Business Acumen For Hr Long

Business Acumen for HR

Christopher de Mers, SPHR
24 Feb 2011

Outline
• Objective
• Setting the Stage
– HR Customers & Goals
– Acumen Defined
• Current Business Environment
– State of Business
– Implications
• Developing Acumen
– Learning, Take-aways & Resources

cpdemers All Rights Reserved 2

Objective
• Provide clarity about business acumen,
and means to develop


Caveats
• Functional expertise does not usually
interface with business leadership
• Acumen is not memorizing facts; it is
discerning music from noise
• These are serious times


Change Our Business View
• We are own worst enemy; stop saying:
– I’m in HR because I’m no good with numbers
– My role is to keep employees happy
– What I do can’t be measured
– I’m a people person


Key Point
• Acumen is a skill and can be developed
like others…
• …it is one of few skills that is accentuated
by age


Setting the Stage


Why Does HR Exist?
• What’s Unique About Our Discipline?
• Who’s Our Customer?
• What’s Our Goal?


Describe HR in Adjectives
• Reasoned
• Thoughtful
• Objective
• Prudent
• Broad-ranging
• Long-term
• Enterprise-wide


A Little History
• Where did we come from?
• Role of HR in the past
• Business processes we own today


A Working Definition
• HR exists to efficiently sustain employee
productivity over the long-term


Some Implications
• How does productivity get measured?
– In your firm/industry
• How does outsourcing affect HR efforts?
– Productivity is “total” productivity
• Where does corporate culture fit in?
– HR is a steward of culture
• How does investment in HR produce ROI?
– Strategy of buy vs. develop talent


Key Point
• If you do not possess business acumen
your contributions will be limited. Period.


What is Business
• Commercial activity engaged in as a
means of profit
• Concerted activity to efficiently provide a
service


Clarity on Business
• “Business” includes the key disciplines
– Finance
– Marketing
– Operations
– Manufacturing
– R&D
– Sales


Key Point
• To understand business acumen, you
must understand business disciplines…


Clarity on Business Acumen
• insightful assessment or forecast
• ability to make good judgments
• understand how business works
• offer practical business solutions
• grasp key drivers in industry & market
• combination of financial literacy and
business literacy (how $ get things done)


Business Acumen Definition
• Ability to provide insightful assessment
on key business factors in current and
future operating environment


Business Acumen Equation
• Knowledge plus Environmental Awareness
divided by Time

(K+En A)
Time


Key Point
• Acumen is developed over time by being
prescient more often than not…


Caution
• Things are not always what they seem
• Reflection is the act of examining
disparate sources of information and
drawing conclusions: it is fluid
• People with business acumen take time to
reflect and are unafraid of being different
• Its not always easy…


An Example
• Austin homes sales up 14% in Jan., 2011
– Austin Business Journal, 21.02.11
• New home listings down 14% in Jan., 2011


More…
• Avg sales price up 6% in Jan., 2011
• Home sales down 5% in 2010
• Avg sales price up 4% in Q4, 2010
• Home starts down 26% in Q4, 2010


Interpretation
• Headlines are not content; we live in a
headline-focused sound-bite world
• Twitter is not information; business runs on
information
• Reaction is not reflection
• To develop acumen you must work with
content and information, and create a
habit of reflection


Key Point
• If you’re too busy to think you’re too busy
to…
…think


Business Acumen
• Orient yourself to a business view first
• Think big picture
• Forecast
• Ask your self what if?


Current Business Environment


Business Environment
• GDP Change, Year over Year
– 2010: 2.9% (est)
– 2009: (2.6)%
– 2008: 0.00%
– 2007: 1.9%


• Unemployment rate still high:
– Austin, 6.8% (BLS, Dec) 62k looking for work
– Texas, 8.3% (BLS, Dec)
– US, 9.4% (BLS, Dec)
• 11 states have unemployment over 10%
• 30 states have rates higher than Texas
• Texas added jobs every month in 2010
• Texas employment up 230,800 last 12 mo
• Texas pop up 592,000 last 12 mo


• We are in a creeping jobless recovery
– US creating <100k jobs/mo, 2010 (DOL)
• Credit access and use is tight
• Consumers are not spending
• Employees are not confident
• Employers are not confident, spending or
hiring ($1.93T in cash reserves excluding
financials, Sep., 2010; 52-yr high)

• What changes have you experienced in
your company in the last three years
• What are the implications in your business
to the continuing need for productivity
increase concurrent with little to no hiring
• What is the condition of your employees


Developing Acumen


Developing Acumen

A five step process…


Developing Acumen
Knowledge

Emerging Habits
Thought

Connections Customers


Knowledge
• Improving acumen starts with knowledge
– What are the fundamentals of my business
– How does my company really work
– What are the key drivers
– The key resources
– How do we make money or deliver service
– What has been our recent history


Habits
• Develop good business habits
– Read, take classes, use media intelligently
• Develop a short list of good questions
– What does this mean to our business
– How does this change our assumptions
– Where are the opportunities here
– How are we positioned to meet them
• Google why “x” failed


Customers
• Learn about your customers
– How did they find you
– What makes them come back
– What do they value from you and other firms
– What are the major factors influencing their
purchasing decisions
– How well do you meet their needs


Customer Focus
• Edsel
• New Coke
• Toyota


Connections
• There are SMEs all around you – take
advantage of this…
– Ask opinions
– Examine history
– Talk about opportunities and failures
– Discuss likely future events and their impact
– Ask them who they talk to
– Keep them current!


Emerging Thought
• What is the current state of your business
• How do major events impact you
– Political change
– World events
– Demographics
– Tastes and values
– Positioning of your product
• Is the environment better or worse in the
next 12 months?

What You Can Do
• Volunteer for projects that challenge you
– Work, school, church, community, professional
• Non-profit world is huge in Austin
– 6,309 501(c)(3) public charities (Greenlights 09)
• Take developmental role outside of HR
– Customer facing or Finance
• Work in a small business


Human Resources


Our Key Contribution
• HR uniquely positioned to manage talent
– Hiring, training, long-term
development, rewards, etc.
• Selection & retention is the name of the
game; right people, right place, right time


Productivity
• The HR role exists to drive productivity
• We should know more about labor than
any other discipline: where it is, where its
going and how we’re positioned to it
• HR leaders who understand future
trends, internally and in the market, are
more able to sync human resources with
needs


The Good News
• Participative, objective, reasoned
reflection is who we are
• We think of the enterprise, and the future,
while honoring our past


Closing


Take Aways
• Business Acumen can be developed
• Change your view towards business
• Follow the five steps
• Be practical, yet unafraid


Resources
Analysis
• Financial Times
• Harvard Business Review
• The Wall St. Journal
• Marketplace, NPR
• Nightly Business Report, PB
Data
• US Commerce Dept
• US Labor Dept


Q&A


Business Acumen for HR

Christopher de Mers, SPHR
24 Feb 2011
Thank You!

Business Acumen For Hr Long

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