company's financial goals, and you have to help. As always, the bottom line in business hasn't changed: You can't get ahead if you don't know how to work with the numbers.

Recently, I spent a day with 20 senior staff members at Shandwick, as they grappled with three vexing problems: managing cash flow, the economics of hiring, and identifying the most profitable sales prospects. Think you know your numbers? Then test yourself by working through the following scenarios that are based on real-world situations.

Managing Cash Flow: The branch office that's profitable ? and penniless

"Cash is king." It's a maxim in corporate finance, but it doesn't say much. Many people who toss that cliché around can't explain exactly why cash flow is so vital to a company's financial health. Here's the short answer: If a company doesn't have enough cash on hand, it can't pay its rent, meet its payroll, or fund its day-to-day operations. A company may have contracts that guarantee enough sales to make it profitable, but if that revenue hasn't arrived in the company's coffers, the company may not be able to pay the light bill.

Cash flow is so crucial at Shandwick that its chief financial officer, Kelly DiGrado, 33, teaches the concept in "Business Literacy I" at the Minneapolis office. "I try to explain cash flow by comparing it to a checkbook," says DiGrado, who has spent her entire 11-year career at Shandwick. "A checkbook tracks personal cash flow in the same way that a corporate cash-flow statement tracks the money that moves in and out of a company."

DiGrado asks Shandwickers to assume the role of the company's check writer. She then unveils the case of the branch office that managed to run out of money on $3 million in sales a year. Here are the specifics:

You're a vice president for an established agency, and you've been given $500,000 to open an office in southern California. Right away, you land a $3 million account, worth an average of $250,000 a month in revenue. You're off to a great start.

You hire several people to manage the new account. Salaries for your first month end up costing $100,000. Rent is $20,000, and you pay $30,000 to suppliers for furniture, new stationery and business cards, and other operating expenses. By the end of the month, the cash balance is down to $350,000. But you still haven't billed the client, because the billing software hasn't been installed yet.