HR's Secret Weapon? Business Acumen

Today's post comes to us from Workforce Institute board member Martin Armstrong.

Times are changing, and so is the role of the HR Business Partner (HRBP). When business executives think of HR, they typically think of HRBPs being responsible for creating a great place to work through employee engagement programs, establishing an open-door policy, dealing with 20% of the employee population who don't follow guidelines, processing HR transactions, managing employee relations issues, recruiting, training, learning and development, and administering benefits and compensation plans.

From a historical standpoint, the role of the HRBP was best captured in Dave Ulrich's 1997 book, “Human Resource Champions.” The HR Model that Ulrich developed was designed to help organize HR into four roles: Strategic Partner, Change Agent, Administrative Expert and Employee Champion. 

Twenty-two years later, Ulrich was interviewed in August of 2019 by David Green of myHRfuture and suggested that “the most important thing that HR can give an employee is a company that wins in the marketplace.”

While HR professionals may possess traditional and trending HR skillsets such as people analytics, strategic workforce planning, design thinking, consulting, and stakeholder/change management, Ulrich added, “it's not just about the skill you've got, it's how those skills will drive outcomes that make a difference in what matters.”

Companies that win in the marketplace demonstrate that they have the ability to successfully execute a business strategy, have a keen understanding of their industry, are financially disciplined, and capitalize on organizational capabilities that drive results.

To this end, business unit executives are likely to extend to HR an invitation to a business discussion, but only if the executive believes that HR understands the business, and in addition, proactively contributes to solving business challenges that are needed for the company to win in the marketplace.

HRBPs can maintain a seat at the table by using business acumen

In August 2019, Josh Bersin wrote an article in Human Resource Executive titled “8 Skills HR Business Partners Need for Success.” Among the eight skills described, his article listed two critically important individual competencies: Digital Acumen and Business-Language Knowledge.

Bersin describes digital acumen as “having the ability to analyze and interpret data, and to use it to help business leaders better understand workforce needs and incorporate results into workforce strategy and planning.” With respect to Business-Language Knowledge, Bersin argues that “to ensure credibility, HRBP's need to speak “in business” as this derives from knowing the details of the business they are serving and understanding its jargon and acronyms.”

Senior HR executives agree - HR isn't about HR, it's about business. The question then becomes, how can HRBPs increase their business acumen competency? According to Peter Cappelli, the Director of The Wharton School's Center for Human Resources, there are three tips that HR professionals can consider to sharpen their business acumen:

  1. Recognize that good HR is about making choices - based on a sound understanding of a company's business strategy, knowing what to do and when is the first step to figuring out different ways companies can compete and succeed.
  2. Learn enough finance to understand the factors that drive shareholder value - becoming fluent in the language of numbers and balance sheets will help HR articulate how HR metrics can lead to improved performance and a stronger bottom line.
  3. Choose your continuing education options wisely - beware of HR courses that use outdated curricula that don't reflect the issues of today. Spend time researching continuing education content that will increase your HR and business acumen.

HRBPs can also turn Business Intelligence into HR Business Intelligence by converting the massive amounts of employee data into meaningful and useful information that business units may use to make informed decisions that impact financial statements.

The cost of labor, variable compensation, unrecorded paid time off, absenteeism, recruiting/speed to hire, simplifying required training, and streamlining the use of required HR systems and tools impact money and time, two precious commodities that business executives cherish most.

Understanding the business requires HRBPs to meet with company leadership, rank-and-file employees and, where applicable and possible, even with customers. Leaving the comfort of their offices to find out how the business really works (or doesn't) will enable HRBPs to determine how HR policies, compensation plans, and other practices can help the business achieve its goals, and add value to customers, investors, and communities.