Modern HR Management: How HR leaders can develop strategic business acumen
The HR function has evolved dramatically. While the pre-pandemic focus of the function was mostly on bolstering and accelerating the digital transformation journey. Post pandemic, HR truly was at the forefront of business. Over the past two years, HR leaders dealt with immediate pandemic relief measures, preparing for extended remote work, or dealing with burnout and mental health issues. And during this time, HR leaders have aligned with the business to re-jig priorities, accelerate digital transformation and enable skilling programs that will shape the future of work.
Speaking about the shift, Prof Girsh Balasubramanian, Assistant Professor, Human Resource Management, Indian Institute of Management, Lucknow said, “As an after-effect of the ongoing pandemic, we are seeing that most of the companies are going through core transformations in their culture, values and talent strategy. The HR domain is becoming a lot more agile and owing to the new skills demand of the function, it is imperative to create professionals who are equipped and skilled enough to help enterprises adopt and deploy disruptive technologies across the system.”
As HR and business continue to work closely together in the emerging (new) hybrid world of work, HR leaders need to become business strategists.
Research on the “Organization of the future” shows that companies of the future will need to address three focus areas for the future:
- Know what they are and what they stand for
- Operate with a fixation on speed and simplicity
- Grow by scaling up their ability to learn and innovate
A 2021 report by McKinsey on “The new possible: How HR can help build the organization of the future” highlights that “HR will be the driving force for many initiatives: mapping talent to value; making the workforce more flexible; prioritising strategic workforce planning, performance management, and reskilling; building an HR platform, and developing an HR tech ecosystem.”
If the pandemic accelerated the digital innovation journeys of organisations, it has also opened up new avenues for companies to reflect on the potential for advanced technology integration, including automation and AI, data and analytics. And HR leaders will increasingly need to step up to better understand business priorities as a range of new jobs and skills upturn business models.
What is strategic business acumen?
Business acumen is not a single skill. It combines finance knowledge, a market perspective and business systems thinking.
It’s having a solid understanding of business fundamentals, including the strategy, cash flow, finance metrics and statements, and company performance. It also includes knowing what it takes to make the business a success, having a motivational management style, and knowing how marketplace change can shape business decisions.
How can an HR leader acquire business acumen?
With the rise of advanced HR technology, the HR function is not focused on transactional work but on value-adding, strategic work. This is why HR leaders need to sharpen their business acumen to identify opportunities that can help accelerate their business journey.
Developing a strong understanding of the business
One of the ways HR leaders can develop a deep understanding of the business is by asking questions about the business priorities and issues in the business - and seeking answers. From the business’ target audience to products and services, which are the most profitable and why? Which clients are the biggest? Who are the top competitors and what are they doing differently? And how are customer preferences changing?
Leader’s role in financial management
Business leaders need to be familiar with key concepts, terminology, and financial statements to navigate the business. While this knowledge can be acquired through management courses, HR leaders need to take the time to understand the top financial challenge and opportunity areas for the business.
Perhaps the most important and effective way to build business understanding would be to engage in cross-functional learning and take up roles in functional areas outside of HR. Working with colleagues from different departments can give leaders a holistic view and understanding of the business.
Mentoring and Coaching
Building leadership acumen is a long term journey. Working with a mentor can help HR leaders build the right skillsets, communication strategies, and mindset required to navigate the business through turbulent times. And having a business mentor and coach can greatly assist and enhance the learning process.
Developing strong business acumen is no longer a ‘good to have skill. It is an essential skill for HR leaders as more companies leap to disrupt their conventional business practices to align with new opportunities that multiple cycles of technology disruption are bringing to the modern organisation.
Speaking about the learning programs that are aligned to these priorities, Prof Pavni Kaushiva, Assistant Professor, Human Resource Management, Indian Institute of Management, Lucknow noted, “Companies are becoming increasingly reliant on technology, necessitating digital transformation across the board. The pandemic has made us realize the role of digital and tech-empowered HR leaders in helping organizations navigate through unprecedented challenges. Attuned to the market demand, our Strategic HR program is a niche program which focuses on upskilling HR professionals in a way that they could easily deal with the evolving and dynamic challenges across the function.”
This article is part of a content partnership with WileyNXT. Check out the latest HR programs here.