Why Could Your HR Department Benefit from Business Acumen: A Q&A with Senior Financial Consultant Kenny Snarr
- Acumen Learning
- Feb 24
- 5 min read
Welcome to this insightful Q&A session with Kenny Snarr, one of our senior financial consultants. Today, we're discussing how human resources can benefit from business acumen and how to implement it into your role for success. Let's get started!
Question:
Kenny, how would you define business acumen and why is it important for HR professionals?
Business acumen refers to the ability to understand and apply key business concepts and principles to make informed decisions that contribute to the overall success of an organization. For HR professionals, developing business acumen is crucial because it allows them to align HR strategies with the company's business objectives, making them more effective in their roles. By understanding how the business operates and generates revenue, HR professionals can better support organizational goals and make decisions that drive company success.
Question:
How can HR professionals align their work with the company's business goals and KPIs?
Great question. HR professionals can align their work with the company's goals and performance indicators by gaining a deep understanding of the key metrics and performance indicators that drive the business. You can’t align your own role to the objectives of the company without understanding what your company is working towards. This includes knowing how to find these metrics, analyzing the company’s performance against these objectives, and identifying ways in which your department can impact these metrics positively. By doing so, HR can ensure that their initiatives support and enhance the company’s overall strategy and objectives. One great place to start would be to listen to your company’s earnings calls! This gives you direct insight into exactly what the business is focusing on and hoping to accomplish.
Question:
Earnings calls huh? I didn’t realize everybody could benefit from those. Next question, in what ways does business acumen help HR professionals make metric-driven decisions?
Business acumen helps HR professionals make metric-driven decisions by empowering them to leverage data and analytics effectively. This includes analyzing metrics related to employee performance, turnover, and engagement to identify trends and areas for improvement. Additionally, HR professionals with strong business acumen can connect these HR metrics to the overall business performance, making informed decisions that support organizational goals. They can also manage HR budgets strategically, ensuring that resources are allocated in ways that best support the company’s objectives.
An example of this could be an employee within the human resources department who notices a high turnover rate within a specific department. This is a bit specific but is a great example. With developed business acumen, this HR professional should be able to analyze the turnover data in conjunction with the department's performance metrics and discover that the turnover is impacting overall productivity and, consequently, revenue. They then conduct employee surveys to identify the underlying issues, such as lack of career development opportunities or insufficient compensation.
With this data, this employee could then take a business case to their senior management, recommending targeted interventions like career development programs, competitive salary adjustments, and/or improved employee engagement initiatives. They project the potential return on investment by showing how reducing turnover would lead to higher productivity, lower recruitment costs, and increased revenue.
By effectively connecting HR metrics with business outcomes and strategically managing the HR budget to implement these changes, the HR professional demonstrates how business acumen leads to informed, metric-driven decisions that significantly benefit the company.
Question: Wow that is a great example! I assume you’ve seen a similar situation, which is awesome. How does business acumen enhance communication for HR professionals?
Business acumen enhances communication for HR professionals by making them more comfortable and confident in discussing metrics, finance, and accounting concepts. This improved understanding allows them to communicate more effectively with other business leaders, connect HR decisions with strategic objectives, and articulate the impact of HR initiatives on business performance. Strong communication skills are key to effective leadership, and HR professionals with business acumen can better advocate for their department and contribute to strategic discussions.
Question:
It seems that communication is key to every role, but especially in the Human Resources department. Do you have an example of an HR professional whose career benefited from developing business acumen? Maybe somebody who attended your class or an Acumen Learning graduate?
Hmm. Great question. One individual that comes to mind was an HR business partner who initially worked at a publicly traded company. Her company brought in Acumen Learning and she was attending our Building Business Acumen Course. During the course, she quickly learned the gap in her business acumen and her ability to contribute more effectively to her company's goals. She spent time outside of the course to educate herself by reading Seeing the Big Picture, listening to her company’s earnings calls, and really engaging and learning the key metrics important to her company. By actively seeking opportunities to understand the financial aspects of the business, she began participating in cross-departmental meetings, learning from finance and operations leaders about revenue streams, cost structures, and key performance indicators.
With her growing expertise, she led a project to revamp the company's performance management system. By aligning the new system with the company's financial goals and key business metrics, she was able to demonstrate a direct correlation between improved employee performance and increased company profitability. This success showcased her ability to connect HR initiatives with business outcomes, significantly enhancing her credibility within the organization.
By applying her business acumen, she effectively managed HR budgets, strategically allocating resources to support critical areas of the business and advising other leaders on cost-saving measures without compromising employee engagement and morale.
These strategic contributions led to her rapid promotion within the organization. In her new roles, her strong business acumen was instrumental in driving large-scale HR initiatives that supported the company’s growth and adaptation in a competitive market.
She also served on the board of a publicly traded company, where her insights into business operations and financial performance further underscored the value of integrating HR perspectives with overall business strategy. Her journey highlights how developing business acumen can empower HR professionals to make significant strategic contributions, leading to advanced career opportunities and organizational success.
ACTIVITY:
Now that you've explored the concept of business acumen and its significance for HR professionals, let's engage in a learning activity for your next team meeting:
Exercise: Enhancing HR Decisions through Business Acumen
Divide participants into small groups. Each group will be given a different hypothetical HR scenario that requires making strategic decisions. Examples include improving employee retention, addressing a skill gap, or enhancing employee engagement.
Each group will discuss their scenario, focusing on the following points:
Identify the HR objectives related to the scenario.
Analyze the potential impact of different decisions on the company's overall performance and strategic goals.
Consider how various business functions (e.g., finance, marketing, operations) would interact with HR in addressing the scenario.
Then develop a detailed action plan that aligns with the company's strategic objectives and have each group present their action plan. Encourage a discussion around the strategies, metrics, and potential risks identified.
By engaging in this exercise, HR professionals can deepen their understanding of business acumen, enhance their ability to make strategic HR decisions, and effectively contribute to the organization's goals.
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