In any business, financial problems can be either isolated and acute or develop over time and may affect both working capital and solvency. The Entrepreneurial Operating System (EOS) provides many organizations with a system that can be used to effectively solve these financial problems using a meeting format called the Level 10 (L10) Meeting.
The L10 Meeting is intended to encourage alignment, focus on issues and ensure that leadership teams are held responsible. When financial issues appear, the L10 format will help leaders to recognize, discuss, and eliminate them as fast as possible. In this article you will learn about how to use L10 Meetings particularly to tackle financial concerns so that your team remains financially strong and oriented towards the development.
What is an EOS L10 Meeting?
An L10 Meeting is a weekly format of the meeting that is designed to enhance leadership team efficiency and productivity. As a result, L10 Meetings have a clear set of objectives and are a reliable method of reviewing key company objectives, addressing emerging concerns, and evaluating performance.
The structure of an L10 Meeting typically includes:
- Check-In (5 minutes): Short messages to maintain the communication and interest of all the participants.
- Scorecard Review (5 minutes): Check basic data, financial ratios as well.
- Rock Review (5 minutes): Review status on Rocks which are the quarterly goals.
- Customer/Employee Headlines (5 minutes): Get relevant updates from clients and employees.
- To-Do List Review (5 minutes): Make sure that everyone present has finished the tasks that were assigned at the previous meeting.
- IDS – Identify, Discuss, Solve (60 minutes): The major portion of the meeting, which is spent in the search for and analysis of crucial problems.
- Conclude (5 minutes): Check the list of tasks, priorities, and rate the meeting.
It helps maintain order, so the meetings are effective, rather than having everyone spend time talking about unrelated issues. However, if there are some financial conflicts on the L10 Meeting, the IDS process helps the team to solve them.
Financial Problems and L10 Meetings
Financial issues, in particular, can be addressed systematically and collectively in the course of L10 Meetings. Below are steps to use the L10 format specifically to solve financial issues:
1. The Surface Financial Issues During the Scorecard Review
The Scorecard Review is a core part of every L10 Meeting. Here the team goes over figures that would give an indication about the financial state of the company; if it has enough cash flow, revenue, expenses, profit margins or outstanding receivables among others. If the numbers are outside of these parameters, then there is commonly more serious problems with the company’s finances.
Action Steps:
- Identify Financial Metrics: Make sure that your scorecard contains financial indicators that can signal problems on the horizon.
- Establish Thresholds: Establish specific goals or bands for each financial measure. If a metric is below or above this range, then highlight it to have a discussion about it.
- Add to the Issues List: If a financial metric is questionable, it should be transferred to the Issues List for consideration during the IDS part of the meeting.
Such an approach to financial metrics is preventive, which means that the team can prevent significant problems from arising.
2. Prioritise Financial Issues Using IDS Process
The main activity of the L10 Meeting is the IDS or Identify, Discuss, Solve process, which is the main area where the team addresses the most important challenges affecting the business. When there is information on financial problems during the Scorecard Review or in some other way, they can be prioritized here.
Action Steps:
- Identify the Financial Issue: Make sure people know what the financial problem is all about and how big it is. It may be poor cash flow, urgent bills, low sales, or increased prices.
- Discuss the Issue: Allow the group to share anything they want about the issue including its causes, effects, and other factors. Promote the discussion but make sure that it does not go off track.
- Solve the Issue: Work together to find the practical solutions to the financial problem. Some of the measures may include the need to alter the budget, shift the financial focus, enhance the collection mechanisms or adopt the cheaper ways of carrying out the business.
IDS process guarantees that the team not only recognize that there are financial problems but also initiates action to address those problems. This approach makes the meetings brief and focused on finding solutions to the existing problems.
3. Financial targets can be fueled by rocks
In EOS, “Rocks” are quarterly goals that the team establishes to move the company towards its vision. Financial Rocks are a strong practice to keep everyone’s attention on solving financial issues in a broader perspective, thus guaranteeing the team’s progress toward its goals.
Action Steps:
- Set Financial Rocks: Decide on one or two major targets for the financial plans for every quarter that are in harmony with the general aims and objectives of the company. Lob objectives might include raising profitability, decreasing operational costs or increasing cash balances.
- Track Progress Weekly: The status of each Rock should be checked during each L10 Meeting. If there is any financial Rock that is not on the right track as planned, then it should be tagged under IDS.
- Assign Accountability: Set a person to be charged with each of the Rock. This accountability helps to guarantee that financial objectives are attended and prioritized with the same effort.
Applying Rocks to financial goals means that short-term activities are linked to the long-term vision, and the team works on financial problems systematically.
4. Complete Financial To-Dos as Soons as Possible
L10 Meetings feature overdue action lists, which are short-term items of work agreed to by each team member for completion before the next meeting. Specifically, to maintain the integrity of the relationship, it is crucial that any to-dos that are assigned whenever financial issues are involved, must be done effectively.
Action Steps:
- Assign Specific Financial To-Dos: Make it a point that every move concerning a financial matter is documented and delegated to any of the team members. For instance, it may involve preparing new cash flow estimates, holding a meeting with a major supplier to discuss new conditions for payment, or introducing a programme for reduction of expenses.
- Set Clear Deadlines: Provide each financial to-do with a particular timeline to make progress continuous.
- Hold Team Members Accountable: The To-Do Review section of the meeting should also help you determine if a particular assigned task has been done or not. Incomplete tasks should be reported with the purpose of defining the problems and developing the corresponding strategies.
Systematic performance of financial to-dos means that financial concerns are never overlooked, and small problems do not fester.
- Make Financial Accountability and Transparency part of organisational culture
Transparency is an essential part of EOS and using the L10 Meeting format. It helps create an accountability culture when the financial concerns are raised and dealt with, and where possible, the action plan stated. This transparency is especially relevant for financial issues because if these issues are hided or avoided they will only grow in size.
Action Steps:
- Encourage Open Dialogue: Encourage the members of the team to report any financial matters with ease without being punished by blaming.
- Set Clear Expectations: Describe the expectations of the team in terms of handling of financial problems, the matters that must be followed up or made accountable for.
- Celebrate Wins: When financial problems have been solved, it is important to celebrate such achievements, and show people that it is beneficial to be clear with one another and work together.
When it comes to the nature of the financial issues, it is important to build a culture of transparency in order to keep the team on its toes and maintain the financial health of a company.
Finally Use L10 Meetings for Ongoing Financial Stability
The EOS L10 Meeting format is an effective and valuable tool for the companies that have to solve the financial issues in advance. By including financial measures into the Scorecard, having Rocks set for the financials on a quarterly basis, and dealing with financial issues through the IDS process, the teams will be able to manage their financial position.
When there are financial problems, it is possible to solve them within the framework of the L10, which will make it possible to quickly make decisions. The financial problem is solved in a structured and transparent manner hence encouraging long term stability and growth.
If your team is prepared to start using the EOS L10 Meetings to address these types of financial problems directly, here are some suggestions to help create a financially strong company. We use EOS Inspired Financial Management with all of our client engagements… reach out if we can help!
