Business Acumen

Business Acumen is defined “as the knowledge, skills, abilities, and other characteristics (KSAOs) needed to understand the organization’s operations, functions, and external environment, and to apply business tools and analyses that inform HR initiatives and operations consistent with the overall strategic direction of the organization.”
“Business Acumen” Contains 3 sub-competencies:

Business and competitive awareness: Understanding the organization’s operations, functions, products and services, and the competitive, economic, social, and political environments in which the organization operates
Business analysis: Applying business metrics, principles, and technologies to inform and address business needs
Strategic alignment: Aligning HR strategy, communications, initiatives, and operations with the organization’s strategic direction

Key Concepts:

Business terms and concepts (e.g., return on investment [ROI])
Analyzing and interpreting business documents (e.g., balance sheets, budgets, cash flow statements, profit and loss statements)
Elements of a business case
Business intelligence techniques and tools (e.g., online analytical processing, advanced analytics, business intelligence portals)
Financial analysis and methods for assessing business health

Summary:
Assessing financial impacts of business proposals related to employee management is an important HR contribution to executive discussions and proposal considerations. All HR programs should be assessed periodically using business management tools, including profit and loss sheets and balance sheets. HR professionals cannot have credibility with other executives unless they have this ability to analyze programs using business considerations, business and competitive awareness, and an alignment of strategies in HR with corporate strategies.
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