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Developing your business acumen and commercial impact
Guest Blog from Rebecca Day, Day HR Consultants
Developing your business acumen and commercial impact
When I began my HR career, my first CEO told me that no matter what role you hold in the company you always have to know how much is in the till. This was, without doubt, the most important piece of advice that I have ever received. It’s stood me in good stead and it’s also my top tip for indies looking to take on more strategic work.
As HR experts, it’s essential that we hold ourselves accountable to the same high commercial standards as a marketing or sales consultant or any other functional expert. This means knowing our numbers; understanding and demonstrating how HR can deliver to the bottom line and keeping up to date with changing marketing conditions and business insights. It’s all about best ‘fit’ for the organisation rather than best ‘practice’.
According to a recent IBM survey of multiple global companies, only 19% of HR experts demonstrate business acumen. If this is an area of opportunity for you, here are some tips that might help:
- Speak the same language as the business
As Josh Bersin says ‘to ensure credibility, HRBP’s need to speak ‘in business’. This means knowing our numbers – not just people metrics but sales; profitability; productivity; efficiency and customer service targets.
The starting point is to understand the basics – fixed and variable costs; net operating profit; margins; assets; liabilities and how to calculate basic profitability ratios. Whilst LinkedIn Learning is my personal favourite, there are lots of other virtual on-demand courses out there.
- Keep up-to-date with the latest trends and insights
Indies often work across industries and therefore need a broad knowledge base. Market conditions; changing customer demands; digitalisation; new technology and big data are all common denominators and it’s essential that we keep up-to-date with these. Here are a few of my go to resources for easily digestible thought leadership and commercial insights: –
Whilst some of the articles are subscription only, they have a great range of free resources too.
- Balancing compliance with commerciality
When conducting an HR audit, it can be tempting to dive right into compliance mode and review the internal processes, policies and procedures. However, if you don’t first understand the wider organisational context, you won’t be looking at them through the right lens: the people; processes; policies and technology needed to execute the business strategy. This may mean a failure to zoom in on the critical issues and the difference between getting your proposal over the line or not.
To get the right balance between commerciality and compliance, you will first want to have a good understanding of the company’s 1–3-year growth strategy; vision; values; customers and competitors and how they are tracking against their goals. This will give you the context that you need to hone in on the areas of critical importance and biggest impact.
- What problem are you trying to solve?
Have you ever been brought into solve a problem only to find that, in actual fact, it’s something else entirely that needs fixing?
We’ve talked about the need to understand the basics – sales growth; profit margins; fixed costs, etc., and we are already well-versed in the importance of people metrics. However, these will not be enough to get to the root cause of a problem.
Take sales numbers, for instance. Sales could be decreasing for many, and sometimes multiple reasons. It could be that there isn’t the right balance between recruiting new customers and retaining current customers; that the client isn’t incentivising business building behaviours or, it may be a process or technology issue. Whether you have been parachuted in to focus on a particular area or, to provide outsourced HR, deep insights are essential in ensuring that you are solving the right problem; identifying what skills and behaviours employees need to be successful; the right structure and processes and where you can help drive productivity and efficiencies.
Understanding the numbers and what return on investment the business can expect is also vital to getting any proposal over the line. Think about how many times you have been told that there is no budget to increase salaries, when, in point of fact, the cost to hire and decreased productivity due to time taken to hire are eroding profit. In this instance, demonstrating the net impact of increasing salaries against decreasing operating costs is how you will get a proposal like this over the line.
Once you have got to grips with the numbers and the strategy and execution plan, you will then want to spend time with each functional lead to understand how their functional goals roll up into the overall company goals and what they see as the barriers and opportunities. This step can often open a can of worms which can range from functional goals being set in isolation of each other; inefficient hand-offs between departments; duplication of work and lack of decision rights, to name just a few. This means in-depth questioning through the lens of all of the insights you have already gained to get to the bottom of what’s really going on.
Here is a selection of my favourite diagnostic tools that can be applied to any situation: –
- Use the business’ strategy and execution plan as your true north
Finally, whatever people initiative you are working on, the client’s business strategy and execution plan should always be your true north. Use these as your starting place to compare and contrast the current reality against ‘what good looks like’ and then to stress test the initiative or people plan at every stage of the process. This will help keep you on-track and ensure that you don’t lose sight of the key strategic building blocks; the cadence and sequencing of all key activities and the people, processes and technology needed to deliver these.
What tips do you have to keep your commercial skills finely tuned?