It won’t be easy, but it’ll be worth it
If you search for HR jobs on CareerBuilder, you’ll find more than 20,000 different postings, and you’ll notice they have a lot in common. Most include a list of required soft skills like collaboration, innovation, interviewing, verbal and written communication skills, and confidentiality. Some will also include more technical skills like instructional design, video editing and app development. They’ll also include skills like project management, facilitation and public speaking.
More and more, you’ll see that “business acumen” is a key required skill as well. But what is business acumen?
It’s not just having good business sense, and it’s more than knowing what words like “revenue” and acronyms like EBITDA mean. Fundamentally, business acumen is understanding how your company makes and uses money and then using that knowledge to make smarter, more informed business decisions.
At my firm, we teach business acumen to employees in many different functional areas, and we’ve discovered that more than 90 percent of the professionals we teach don’t understand the key business metrics that are important to the CEO and for the success of the company. There’s a pretty wide knowledge gap when it comes to understanding your company’s strategies, which is key to improving employee engagement.
With that said, business acumen is important for all employees, from the front line all the way to the corner office. It’s especially important for HR and training leaders, whose responsibility is to facilitate engagement and translate the company’s key growth and financial goals into professional development programs for employees at all levels of the company.
If you can understand your company’s financial goals and how all its moving parts work together to accomplish those goals, your leadership succession strategies and corporate training initiatives are significantly more likely to achieve the desired results. Then, you can incorporate business acumen training into your overall strategy and reap the benefit of the trickle-down effect. Remember, though, that developing an army of business-savvy employees begins with you.
How do you get started? Here are seven crucial steps for developing business acumen. They will take considerable effort on your part, but if you really want to become an all-star and claim your seat at the table, these steps will lead you in the right direction.
1. Make business acumen one of your core competencies.
Most companies have a specific set of core competencies they want employees to focus on developing. If business acumen isn’t one of your company’s core competencies already, make it one of your personal core competencies, and then become a champion for adding it to your company’s list. Commit to making business acumen a major part of your own professional development, and your future self will thank you.
2. Find a mentor.
Identify someone in the company whom you respect and admire, ideally in finance or a related role, and use them as a resource. Ask them questions about their role, how it fits into the company strategy and how you can support them. Finding a reliable mentor will support your success in the next two steps.
3. Get comfortable with your company’s financial statements and strategies.
This task may sound daunting, but you don’t necessarily have to become a finance expert overnight to understand your company’s financial strategies. Focus on learning about the key metrics in your company’s income statement, balance sheet and cash flow statement. Your mentor will be a great resource to help you with this step, and there are also bite-sized resources online to help you understand basic financial metrics. Investopedia, for example, has short, digestible videos and articles about these topics.
Also, spend some time learning more about your company’s products and services and how the supply chain works. Arming yourself with this knowledge will help you better understand your company’s key strategies.
4. Listen to your company’s quarterly earnings calls.
There will probably be a lot that you don’t understand, but that’s ok. Your mentor can help you cut through the clutter and decipher which metrics, goals and initiatives apply to you and your team, and how you can impact each one. Each quarter, continue to build your skillset in this area. If you really want to go above and beyond, check out your competitors’ quarterly calls as well.
Once you have a good grasp on how the calls work and what to listen for, they will open your eyes to the challenges and strategies of your industry and help you better understand the reasoning behind your company’s strategies. You can find quarterly call transcripts for most public companies on SeekingAlpha.com.
5. Pay attention to business news.
There is almost an infinite number of business news sources available online, including Harvard Business Review, Forbes, The Economist, the Wall Street Journal, Google and Yahoo Finance, and Business Week. Stay up to date on current events, and ask yourself, “How does this relate to my company?” and “What are the ramifications in my industry?” Once again, your mentor can be a great resource to help you answer those questions.
6. Read, read, read.
Develop a library of your own go-to career-building books. Here are some recommendations of books that will help you build your business acumen. You don’t have to read every book cover to cover to gain valuable insights. Simply having a resource to draw on when you have questions might be all you need!
7. Listen to your customers.
Pay attention to what your customers are saying to, and about, your company and to the challenges they look to your company to solve. Remember that your customers aren’t just the people who buy your company’s products or services; they might also be internal, like your coworkers and the people you interact with in other departments. Pay attention to the challenges your colleagues face, and try to make connections between their work and your own.
Developing strong business acumen skills won’t happen overnight. It will take hard work and dedication. But whether you’re trying to move ahead in your career or build a top-notch L&D team, if you’re committed to developing your business acumen, these steps will take you in the right direction.