Business Acumen Competency Flashcards
Document that defines the output customers can expect.
Service-level agreement
The process by which an organization creates the product or service it offers to the customer.
Value chain
Money an organization owes its vendors and suppliers.
Accounts payable
Statement that reports revenues, expenses, and profits for a specified period of time, for example, quarterly or annually.
Income statement
Ratio of net income (gross sales minus expenses and taxes) to net sales (revenues)
Net profit margin
Applications that can analyze data faster and in more ways than traditional relational databases, offering a multidimensional analysis of business data.
Analytical processing
Financial, physical, and sometimes intangible properties an organization owns.
Assets
Ratio of gross profit to net sales.
Gross profit margin
The benefit created when an organization meets its strategic goals; measure of usefulness, worth, or importance.
Value
Business management software, usually a suite of integrated applications, that a company can use to collect, store, manage, and interpret data from many business activities.
Enterprise resource planning (ERP)
Organization’s debts and other financial obligations.
Liabilities
Money an organization’s customers owe the organization.
Accounts receivable
Ability to use information to gain a deeper understanding of an organization and make sound business decisions.
Business intelligence
Statement of an organization’s financial position at a specific point in time, showing assets, liabilities, and shareholder equity.
Balance sheet
Performance management tool that depicts an organization’s overall performance, as measured against goals, lagging indicators, and leading indicators.
Balanced scorecard
Amount of owners’ or shareholders’ portion of a business.
Equity
Presentation to management that establishes that a specific problem exists and argues for a proposed solution.
Business case
Statement of an organization’s ability to meet its current and short-term obligations, showing incoming and outgoing cash and cash reserves in operations, investments, and financing.
Cash flow statement
It allows HR professionals to apply knowledge of an organization’s business model and competitive situation when solving workforce problems.
The Business Acumen competency
Unlike value, these relate to guiding principles and beliefs of a company or an organization.
Organizational values
Before strategic planning can begin, an organization must consider this question of value:
how it creates value and what activities are critical to the creation, retention, and increase of value.
The definition of value can be influenced by
mission.
ability to generate value above the costs of production
added value
The definition of value will also be influenced by
culture at an organizational, global, and workplace level.
consists of multiple organizations producing parts of a good or service across geographical regions, with each link on the chain adding value.
A global value chain
In a general sense, it refers to an organization’s success in meeting its strategic goals.
Value
The assumption behind strategic planning and management is that purposeful activity will yield
greater value
From a value chain persepctive, an enterprise or an orngarinztion can achieve competitive advantage
- by being superior in one functional area in the value chain
- by more effective coordination among various functions.
The key value that HR contributes to the value chain is…
the quality and availability of “pivotal talent pools,” those employees whose skills are critical to the organization’s strategy
HR protects value when it ..
manages labor supply to support optimal productivity.
HR enhances value through
its leader and performance development processes.
HR can add value when…
…it acquires strategically important new areas of talent.
How can HR deliver better service to the organization and increase value?
HR may implement a process of meeting periodically with internal customers to understand their current needs accurately and completely.
How the organizational or product life cycle is different fromthe employee life cycle
The employee life cycle describes the stages in an employee’s experience from hiring to exit.
Organizational and Product Life Cycles stages
- introduction
- growth
- maturity
- renewal or no growth or decline
In this organizational/product life cycle revenue (the vertical axis) is low because there is little market awarness.
Introduction
In this organizational/product life cycle as time proceeds (the horizontal axis), revenue begins to increase.
Growth life cycle.
In this organizational/product life cycle the foucse shists to creating processes that will increase efficiency without stiffling innovations
Growth
In this organizational/product life cycle growth only occurs thorough introduction of new products, customer groups or acquisitions.
Maturity
In this organizational/product life cycle profit margin ebcomes more narrower and efficientcy becomes more important.
Maturity
In this organizational/product life cycle demand will decrease
renewal or no growth or decline
In this organizational/product life cycle organization, in order to survive, or continue to thrive, must return to its innovative roots.
renewal or no growth or decline
Consequences of product cycle reaching its maturity
- profit margins become narrower
- efficiency becomes important
- greater formaliazation
- bureaucracy
Which organiztion/product life cycle is the highest
Maturity
Introduction
Introduction
HR and organization life cycle
Introduction
HR and organization/product life cycle - what are the characteristics of the intruduction stage
- Vision, innovation, and energy are critical
- Little structure and no formal policies
- May not be a dedicated HR function
- HR Function it have to be outsourced to a consultant or performed by a top manager.
Total income minus total expenses
Profit and loss
Total income minus total expenses - if the result is positive (revenue exceeds expenses)
Profit
Total income minus total expenses -if the result is negative (expenses exceed revenue)
Loss
Revenue exceeds expenses
Profit
Expenses exceed revenue
Loss
Revenues minus costs
Net income
Also known as net earnings and can refer to both organizations and individuals.
Net income
In Net Income, the subtracted expense may include:
The subtracted costs can include
* expenses (operating, administrative)
* taxes
* interest
* depreciation.
The money generated through the sale of goods and services.
Revenue
Calculated by multiplying the average sales price by the number of units sold.
Revenue
It is also referred to as gross income.
Revenue
Recurring costs, regardless of an organization’s output
Fixed costs
Examples of fixed costs
- interest payments
- lease/rent payments
- utilities
- insurance.
Depend on the organization’s output; can increase or decrease depending on how many goods or services the organization produces.
variable costs
Examples of varible costs
- labor costs
- costs for resources
- materials.
semi-variable costs
- volume discounts
- employee compensation made up of both salary and commissions.
KPIs
Key performance indicators
Specific measures of an organization’s critical business areas that are quantifiable or qualitative.
Key performance indicators (KPIs)
can vary depending on how, when, and where they are used (projects, depatments) , can be used to analyze an organization’s long-term goals or critical success factors.
Key performance indicators (KPIs)
can be used to analyze an organization’s long-term goals or critical success factors.
Key performance indicators (KPIs)
A measure of comparison for products and services
Quality
This assessment is based on characteristics of the product and service and how well they achieve the intended function.
Quality
An estimate of an organization’s future financial performance.
Financial projections
address a specific 12-month period, broken up monthly and by department and/or function.
Financial projections
a valuable tool for translating goals into targets and serve as a feedback and control tool.
Financial projections
Deviation from these can be used to assess potential changes to strategic plans.
Financial projections
The factors that enable an organization to outperform its rivals
Competitive advantage
Examples of Competitive advantage
- branding, product quality
- customer service
- distribution network
- geographic location
- access to superior human
- access to natural resources
- intellectual property.
Defines an organization’s purpose and direction and can provide guidance to HR on the organization’s core values and objectives.
Strategic plan
Components of Strategic plan
- Vision and mission statements
- Core values
- Goals and objectives (both long- and short-term)
- SWOT analysis
- Action plans
The fundamental concepts of economics.
Supply and demand
refers to customers’ desire to purchase goods and services and their willingness to accept the price at which the goods/services are offered.
Demand
Typically drops as price rises
Demand
refers to the availability of the good or service.
Supply
When prices are high, it will typically increase as organizations try to maximize profits.
Supply
Falling prices typically result in
a.) more or
b.) less supply.
Falling prices typically result in less supply.
Organizational/Product life cycle - impact on HR strategy: Introductory stage
- talent acquisition
- defining a culture
- controling basic HR risks
Organizational/Product life cycle - impact on HR strategy: growth stage
- Tactical buildup of talent
- Tactical increase in complexity of structure and policies
- Helping leaders redefine their roles
- Formalization of job descriptions
- Managing changes caused by the organization’s growth and increased formalization.
Organizational/Product life cycle - impact on HR strategy: maturity stage
- retaining productive workforce
- stable leadership
- succession planning
- implementing policies
- reinforcing organizational culture
- Improving channels of communication
- environmental scanning
- Consulting to solve productivity problems
- ensuring agility and innovation of the formalization
Organizational/Product life cycle - impact on HR strategy: renewal stage
- Reductions in workforce
- A change in leadership
- A streamlining of structures and policies
- Added responsibilities
Organizational/Product life cycle - impact on HR strategy: no growth stage
- Dealing with increased turnover rate
- Maintaining engaged workforce with fewer resources
- Delivering HR services with shrinking budget
Organizational/Product life cycle - impact on HR strategy: declining stage
- Reducing the workforce size
- manage constant stress and workplace changes
- Attracting necessary talent
Characteristics of organization/product life cycle - Growth
- Keen awareness of markets and customers
- Managers must be strategically disciplined
- Competing demands for innovation and efficiency
Characteristics of organization/product life cycle - maturity
- Need for greater control
- more formalization and complex reporting and decision-making structures
- a loss of connection with the organization’s strategy
Characteristics of organization/product life cycle - Renewal
- attempts to reconnect with or find new customers or missions
- need to restructure
- Vision and innovation, strong leadership, motivation, and communication are vital
Characteristics of organization/product life cycle - No Growth
- Revenue and workforce remain static or decline
- Fewer opportunities for employee advancement
- Compensation is static
Characteristics of organization/product life cycle - Decline
- organization shrinks in size and assets
- In-fighting increases
- a swing back to more autocratic control
refers to all the factors that exist outside the organization that could influence an organization’s strategic decisions
The macroenvironment
Conducting this type of analysis can help in acquiring information about the factors that might affect strategic decisions and therefore help to improve an organization’s competitive market position
A PESTLE analysis
A PESTLE analysis looks at the following:
- Political
- Economic
- Social
- Technological
- Legal
- Environmental
Governmental and other political forces that can exert influence on the economy or a specific industry and therefore affect the capabilities of an organization, for example, new or changed taxes, employment laws, and trade tariffs, barriers, and restrictions.
Political factors (PESTLE)
Market and other economic conditions that can affect an organization, for example, interest and exchange rates, wages, cost of living, and working hours.
Economic factors (PESTLE)
Events and trends in society that can affect the present and future availability of talent, compliance requirements, and employee needs, for example, health and safety consciousness, population demographics, and growth rates.
Social factors (PESTLE)
Changes in technological capabilities and availability that can affect an organization’s ability to produce and provide goods and services. These factors also include technological literacy levels and research
Technological factors (PESTLE)
Laws and regulations that can affect an organization’s operations.
Global organizations have to navigate different countries’ legal systems in addition to those in their home country, which may require extra care.
Legal factors (PESTLE)
Geographic and climate changes that might affect an organization’s operations, for example, extreme weather that may disrupt operations or transportation of goods for a specific area or an entire region.
Environmental factors (PESTLE)
Used to understanding how different factors can affect the core competencies of the organization and help HR in fulfilling its responsibility to provide the organization with the right number of workers with the right kinds of skills.
PESTLE
Scanning and researching external factors that might affect their organization.
PESTLE Analysis
How HR professionals can develop their awareness of their organization and the environment:
- Regularly reading the business press
- Staying current with the latest academic HR research
- Analyzing the organization’s performance
- Monitoring the performance of other organizations, including competitors and major employers
- Becoming regular users of third-party information from government agencies
- Scanning annual reports from businesses or groups with comparable markets and workforces
can provide a sense of developing management philosophies, preferences, and attitudes. It may be useful to develop relationships with individuals in the organization’s finance function who can explain the significance of financial performance metrics.
Networking
It can focus on issues that affect the business decisions and shape developing policies
ie.
major employers and on wage and benefit issues.
the impact of recreational marijuana on the workplace or the burden of education debt on employees.
HR advocacy
