Probably one of the strongest predictors of business impact is the ability to understand the business – or, in other words, business acumen. However, this is a skill that is underdeveloped in HR. In fact, 4 in 10 CHROs consider business acumen the most lacking skill in HR talent. The good news is that there are different ways for you to develop HR business acumen. Seven, in fact.
Business acumen is sometimes referred to as business sense or business savvy. An HR professional with business acumen: Understands the core business principles, internal and external operations, and the goals of the organization. And can strategically tailor and position their policies and day-to-day activities to best serve the organization and its customers. Developing business acumen changes your understanding of what the organization needs, and grows your confidence in taking action and implementing change. You’ll also earn the credibility and trust of senior leadership. So how can you as an HR professional develop business acumen?
Here are seven different ways you can become more business savvy.
1. Build a deep understanding of your business
You want to get to know your organization’s product or service and understand what’s involved in delivering it. That involves answering questions such as: What are the biggest priorities and concerns of your organization’s leaders? Who is your biggest client, and why do they use your service or product? Which product or service is the most profitable and why? What is the company’s operating margin? What did the previous financial year’s revenue and profit look like? This will help you understand how the metrics that matter to you as an HR professional (such as employee engagement, retention, benefits, and so on) lead to improved organizational performance and a healthier bottom line.
2. Understand your (desired) customer base
Knowing who your customers are is going to help you empower your organization’s workforce to better serve those customers. Try to find out: Who your customers are, what they are looking for, what their biggest challenge or pain point is. Who your competitors are and what makes your organization different. How HR can help position the organization to better serve its customers, increase the value provided, and drive profits.
3. Improve your financial knowledge
Your business savvy won’t be complete without at least a basic understanding of finance essentials. Familiarizing yourself with basic financial management terms will help you better understand your organization’s money-making model. Former Harvard Professor and best-selling author Ram Charan say that every leader must be able to answer three questions: What is the money-making model of my organization? How does my team contribute to the money-making model? Does everyone on my team know the answers to Questions 1 and 2? Needless to say, this also applies to HR.
4. Learn common management theories and their application
This will help you better understand the challenges you face, how a manager’s strategic decisions impact others and the wider company and consider the broader needs of the organization. Studying management makes it easier to recognize how all decisions are connected, and how they combine to work toward a greater purpose and improve financial results. This is most relevant to HR professionals in managerial positions and can be improved by taking part in management training.
5. Continuously educate yourself
Learning never ends, and you can’t learn everything on the job. You’ll have to look for further education from different sources. Here are three tips to get you started: Choose the right education: up-to-date online courses are a great way to develop HR skills, including business acumen, and prepare you to take on a more strategic role. Stay informed: continually reading books, listening to podcasts, reading HR magazines and articles, and participating in industry events will help you to stay up to date. A note of caution: some materials are outdated and don’t reflect what HR looks like today, so choose wisely. Follow business leaders: Find prominent HR influencers and follow their blogs or social media to learn from their insights and thought processes.
6. Consider job shadowing
Observing how people work across different departments is a brilliant way to gain new knowledge, build new relationships, and get insight into the organization and how it functions. Spend time with colleagues from other departments to develop your understanding of how the operations there impact the organization’s overall success. Doing so will also help you better understand where the limitations and challenges are.
7. Get a mentor
As you advance in your HR career, what you say, how you say it, and when you say it becomes increasingly important. It’s not easy to pick up communication and consulting skills on your own without some outside help. That is why it can be highly beneficial to find a mentor or coach with significant experience, either within your organization or elsewhere.
So there you have it – 7 ways that HR professionals can develop business acumen. As you can see, business acumen training is key for all HR professionals today. It is crucial in helping you connect HR strategy with the wider business strategy, and enabling you to provide real value to your organization. The last question for this Bite: How many strategies have you already used to develop your business acumen? Let us know in the comments.