Business acumen is the sum of three areas
of knowledge & understanding
The foundation one is Financial Acumen, which comprises a firm grasp of the things that drive profit and cash flow, supported by fluency in the jargon used in financial statements, and enough accounting principles not to get bamboozled by figures that others have compiled, which could be based on misunderstandings. With this one skill under his or her belt, the HR professional can readily prioritise issues, question assumptions, contribute freely to business discussions, and see how their own efforts can directly affect financial results in both the short and long term.
The second item is a holistic, systems view of the business. What happens in any one department can critically affect the work of other departments. If you don’t see how technology will change the jobs you currently have in the business, you can’t see how to help existing employees adapt to the future, let alone hiring the right mix of skills and attitudes needed for success in a few years’ time. Leadership is a focus in many big companies, but the actual needs of leadership in 5 years’ time may be quite different from those we have today, as business models change and leaders will have to deal with innovation not just in product or market, but in customer relationships, supplier relationships, more virtual teamwork, and rapid changes in what is outsourced or insourced.
The third essential is a clear view of the business in its external context: customers, competitors, suppliers, and other external factors like governments and new technologies that change the rules of engagement. A purely internal view of the business, no matter how clear, will never be sufficient to support wise decision making in a rapidly changing world.
Meeting the challenges of building Business Acumen
When your organisation is experiencing turbulent times and you are in a position where you have to lead through change, you must stay purpose driven. If the leader of an organisation veers away from the organisation’s purpose, how in the world are the employees of that organisation supposed to stay on target? It’s just not going to happen.
You might not know the exact way in the beginning, you may be more nervous than you have ever been in your career or the criticism from the outside world may be at an all-time high, but if you direct all of your focus on staying purpose driven and creating a culture high on purpose, the “how” will eventually present itself.