How can HR Professionals build Business Acumen?
We had the opportunity to speak to Jonathan Ferrar, CEO and co-founder of Insight222. We discussed HR skills of the future and the ever growing need for business acumen. Jonathan shares with us four tips that HR Professionals can leverage to continue growing their business acumen skills.
Check out the video of his interview below as well as the transcript from our discussion. For more videos on the future of HR, don’t forget to subscribe to our YouTube channel.
myHRfuture: Why is Business Acumen important for HR?
Jonathan: Recently, we conducted a survey looking at what new skills HR requires. Although all of those that participated in the survey felt skills such as digital, agile, design, analytics, change management etc were required in huge amounts. One that people commented on more than anything was the requirement for business acumen.
Business acumen refers to a keen and agile ability to understand, interpret and deal with business situations. I thought that business acumen had been around for years, that people were really honing in on that skill, but it is clear that that's not necessarily the case. When I was at the HR Congress, Dave Ulrich and Loren Shuster both spoke about business acumen.
Lauren is the Chief People Officer at Lego and formally in commercial roles, he was saying that the most important thing was: Can you as an HR professional stand up in front of your team and talk about the business for 20 minutes? He means talk about it financially. Talk about the products and services. Talk about the external environment in which you're a competitor and the competitors in your supply chain? All of those things that are contributing to the success of the organisation. Can you stand up in front of your team and talk about the business for 20 minutes, not about HR, but the business?
myHRfuture: So what can HR Professionals do to improve their Business Acumen?
Jonathan: There are four areas that HR Professionals can focus on to help improve their business acumen. Firstly, number one, is financial literacy. Financial literacy involves an understanding of key accounting concepts such as profit, revenue, sales and an awareness of factors that impact important business metrics such as, seasonal business cycles. Find out from Google, or from a free course, what is a balance sheet? What is a profit and loss account? What is cash flow and other financial metrics? Then take that knowledge and read your annual report and put it into context in your business.
Number two, internal environment. Internal environment refers to the understanding of your organisation’s work environment and objectives, and how your teams work contributes to this. Learn about the products and services in your supply chain within your organisation. As well as understanding exactly what you do, who you sell it to, how you make it, and finally, how you serve your customers. Building relationships within your organisation from a broad range of backgrounds with diverse responsibilities can also support you in gaining internal awareness.
Number three is the external environment. External awareness requires awareness of factors such as the economic conditions, industry sustainability and competitors. The tip here would be; to learn about your competitors, learn about your macroeconomic environment. Liaise with your marketing team and find out who your top competitors are, remember that may differ by region or country etc. Once you have an understanding of who your competitors are, go and Google them. Find out about them, look at their websites and really deep dive to determine the similarities and differences between your own organisation. External awareness is important in workforce analytics as it enables you to forecast the effects of the decisions you make.
Finally, number four is about the politics and political awareness you have of the whole organisation. This is the interplay of functions, departments and countries in your organisation and how they fit together. Political astuteness is essentially being able to understand organisational relationships, influence others and resist influence where necessary. My tip here is to go and find yourself a mentor, an executive, a manager or colleague in another part of the business outside of HR, who can help you understand how the organisation politically gels together.
These four areas; financial literacy, political astuteness, internal and external awareness are the four key areas I would suggest focusing on when trying to cultivate and grow your business acumen.
ABOUT THE AUTHOR
Jonathan Ferrar is the CEO and co-founder of Insight222. He is a globally respected speaker, author and business adviser in HR strategy, workforce analytics, and the future of work. Jonathan has worked in corporate business for 25+ years for companies like Andersen Consulting (now Accenture), Lloyds Bank, and IBM where he served as executive manager for 10+ years. He is a keynote speaker, co-author of The Power of People, and Board Member of the CIPD.