Communication is an
important driver of the finance profession just as it is in all other business
areas. The exact manner in which people in business communicate will, however,
depend on the context they find themselves in. For example, people who find
themselves to be in close proximity are more likely to choose verbal
communication over other forms. Recourse to verbal communication may also
depend on the availability of enabling technology like the telephone in the
modern age. Parties may also resort to writing as a form of communication. Indeed,
writing accounts for much of the business communication in finance. It is
unlikely that new advances in technology will herald any meaningful departure
from this scenario.
Writing is crucial for
someone starting out in finance as their writing competency would often
determine whether they are hired or not by prospective employers. In a highly
competitive business environment like the one we have today, writing remains
the first means of contact between prospective employers and employees
respectively. This need for good writing capabilities in prospective employees
has been heightened by a realization by employers that writing is important for
the success of their businesses. Employees dealing with finance must be in a
position to prepare good reports. Clients reading through whatever is in
writing should be able to pay attention to the content, a task which is only
possible when the writing is good. Two reports by the National Commission on
Writing for America’s Families, Schools and Colleges underscore the
significance of writing in increasing an applicant’s chances of get the job
(2004). The two reports, Writing: A
Ticket to Work and The Neglected R: The Need for a Writing Revolution
castigated schools for not teaching students how to good writing skills. It was
a finding in both reports that employers are less likely to consider people lacking
in clear writing skills for hire. Even when employers do hire them, they would
still not want to promote theme relative to their colleagues who may be good at
writing. Many of the companies that completed the surveys forming part of the
report also noted that writing ability was a key consideration in their
promotion decisions. Even more important for the current discussion is the
finding that a disproportionately high number of companies in finance administer
writing assessments in their hiring practices. This alone explains just how
important writing is in finance.
The need for good
writing for a finance professional, however, extends beyond the mere interest
in getting a job. Thus, writing is also important in communicating with the
various parties that the professional must interact with. For those finance
professionals in paid employment, there is the constant need to communicate
with superiors through writing. The board of a company may be considering a
decision to invest in alternative projects. Financial analysis is often key in
evaluating the merit of investing in any project. Capital budgeting becomes
handy in such evaluations. Some of the key people with the responsibility of
making final decisions on projects may not have a technical background in
finance. It is, therefore, incumbent on the analyst to clearly present his or
her findings in a persuasive manner. There is no benefit doing an excellent
capital budgeting evaluation and poorly presenting it so that it fails to get
the approval of key decision makers. In addition, one must also have constant
written communications with colleagues in their respective areas of finance. A
lack of good writing skills can jeopardize such communications. For instance,
poorly written email communications can be misunderstood by colleagues. The
cost of such misunderstandings to the company will largely depend on the
context. For instance, an email from the finance officer authorizing payment may
lead to excessive payment from a company account if the mail fails to be clear
on the exact amount that should be paid out. Superiors are likely to consider
informally drafted emails and memoranda as a sign of insubordination by the
originator of such writings. Left unchecked, the same problems may extend to
external parties. Thus, a poorly drafted memo may make a trusted client begin
to think that the company is becoming careless.
Besides the areas in
which writing has a clear role in finance as a field, those seeking even a
deeper engagement may find writing very important in academic aspects of
finance. Every profession improves the collection of its knowledge base through
academic enquiry. A finance professional may choose to commit his/her work to
developing new theories and testing existing ones through academic
publications. This is also an exercise requiring a repository of good writing
skills. There are a variety of avenues through which finance experts get their
perspectives to fellow experts as well as the general public. Thus, one may
publish their financial opinion in periodicals like the Wall Street Journal,
The Washington Post and The Financial Times. Publications in these magazines
often receive readership from various groups including the general public
owning to their relative lack of technical jargon. In this way, the finance
writer is able to influence public opinion. The extent to which one actually
manages to influence will, however, depend on the quality of their
publications. A poorly written opinion article on a technical issue like the
recent financial crisis will rarely attract the interest of a lay reader who is
unaccustomed to complex financial jargon like ‘risk-return premium.’ This makes
it very crucial for a good financial journalist to understand the audience for
which their writings are meant. Even a more lucrative area for a finance
practitioner to demonstrate their mastery of the field is to publish in peer
reviewed journals. These are the publications that normally change the way
people view certain aspects of doing things. A case in point is the plethora of
writings by finance scholars regarding the recent financial crisis. There are
some who have faulted the regulations prior to the crisis while others see
nothing wrong with those regulations. Whatever the position of financial
scholars, their views in those academic journals can only succeed if accompanied
in exemplary writing. For instance, Franco Modigliani and Merton Miller were
able to change the course of finance when they published their theory on
capital structure. It is doubtful whether anybody would have paid attention to
their theory if it was never well articulated in writing.
Though not exhaustive,
the foregoing discussion underscores the important role that writing plays in finance
as a discipline. From the practitioner to the academic, good writing skills is
significant for success. The practitioner must communicate with colleagues,
superiors as well as clients in good writing. Likewise, the finance academic
must present his research findings in good written peer reviews journal
articles.
Reference
The National Commission on Writing for
America’s Families, Schools, and Colleges (2004). Writing: A Ticket to
Work….or A Ticket Out: A Survey of Business Leaders.
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