Business Acumen Blog

If you’ve ever taken our course, or sat in one of Kevin’s presentations you’ve seen our Five Business Drivers model.

Cash is measured on the Cash Flow Statement, Profits are measured on the P&L, Assets are measured on the Balance Sheet, and analyzing these financials over a period of time will help you measure Growth. And then there’s that Fifth Element: People, which sometimes takes a backseat. Just ask any business Executive how they measure the success of their company and they’re likely to have an answer that has something to do with one of the first four drivers. Sure everyone agrees that people are our most important asset, and we all get it… it’s the decisions of people that drive the numbers, but we struggle to measure the performance of people.

Look, in an increasingly complex and global business environment, producing and recruiting top level talent who aren’t afraid of change, who take the right strategic risks, who bring about unseen opportunities, and who don’t flinch when it comes to creating and recreating a competitive advantage will make all of those numbers on your financials look healthy. But too often we measure people by measuring the financial statements; Assuming that if we’re reaching some agreed upon financial goal that we must be managing our people well. While that’s one way to look at, it’s probably not the smartest.

Take Mark Little, his story is shared in Ram Charan’s latest book that he co-authored with Bill Conaty, “The Talent Masters”. Mark was on the path to success as GE’s Vice President of Engineering for their power systems division. This made him one of the top 125 executives at one of the world’s biggest companies. And then disaster.

The rotors that run GE’s turbines were failing, the media picked up on the story, and panic set in that GE would struggle to compete in a very profitable market. The divisions numbers plummeted and Mark was replaced, but he was not let go. Instead he was told that the CEO and Senior Vice President in charge of HR wanted to meet with him personally. What he must of thought would be an exit interview, was anything but. The executives assured him that he had a bright future at GE.

Bill Conaty was that Senior Vice President over HR, and in the book he recalls, “Mark wasn’t just a name on our list, but a guy we knew thoroughly.” If GE would have managed Mark based upon the P&L of his division he would have surly been let go. Today Mark is one of 12 executives that report directly to the CEO. He is a key player in driving the success (the numbers) of General Electric.

Business demands that we measure cash, profits, assets, and growth. If you’re a public company it’s the law that you measure these numbers. There’s a science, agreed upon measurements, and a formulaic system for measuring the numbers. But what about measuring people? Charan and Conaty’s opening sentence hits like a piledrive to the face, “If businesses managed their money as carelessly as they managed their people, most would be bankrupt,” they continue…

“Managing people with precision is without question harder than managing numbers, but it is doable and gets easier once you know how. Companies such as GE, P&G, Hindustan Unilever, and some others analyze talent, understand it, shape it, and build it through a combination of disciplined routines and processes, and something even rarer and harder to observe from outside: a collective expertise, honed through years of continuous improvement in recognizing and developing talent.”

Remember that the Fifth Business Driver is the true measurement of a company’s success, but it doesn’t (and can’t) stand alone. There’s an opportunity for HR professionals to elevate their departments from second class, to mission critical. The CFO and the Senior HR Executive should be seeing the same things, tackling the same problems, and architecting plans to capitalize on an ever changing marketplace. Of course, in order to do this you need to be respected as a business leader first and an HR professional second. Practice and perfect your business acumen to position the Fifth Driver at the center of your company’s success, champion the interdependence of the Five Drivers, and be obsessed with measuring people and numbers.

The SHRM 2010 ANNUAL CONFERENCE & EXPOSITION featured more than 150 breakout sessions featuring leading experts speaking on some of the most important HR topics, including talent management, legislative compliance, strategic HR practices, and global HR issues.

Twenty-five of these experts received a speaker rating of 4.8 or higher (out of 5), making an exclusive list of SHRM’s Top Rated speakers.

Kevin Cope’s Building Business Acumen session almost made this list… just kidding! He made the list.

Here’s the list…
SHRM’s Top Rated Speakers PDF

And we’re not shy, here’s a scanned copy of Kevin’s scores and attendee comments…
Kevin’s Scores & Feedback

Keep in mind that Kevin doesn’t throw out stuffed carrots and talk about soft skills like positive thinking or inspiring creativity. He’s taking the subject of business acumen head on – a subject that most folks shy away from. So what is it about Kevin’s approach to finance that  gets an HR person to comment, “Best session of the conference!”

There’s likely a lot of answers, but as I sat and listened to the boss-man give his spill, it struck me that financial conversations are too often reserved for the c-suite, and such a mentality creates a culture of exclusion. It must be refreshing for an attendee to be brought in on an intelligent dialogue about the inner-workings of business, to be regarded as a business person first, and an HR professional second.

One last observation, the room was full of HR professionals of varying degrees of experience. Surly some were well versed in the language of finance and could have easily walked us through their company’s latest financial results. Others would likely never admit this to their boss, but they find financial conversations painfully intimidating. But it’s interesting that the scores and feedback were universally kick-butt positive. Nobody made the comment that the material was too basic, and nobody said the material was over their head. I think this is a clear indication that Acumen Learning is onto something! Our approach to business acumen is unique and different from other ideas out there. It’s an approach that resonates with business people who want to make a difference within their sphere of responsibility.

We’re back from San Diego. It was our first time attending the annual SHRM conference, which is the biggest human resource conference in the world. Exhibitors ranged from the expected, like Yahoo Hot Jobs! and ADP, to the unexpected like the guys that make frozen bunt cakes. Bunt cakes – HR? Who knew? Along with the expected and unexpected, there was us. We learned a few things from attending. One thing in particular we learned is that a company has to reach a certain point to implement business skills training in their company.

Everyone Has an HR Person…

As small company after small company approached our booth, it hit us that just about every company has an HR person… but not every company has someone over training. For example, a 16 employee widget maker would likely have someone over HR, but training… not likely. With that said, the person over HR would likely also be over training, but they would probably focus on HR topics like safety, harassment, etc. (i.e. Train our employees on topics that will prevent us from getting sued.).

But when it comes to employee development or skills training, the small company’s we talked to at SHRM were very interested – but not interested enough to make it a priority. Meaning business acumen training was appealing and needed badly, but not as bad as anti-sueing training, or recruiting efforts, or benefits packages, the list of HR responsibilities and priorities goes on and on. And I don’t fault them, if our company makes widgets and I have to choose between an employee with business acumen and an employee who’s limbs are chewed off by my equipment… well the choice becomes pretty clear.

And yet this logic begs answers. For instance, when does a company all of a sudden decide to implement employee training that teaches leadership and business skills? Is it a matter of budget or is it based on a certain number of employees? I’ll admit right now that I don’t have the answers to these questions, but my guess is that there’s some point in time that budget and number of employees converge. When this convergence happens someone within the organization can make a compelling argument for skills based training pretty easily, “Look, we have the budget and these employees need to be trained.”

That’s not to say that someone couldn’t make a compelling argument for training and squeak out a few dollars from a tight budget, but it’s not done very easily. Since there’s not a budget for it they’ll look for ways to provide the training with no budget and that will likely land right back on your lap. Let’s say you make a compelling argument for negotiation training for your team and there’s no budget for such training. You’d better be prepared for someone to ask, “Is this something you could teach your team?” Now be careful how you answer, if you say no then you could look incompetent. And if you say yes, you could end up working overtime trying to balance your real job with your new assignment that’s really a pet project. Faced with the inevitable questions, you’ll have to be prepared upfront why the training is important and potentially more important than other budgeted items. Such an argument will likely pull you away from your other responsibilities, take a tremendous amount of time and effort, and since there’s no budget for it, your proposal may get flatly rejected despite your effort. So you have to ask yourself if it’s worth it? You could easily argue that training is a) not in your job description and b) requires a ton effort to make the right sales pitch. Therefore it’s not worth pursuing.

Likewise, for a small group of employees the argument for skills training is probably a tough sell because it’s easy to pick out who’s lacking a particular skill and assign a manager to help the employee improve performance. For example, if I have four customer service agents and I know that Betty is not as customer focused as her co-workers I could go to the boss and make a compelling argument for customer service training. But wouldn’t it be smarter to assign your best customer service agent to mentor Betty, or since it’s just Betty why don’t you, her manager, help her out? A small number of employees makes improving performance relatively easy. So would you really stick your neck out to push training for a small team?

But, if the budget is there and there’s more than a handful of employees that would benefit from the training, then pushing training is likely an easy move to make. So the million dollar question… When does budget and employee count converge?