Can You Speak My Language? The Importance of Business Acumen in HR From an Executive

10/04/2016 03:19 pm ET Updated Dec 06, 2017

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So I’m going to start with a question.

What is the role of Human Resources?

If you’re like most people, you probably see Human Resources as the department that takes care of a company’s employees. It makes sure that the company is in compliance with policies and procedures. It’s there to ensure that each employee is treated fairly.

Pretty cut and dry, right?

But what if Human Resources had more to offer to an organization? What if it had a more prominent role in shaping the overall direction of the company?

Bill Hall, Vice President of Learning and Development at Simulation Studios is an expert on the topic of corporate development. He has much to say on the subject. In this post, you will learn how HR can become a more integral part of reaching a company’s strategic objectives.

 

What is one of the biggest challenges for Human Resources?

We live in a world where businesses are judged by modern economic metrics. For better or worse, a company is judged by its financial performance rather than human performance.

It’s an executive’s job to deliver positive business results – with employees completely dependent on those positive results. Otherwise people are fired, salaries are reduced, and forced unpaid vacations are put into practice which is beneficial to no one and problematic for the economy.

A company’s employees are truly its greatest asset, right? But you would be hard pressed to find this value on a balance sheet. Executives rely heavily on Human Resource managers to keep these assets working at their highest capacity. Often, this turns into a balancing act between maintaining company interests and keeping the workers happy. Human Resource managers have to deal with the human side of business which is often exceptionally challenging, ugly, and very rarely recognized. It is a thankless job even though it is also one of the most critical.

 

Why are these challenges so difficult to overcome?

In many cases, these challenges are exacerbated by a fundamental problem: Human Resource managers and executives speak very different languages. HR managers will talk about development, compliance, competencies, and other legal and talent requirements.

While there is no doubt these are important factors, for executives things invariably come down to business metrics. This disconnect prevents HR and executives from working together to make progress.

 

How can Human Resources overcome this problem?

Executives need HR managers to speak the language of business acumen. Terms that drive strategy and economic outcomes such as debt-to-equity, discounted cash flows, turnover, DuPont Model, EBITDA, and a lot more need to be familiar to the Human Resource managers.

In my experience, a great executive strategy can often fail due to a company’s inability to align the right people with the right plan. When Human Resource managers are at the front, center, and end line of strategic development, the employees are able to more easily align with the strategy and push it forward.

This can’t be achieved if HR managers are insecure or unsure of what the strategy is, its definitions, and the common business jargon used to communicate the strategy. If HR and executives are speaking different languages, it is almost guaranteed the strategy will stall or fail.

 

How can Human Resources learn the “business acumen language?”

Learning the complexities of business acumen in a webinar, a book, or worse - in Powerpoint - is pointless, right? Most generic lessons are too abstract and theoretical. There are too many intricacies and interdependencies that need to be practiced, not just learned by rote. Human Resource managers need to take time and spend money on immersive business acumen training that is hands-on and not merely theory based.

Training should also pertain to the company’s specific culture and industry. Generic business acumen training is like training a commercial airline pilot how to fly by teaching them to fly a 2 seat Cessna prop plane. It’s fun, but not very applicable.

 

What type of training should they undertake?

HR training should focus on obtaining real world outcomes and results. Giving HR managers the ability to drive a real business in real time is invaluable. Topics such as finance, innovation, leadership, marketing, product development, strategy development, and employee management should all become familiar to HR managers. Participants of the training program should understand the impact one department’s decision has on another.

Modern training tools such as business simulations are able to train Human Resource managers in a fast, focused, applicable, engaging, and cost effective way. This type of training is most effective when HR managers go through this training together as a group. Yes, the hands-on training is great, but real learning and application happens when the HR managers are able to reflect, discuss, and apply the learning together.

The results of hands-on, applicable, and focused business acumen training for HR managers is the ability to become fluent in the language of corporate strategy. This common business language will enhance a company’s ability to drive corporate change more quickly, resulting in HR playing a more critical role in a company’s overall success.