Business Acumen For Hr Long

Business Acumen for HR

Christopher de Mers, SPHR

24 Feb 2011

All Rights Reserved 2

Outline• Objective• Setting the Stage

– HR Customers & Goals– Acumen Defined

• Current Business Environment– State of Business– Implications

• Developing Acumen– Learning, Take-aways & Resources

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Objective

• Provide clarity about business acumen, and means to develop

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Caveats

• Functional expertise does not usually interface with business leadership

• Acumen is not memorizing facts; it is discerning music from noise

• These are serious times

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Change Our Business View

• We are own worst enemy; stop saying:– I’m in HR because I’m no good with numbers– My role is to keep employees happy– What I do can’t be measured– I’m a people person

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Key Point

• Acumen is a skill and can be developed like others…

• …it is one of few skills that is accentuated by age

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Setting the Stage

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Why Does HR Exist?

• What’s Unique About Our Discipline? • Who’s Our Customer?• What’s Our Goal?

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Describe HR in Adjectives

• Reasoned• Thoughtful• Objective• Prudent• Broad-ranging• Long-term• Enterprise-wide

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A Little History

• Where did we come from?• Role of HR in the past• Business processes we own today

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A Working Definition

• HR exists to efficiently sustain employee productivity over the long-term

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Some Implications

• How does productivity get measured?– In your firm/industry

• How does outsourcing affect HR efforts?– Productivity is “total” productivity

• Where does corporate culture fit in?– HR is a steward of culture

• How does investment in HR produce ROI?– Strategy of buy vs. develop talent

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Key Point

• If you do not possess business acumen your contributions will be limited. Period.

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What is Business

• Commercial activity engaged in as a means of profit

• Concerted activity to efficiently provide a service

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Clarity on Business

• “Business” includes the key disciplines– Finance – Marketing – Operations– Manufacturing– R&D– Sales

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Key Point

• To understand business acumen, you must understand business disciplines…

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Clarity on Business Acumen

• insightful assessment or forecast• ability to make good judgments• understand how business works• offer practical business solutions• grasp key drivers in industry & market• combination of financial literacy and

business literacy (how $ get things done)

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Business Acumen Definition

• Ability to provide insightful assessment on key business factors in current and future operating environment

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Business Acumen Equation

• Knowledge plus Environmental Awareness divided by Time

(K+En A)

Time

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Key Point

• Acumen is developed over time by being prescient more often than not…

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Caution

• Things are not always what they seem• Reflection is the act of examining

disparate sources of information and drawing conclusions: it is fluid

• People with business acumen take time to reflect and are unafraid of being different

• Its not always easy…

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An Example

• Austin homes sales up 14% in Jan., 2011– Austin Business Journal, 21.02.11

• New home listings down 14% in Jan., 2011– Austin Business Journal, 21.02.11

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More…

• Avg sales price up 6% in Jan., 2011– Austin Business Journal, 21.02.11

• Home sales down 5% in 2010– Austin Business Journal, 21.02.11

• Avg sales price up 4% in Q4, 2010– Austin Business Journal, 10.02.11

• Home starts down 26% in Q4, 2010– Austin Business Journal, 04.01.11

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Interpretation

• Headlines are not content; we live in a headline-focused sound-bite world

• Twitter is not information; business runs on information

• Reaction is not reflection• To develop acumen you must work with

content and information, and create a habit of reflection

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Key Point

• If you’re too busy to think you’re too busy to…

…think

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Business Acumen

• Orient yourself to a business view first• Think big picture• Forecast • Ask your self what if?

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Current Business Environment

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Business Environment

• GDP Change, Year over Year– 2010: 2.9% (est)– 2009:(2.6)%– 2008: 0.00%– 2007: 1.9%

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• Unemployment rate still high:– Austin, 6.8% (BLS, Dec) 62k looking for work

– Texas, 8.3% (BLS, Dec)– US, 9.4% (BLS, Dec)

• 11 states have unemployment over 10%• 30 states have rates higher than Texas• Texas added jobs every month in 2010• Texas employment up 230,800 last 12 mo• Texas pop up 592,000 last 12 mocpdemers



• We are in a creeping jobless recovery– US creating <100k jobs/mo, 2010 (DOL)

• Credit access and use is tight• Consumers are not spending• Employees are not confident• Employers are not confident, spending or

hiring ($1.93T in cash reserves excluding financials, Sep., 2010; 52-yr high)

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• What changes have you experienced in your company in the last three years

• What are the implications in your business to the continuing need for productivity increase concurrent with little to no hiring

• What is the condition of your employees

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Developing Acumen

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Developing Acumen

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A five step process…


Developing Acumen

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Knowledge

Habits

Connections Customers

Emerging Thought


Knowledge

• Improving acumen starts with knowledge– What are the fundamentals of my business– How does my company really work– What are the key drivers– The key resources– How do we make money or deliver service– What has been our recent history

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Habits

• Develop good business habits– Read, take classes, use media intelligently

• Develop a short list of good questions– What does this mean to our business– How does this change our assumptions– Where are the opportunities here– How are we positioned to meet them

• Google why “x” failed

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Customers

• Learn about your customers– How did they find you– What makes them come back– What do they value from you and other firms– What are the major factors influencing their

purchasing decisions– How well do you meet their needs

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Customer Focus

• Edsel• New Coke• Toyota

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Connections

• There are SMEs all around you – take advantage of this…– Ask opinions– Examine history– Talk about opportunities and failures– Discuss likely future events and their impact– Ask them who they talk to– Keep them current!

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Emerging Thought

• What is the current state of your business• How do major events impact you

– Political change– World events– Demographics– Tastes and values– Positioning of your product

• Is the environment better or worse in the next 12 months?

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What You Can Do

• Volunteer for projects that challenge you– Work, school, church, community, professional

• Non-profit world is huge in Austin– 6,309 501(c)(3) public charities (Greenlights 09)

• Take developmental role outside of HR– Customer facing or Finance

• Work in a small business

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Human Resources

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Our Key Contribution

• HR uniquely positioned to manage talent– Hiring, training, long-term development,

rewards, etc.

• Selection & retention is the name of the game; right people, right place, right time

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Productivity

• The HR role exists to drive productivity• We should know more about labor than

any other discipline: where it is, where its going and how we’re positioned to it

• HR leaders who understand future trends, internally and in the market, are more able to sync human resources with needs

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The Good News

• Participative, objective, reasoned reflection is who we are

• We think of the enterprise, and the future, while honoring our past

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Closing

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Take Aways

• Business Acumen can be developed• Change your view towards business• Follow the five steps• Be practical, yet unafraid

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Resources

Analysis• Financial Times• Harvard Business Review• The Wall St. Journal• Marketplace, NPR• Nightly Business Report, PB

Data• US Commerce Dept• US Labor Deptcpdemers


Q&A

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Business Acumen for HR

Christopher de Mers, SPHR

24 Feb 2011

Thank You!

Business Acumen For Hr Long

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