A conventional company is divided into different departments. Each of them faces unique challenges that vary depending on the nature of its processes. One of them is the financial department. Some of the issues faced by managers in this arm of an organization have to do with cash flow, approval of budgets, and remuneration of employees.
In this paper, the author analyzes the challenges faced by financial managers. The problems are highlighted in Microeconomics: Understanding the Market System (Films Media Group, 2011). The educational film addresses some of the issues faced by contemporary financial administrators. A critical analysis of the film reveals that pressure to perform and policy irregularities are some of the major challenges facing financial managers (Films Media Group, 2011). The author will use information from two peer reviewed articles to address this issue. The two are authored by Weissbrich and Krohmer (2011) and Tarzi (1999). The findings made in this paper will go a long way in improving the performance of financial managers.
General Problems Facing Financial Managers
According to Byrd, Hickman, and McPherson (2013), an evaluation of problems facing financial departments allows organizations to carry out the necessary reforms. Consequently, the overall performance of the firm is enhanced. The recent global financial crisis is perhaps one of the major threats that have ever faced the financial sector. Financial managers were expected to guarantee owners of business of high performance even when the economy was at its worst. In light of these expectations, Byrd et al. (2013) point out that the roles of financial administrators have evolved based on their abilities to overcome such challenges.
A survey carried out by Wilson (and cited in Byrd et al., 2013) found out that financial administrators complained of two major problems. They included managing the high cost of healthcare and the demands placed on them to improve the profitability of their companies. Other issues include the morale and motivation among employees, as highlighted in the film mentioned above (Films Media Group, 2011). Financial managers must address these challenges to help organizations survive the dynamic nature of the global market.
Findings from other Studies
A number of studies have been carried out on the subject of challenges facing financial managers. The current paper evaluates such two undertakings whose findings are reported in articles retrieved from the ProQuest Database. Weissbrich and Krohmer (2011) evaluate the challenges facing financial managers from the perspective of Return on Investment (ROI). On their part, the article by Tarzi (1999) assesses the issues from an economic point of view. Both articles highlight how market liquidity affects the performance of administrators. In addition, they address the issue of competition and efficiency.
Pressure to Deliver
As previously mentioned in this paper, financial managers are expected to increase profits for business owners. However, Weissbrich and Krohmer (2011) point out that prevailing market conditions make it difficult to realize some of these expectations. Such conditions include market liquidity. To this end, financial administrators may find it difficult to sell an asset fast enough while at the same time maintaining its value (Weissbrich & Krohmer, 2011). Weissbrich and Krohmer (2011) concluded that these professionals are faced with two major problems. The first entails the need to achieve pricing excellence. The second involves reaching at a mutual understanding with business owners when making financial decisions. In both cases, the pressure to deliver on the objectives is significantly high
Financial managers have distinct roles to play in the operations of an organization. The challenge to establish mutual understanding emerges when there are differences between the opinions held by financial managers and other stakeholders. The situation leads to reduced efficiency. Weissbrich and Krohmer (2011) argue that the misunderstanding reduce the ability of the administrators to deliver. Consequently, the pressure to maximize profits increases. There is also competition for resources in the firm. Failure to reach mutual understandings to resolve these competing interests impacts on the performance of the managers.
Economic Policies
Globalization is associated with unique demands on the financial sector. The study by Tarzi (1999) found out that policy misalignments are common in financial departments. According to Tarzi (1999), globalization requires policy development to enhance harmonization of activities in the sector. Unfortunately, there are instances where various policies are in conflict with each other. In spite of this, financial managers are required to perform even when the economic policies are against their individual preferences. The competition between the policies impacts negatively on the efficiency of the financial administrators.
Economic policies developed at the international level require the involvement of member states. The aim is to enhance harmony. At times, the policies fail to conform to those of a given member states. The financial managers are forced to work with these discrepancies, which impacts negatively on their efficiency. Tarzi (1999) cites a case in 1992 to support this point. The case involved a situation where the British government had no control over currency purchases (Tarzi, 1999). The result was threatened decimation of the economy.
Conclusion
Policy issues and the pressure to perform are the main problems facing financial managers today. Pressure emerges from within an organization. Companies place unrealistic expectations on their financial managers. The issue can be addressed by improving inter-managerial relationships to enhance the performance of financial administrators. Conflicts in policies are brought about by globalization, which brings different markets together. To address the problem, policies should be developed in a manner that is agreeable to all parties.
References
Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial finance. San Diego: Bridgepoint Education Inc.
Films Media Group. (Producer). (2011). Microeconomics: Understanding the market system [DVD]. Victoria: VEA.
Tarzi, S. (1999). Financial globalization and national macroeconomic policies: Managerial challenges to the nation-state. The Journal of Social, Political and Economic Studies, 24(2): 141-161.
Weissbrich, D., & Krohmer, H. (2011). Managerial challenges among marketing, sales, and finance actors. Marketing Review St. Gallen, 28(3): 20-25.