Get Started With Our Free Course: Essential Financial Modelling

Why implementing a financial modelling standard is hard

At Gridlines, we care deeply about Standards in modelling.

In this video, Kenny Whitelaw-Jones discusses some of the challenges that modelling teams must overcome to implement standards. He also discussed findings that were uncovered through a recent survey of financial modellers.

Standards in Modelling

Standards in modelling have been discussed at length for many years. For this blog, we’re not interested in discussing which standard is best (we’ll save that for another time!). We’re happy that there are multiple standards, and as long as you pick one and stick to it – it’s good for your staff, your team, your partners, your clients – that you have a clear and transparent way of building spreadsheet models.

The question we are here to tackle is why it is difficult to implement a standard approach across a team.

We recently sponsored the biggest survey of Financial Modelling ever done (as far as we are aware) and what we saw was that 91% of people thought that standards were really important.

You can download the full survey results here.

Despite that, fewer than 50% of respondents were implementing standards in their teams. This poses an interesting question.

Why do people think standards are important, but then not put the time in to implement them? To quote Kenny it’s because “this stuff is hard”.

People know that it’s important and that they should be doing it, but it’s really hard to implement.

We think that there are multiple reasons for that:

  • It’s hard individually to be consistent
  • It’s hard for teams to do things the same way every time
  • It requires a lot of practice
  • Modellers overall are self-taught

Again, the data supports this – the survey showed that 57% of modellers are self-taught. And, if you are self-taught you are going to develop your way of doing things and then it becomes hard to change.

If you prefer your survey results a little more interactive and visual – you can take a look at the Power BI Dashboard of the survey results here.

Change is hard

From our own experiences, people like what they like, and they don’t want to have to change.

That makes it hard to implement across teams, especially in bigger organisations. Perhaps a new team lead comes in from the outside and has their preferences and their way of wanting to do things. That constant mix makes it hard to maintain standards.

At Gridlines, we think standards are really important and within our team, they help us to work more efficiently and to reduce errors.

We’d be keen to hear from you and your efforts in your team, what works and what doesn’t work when it comes to implementing standards and improving quality in modelling.

You can download the full report by clicking the cover below.

Danny Leitch

Author

Danny Leitch

View Profile

Related Articles

How To Find The Right Financial Model Auditor For You - Gridlines

How to find the right financial model auditor for you

If you are in the market for a financial model auditor, here are some of the things you should know. Choosing a reputable model auditor You need to be sure that you are choosing a credible provider.  Your board and investors will want confidence that you

Our Work

We have the privilege of serving clients who are doing big, innovative things and who push us to do our best work. We like that. We support them with financial modelling, valuations and due diligence.