Is it important for HR to have business acumen?

In the early 1980s, the HR function was called Personnel Management as it was an administrative function of an organization that existed to provide the personnel needed for organizational activities and to manage the general employee- employer relationship which worked well in the factory system. With the rapid growth of IT industry, dynamics of the industry changed increased job opportunities, faster career growth, flexibility, attention, transparency, compensation etc.

With this evolution in the industry and the new generation coming into the workforce personnel management evolved into Human Resource and so did the responsibilities, employees became resources and the job of HR professionals was not just hiring talent but also developing them to achieve organizational goals.

Being an HR professional will you be able to hire the right talent and develop them to achieve organizational goals equipped with just the HR Knowledge? No, it will only help you be operational. If you don’t understand business, How can you be strategic and a business partner?

Business acumen is an a core competency of HR professional they have to develop the keenness and quickness in understanding and dealing with a business situation in a manner that is likely to lead to a good outcome.

  • Understanding business operations and its influencing factors (PEST-Political, Social, Economic and Technology) and align HR practices to the organizations vision and mission.
  • Understand how other internal and external factors interact and affect the organization’s performance.
  • Lastly, build the case for HR to other business professionals-that is, market HR within the organization, showcase how HR can have a direct impact on organizational performance.

In essence, an HR professional needs to work in a consultative role with the organization and business units, thus developing and executing HR activities that are aligned to business strategies and goals.