HR Competencies - Business Acumen Flashcards
Business Acumen
Knowledge, skills, abilities and other characteristics (KSAOs) needed to understand the orgs. operations, functions and external environment.
Apply business tools & analyses that inform HR Initiatives & operations consistent w/ overall strategic direction of the org.
Business & Competitive Awareness
Knowing the organizations:
- Operations
- Functions
- Products & Services
- Competitive, economic, social, and political environments
Business Analysis
Applying business metrics, principles, and technologies to inform and address business needs.
Strategic Alignment
Aligning HR strategy, communications, initiatives and operations w/ orgs. strategic direction.
Proficiency Indicators
basic behaviors required for all HR professionals in area of Business Acumen.
Strategic Relationship
Symbiotic relationship, providing each person w/ something they need. Ex: vendors, customers, regulators and oversight groups.
HR Contributes to the relationship through policies, planning, mgmt.
Business Operations
activities involved in production of value for orgs. stakeholders.
Operations Management (OM)
Business function responsible for managing process of creation of goods & services.
Plan, organize, coordinate and control resources needed for company goods and services.
Involves managing people, equipment, tech, information and all other resources.
HR should create people policies and practices that help the orgs operational success.
Industry
Collection of enterprises serving similar segments of the economy. Ex: Energy, retail, restaurant, communication, consumer products, and business services.
Ten Elements of an HR Business Case
- Problem Statement - Clearly states the specific business problem in one paragraph or less.
- Background - Indicate what’s required to resolve or reduce the problem. Has info on skills, budgeting, and performance that contribute to the business problem.
- Project Objectives - Use 7 bullet points to state what the proposed solution is trying to accomplish. Ex: purchase hardware or getting a new vendor.
- Current Process - How proposed solution impacts org. process and its units. Training department, clients, external partners, and competition.
- Requirements - Resources needed to complete project. Ex: staff, hardware, software, print materials, time and budget.
- Alternatives - At least 4 proposed solutions. Should include project risks, ramp up time, training costs, and project delays.
- Compare Alternatives - compare and contrast the alternatives w/ proposed solution. Ex: difference, similarities, benefits, detriments and costs for each.
- Additional Considerations - Critical success factors. Ex: effects of partnership agreement w/ specific vendors or potential need for help desk or customer support.
- Action Plan - State short term and long term action plans including major milestones. Have proposed metrics to measure success.
- Executive Summary - one page summary of proposed solution. Tailor it to your audience.
Organizational Metrics
Metrics are measurements. Organizational metrics are measurements of individual functions or specific business process within the organization. Identify things to be measured that are critical indicators of success.
Using Organizational Metrics
Revenue by employee: Divide revenue by employee head count.
Expense per employee: Divide the expense element (or total expense) by employee head count.
Leveraging Technology
Make sure technology is working for you and not against you, it is the process of leveraging technology to its greatest advantage.
Training used to be done in classroom, today technology allows for training to be done electronically.
ROIs for HR Initiatives
Return on Investment (ROIs) is expressing financial benefit gained from any given business activity.
Ex: new paid time off policy when looking at impact of absence rates & expenses. Allow employees to enter their own data changes. This can help reduce the payroll expense.
Assessing Risks / SWOT
Two Sources of Risk. Internal risks come from strengths and weaknesses & External risks come from opportunities and threats.
Strengths: Advantage you and team have to reach project goals. Know the skills that give you an advantage. Lack of strength in an area can define risk.
Weaknesses: Anything internal to the org. that could prevent you from meeting objectives.
Opportunities: External facts leads to positive outcome in a meeting obj. Overlooking opportunities can represent specific risks.
Threats: External elements that could jeopardize your project
Examining Organizational Problems
Identify or laying out the problem before rushing to identify solutions. Don’t rush to recommend solutions without a problem having surfaced.
Developing Solutions (5 Steps)
Define the problem: What is it that gets in the way of our goals.
Identify Options: What we can do to eliminate problem? These are the solutions that may work.
Evaluate the Options: Create a criteria any solution must meet. Compare options to criteria, if it doesn’t meet criteria discard the option. What remains is options that work.
Chose an option & implement it: Make a judgment on works best and passes the criteria screening. Identify what is successful for implementation.
Evaluate the solution: Did chosen solution solve the problem. Did it create other problems? What is the follow up action?
Business Case Analysis (BCA)
Looks at programs, solutions to problems or other action plans with the eye on how they will impact the business. It projects accountability for taking any action. HR prof. must be willing to be accountable for success or failures of their program.
Benchmarking
“competitive benchmarking can be defined as continuous process of comparing a firms practice and performance measures with that of its most successful competitors.” Ross Beard”
Ex: identifying compensation levels through periodic compensation surveys.
Expert Knowledge
HR must protect own expert knowledge. When expert knowledge leaves it can cause negative impact if no backup. HR has to do its homework and identify sources for candidates w/ knowledge.
Value
The end result of an organization meeting its strategic goals.
During Strategic Planning
- How Value is created
- How to increase value
- Critical activities needed to create value
Value Chain
Every activity needed for a company to produce and deliver their products
Strategy
The organization’s plan for creating value
Strategic Planning
The process used to develop goals that create value for a company.
Strategic Management
The actions leaders take to create value for all stakeholders.
Key Performance Indicators (KPIs)
Quantifiable standards used for measures of success.
Stakeholder
Anyone who benefits from an organization’s value
Business Life Cycle
- Introduction –> Growth–> Maturity–> Renewal or decline
Forces that impact Business
- Threat of substitution
- Threat of entry
- Bargaining power of suppliers
- Bargaining power among buyers
- Rivalry among existing competitors
Business Case
A presentation to management bringing to light a problem and proposed solution.
Will contain:
- Statement of need
- Recommended solution
- Risk & Opportunities
- Estimated costs & Timeframes
Budgeting Methods
4 types
- Zero-based
- Incremental
- Formula
- Activity-based
Balance Sheet
A statement or snapshot in time of the Company’s financial position. Measure of company’s assets, liabilities, and equity.
Income Statement
A measure of the company’s financial health over a period of time. Contains revenues, expenses, and profits.
Assets
Financial, physical, and sometimes intangible properties an organization owns.
Cash flow statement
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.
Liabilities
Organization’s debts and other financial obligations.
Gross profit margin
Ratio of gross profit to net sales.
Net profit margin
Ratio of net income (gross sales minus expenses and taxes) to net sales.
Equity
Amount of owners’ or shareholders’ portion of a business. Difference between income & liabilities in a for-profit organization.
Accounts payable
Money an organization owes its vendors and suppliers.
Enterprise resource planning (ERP)
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.
Accounts receivable
Money an organization’s customers owe the organization.
