Checklist Rock Star: Why You Should Become One

The checklist is 75 years old this month, and still is a simple and elegant tool to transform your finance and accounting function.

The checklist is 75 years old this month.

I know you’ve always wondered about its origin, so here it is:  The checklist is actually an innovation in aviation. It was invented in 1935 after a Boeing prototype crashed during takeoff due to pilot error, killing both the pilot and passenger. After the disaster, a group of test pilots created the first checklist to govern takeoff and landing procedures to prevent a similar incident from occurring again (and avoid dying themselves).¹

The act of completing a checklist certainly has negative associations.  Checking stuff off of a list seems mundane, bureaucratic, and even a little drone-like.  But here is the thing.  A well-designed and executed checklist has surprisingly powerful effects.  Consider this:

One surgeon, acclaimed as a major “thinker” behind the ongoing healthcare reform², has scientifically proven that the use of simple checklists dramatically reduces hospital errors during patient care. In a 2006 experiment with Michigan hospitals, using a checklist to govern just one complicated activity (the insertion of central lines) resulted in 1,500 lives saved and $175 million dollars in cost savings over eighteen months.³

What does this mean for finance and accounting professionals?  Well, performing surgery is not dissimilar to closing the books in that both environments:

• Demand accuracy and precision
• Require expertise in a complicated area
• Rely upon a coordinated effort by multiple individuals to accomplish the objective
• Are deadline-driven and may cause sleep deprivation

If you’re not in the habit of following a close checklist during the period-end close, creating and using one at the activity level during your next close will give you some pretty exciting results:

1. Fewer mistakes: Having that whole list of activities in one place with names assigned to each task make it memorable to everyone. That means there is less of a chance someone will forget to record that adjustment or complete that reconciliation.
2. Removal of bottlenecks: When each person’s responsible tasks are outlined in the checklist, it is much easier to determine who is overloaded, who is underutilized, and redirect resources to smooth out the workload.

And that’s just the tip of the iceberg.

To learn more than you ever thought possible about checklists, get Dr. Gawande’s latest book.  To learn just a little bit more about the close checklist, click here.

For more small ideas to transform Finance, visit http://backofficemechanics.com