Strategic HR: Importance of Understanding Business Acumen for Success 

By Ashley Dugger

HR professionals are increasingly being asked to take a more strategic partner role in business operations and planning than ever before. To effectively support both the employees and the organization itself, it is critical that HR professionals have a thorough understanding of how the business operates, in addition to upskilling in primary HR functions, in order to blend the strategic mindset of HR with the unique ability of HR to be empathetic and supportive. Becoming more confident in demonstrating your abilities in the areas of business acumen, operations, and competitive advantage relative to the organization’s performance is imperative to strengthen your role within your company and leadership teams as a credible HR business partner. 

Recent survey data from Korn Ferry showed that, globally, when polling Chief Human Resource Officers, they responded that around 41% of HR professionals had a skills gap when it came to understanding business acumen, and 28% lacked ability to turn strategy into action. In addition, in the same study, when asked what is the top reason a CHRO would voluntarily leave a company, respondents noted  “inability to directly connect HR efforts to business” was by far the number one reason. 

An abundance of resources exist for HR professionals looking to upskill/reskill for themselves or their teams in fundamental areas such as leadership, communication skills, financial acumen, strategic thinking and problem solving, market orientation, and storytelling with data/analytical aptitude. Cost effective resources through places such as LinkedIn Learning, Academy to Innovate HR, and SHRM. These tools can be incredibly helpful for better understanding the basics of business so that when discussing strategic planning, HR can make a compelling case through storytelling regarding impact to employee experience and engagement, recruiting and retention efforts, and risk management. 

In addition to the resources noted above, don’t underestimate the impact of leveraging your internal stakeholders and colleagues to learn more in these areas. Work with your finance team to better understand how to interpret basic financial documents such as income statements, balance sheets, cash flow statements, and profit and loss statements. Spend time with your finance and analytics teams to get comfortable with data and metrics, specifically how these represent business performance in areas like pricing strategy, cost control, budgeting, and asset/debt management. Shadow your marketing team and learn how they build a target market funnel and what your primary customer demographics are. This also helps you learn the skills your cross-functional stakeholder teams need from new hires/existing employees as you build out recruitment, retention, and training and development plans for your organization!

Remember that as HR continues to solidify their role in organizations as a strategic partner, you are constantly demonstrating the worth and value that HR brings to all industries. As with so many other things in life, the goal is not perfection, but progress. Continuously seek ways to learn more about the operations of the organization(s) you support so that you and your HR teams are making the most informed strategic decisions possible and feel confident explaining the “why” behind decisions to other leaders and employees based on the data and the connection to company mission, vision, and goals. This may also help you as an HR professional better link day to day responsibilities for all employees with the broader team and organization-wide goals, obtaining more engagement and buy in from employees for change management and increased productivity. Don’t be afraid to ask questions so that you can continuously increase your understanding of business and strategy – you’d be surprised how many other colleagues in the meeting or on the email thread likely have the same questions! Asking questions shows you are committed to your role as a strategic and credible HR professional and business partner to the organization, regardless of your HR title or functional area of expertise. 

Leverage your network! Benchmark with trusted HR professionals from other organizations and SHRM chapters to learn about their best practices for strengthening business acumen and the role of HR tied to strategic decision-making in their companies. Be transparent with yourself and your teams that strengthening your strategic muscles may mean some periods of discomfort as you learn and grow, and that is okay! As Dave Ulrich recently stated on Digital HR Leaders with David Green, and was re-quoted by the Workforce Institute @ UKG in an article by board member Martin Armstrong, “The most important thing that HR can give an employee is a company that wins in the marketplace.” When HR better understands company performance, they can better position themselves as a credible strategic partner. A thriving organization can translate into a healthier, happier, more productive and engaged workforce.