10 HR Business Acumen Competency Indicators

The HR business acumen competency framework provides holistic knowledge of the organization, and that knowledge helps senior HR professionals perform their jobs more effectively.
These are the 10 key HR activities that require the business acumen proficiency:
  1. HR strategy and planning
  2. recruiting and selection
  3. onboarding/new employee orientation
  4. training and development
  5. compensation and benefits
  6. employee relations
  7. employee safety and health
  8. risk management
  9. legal compliance
  10. managing change

Senior HR professionals as business leaders

As a business leader, the senior HR professional plays various roles:
  • An ambassador of the company’s brand – The senior HR professionals plays an important role in the organization’s external environment by representing the organization and what it stands for. This role is played in situations like meeting with a candidate for a senior management position, when working with a new supplier, or negotiating with a labor union.
  • A resource and advisor for the corporate management – The senior HR professional is an in-house subject matter expert that has earned the respect of the executive team and a seat at the table when important decisions are made.
  • An expert in people-related policies and practices – The senior HR professional needs to have a thorough understanding of all policies and practices relating to employees.
  • A thought leader for the entire HR profession – This entails participating in professional organizations, providing advocacy, and sharing key knowledge with peers.

Senior HR professionals as internal business partners

The role of the senior HR professional includes being an internal business partner to the organization, which has many requirements:
  • driving internal initiatives to support leadership, facilitating business strategy, and engaging employees
  • acting as general managers by acting as an internal expert with full knowledge of the business and the industry
  • developing people and HR related plans to support business objectives and increase productivity
  • identifying important positions, recognizing the skills needed to fill them, and creating targeted recruitment strategies
  • retaining oversight of talent development across the entire organization
  • developing and supporting the company’s culture and values
  • developing reward and recognition programs that match the wants and needs of the employees

Behaviors indicating proficiency in business acumen

The SHRM (Society for Human Resource Management) body of competency and knowledge indicates that there are several behaviors that express business acumen proficiency for senior HR professionals. Importantly, these proficiencies differ from those of an HR professional at a less advanced career level. These are some of the proficiencies:
  • ensuring that ROIs for all HR initiatives are positive and at acceptable levels
  • assessing risks or the SWOT of business initiatives as they pertain to human capital, ROI (Return On Investment), and shareholder accountability
  • demonstrating fluency in the language of business administration
  • developing solutions with analysis of the impact on ROI, utility, revenue, profit and loss estimates, and other business indicators
  • evaluating all proposed business cases for HR projects and initiatives and benchmarking competition
  • communicating direction on local and global labor markets and their relationship to organizational success
  • maintaining expert level knowledge of business lines and products/services, as well as the competitive market
  • maintaining expert level knowledge of economic factors, the impact of the economic environment on the industry and the organization’s operations, and key industry and organizational metrics
  • evaluating critical activities in terms of value added, impact, and utility derived from cost-benefit analysis
  • setting an HR and business technology strategy to solve business problems and meet business needs
  • serving as a strategic contributor to the organization’s decision making, which includes fiscal, product/service lines, operations, human capital, and technological areas
  • defining a labor strategy for maintaining and managing talent within the confines of the labor market

Applying the business acumen competency

Consider the scenario of a private healthcare organization experiencing a high turnover in their nursing staff. The HR director talked to her peers and learned that the turnover rate at this facility has been higher than in other markets for several months.
In order to address the issue, the HR director decides to apply the business acumen competency. So she conducts one-on-one exit interviews and collects and analyzes specific demographic, financial, and market data. She discovers that the demand and market price for nursing professionals has risen due to a rise in the amount of nursing homes, so she proposes potential solutions, including a cost-benefit analysis and return on investment for a new hiring and retention initiative.

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