business acumen global

3 Essential Components of Business Acumen for Middle Managers

Madhusudan Reddy
August, 2017

While designing training programs for their Employees, HR professionals need to start with the expected business outcomes

by Madhusudan Reddy

This article was originally published by People Matters, a niche media company working to create an HR community focused on following best practices and finding innovative ideas. It is the first Indian HR magazine with a global scope and multi-media integration. The following article was published online on August 11, 2017.

3 essential components

A company’s leadership pipeline is often a testament to its vision and culture. In an increasingly disruptive marketplace, key business decision-making is not a trait that is restricted to a handful of employees at the top. It is important for companies to enable employees at all levels to understand how the business works for them to make the right choices in their everyday work. A study by the Economist Intelligence Unit and BTS showed that 65 percent of leaders felt that insufficient business acumen limits their organization’s ability to realize strategic growth to a strong extent.

It is at the middle manager level that business acumen is shaped. In short, business acumen means understanding how a company makes money. And it includes a variety of attributes:

Strategic perspective – understand the business, its critical interdependencies, and the short- and long-term trade-offs of decisions.

Financial acumen – know the drivers of growth, profitability and cash flow; interpret a firm’s financial statements and key performance metrics.

Market orientation – understand macroeconomic trends and synthesize market and competitor data. It also means having a deep understanding of a customer’s business objectives.

Leadership and teamwork – execute strategy through others; to create alignment, a positive mindset and build capability in people and collaborate effectively with others.

These skills enable middle managers to answer key business related questions with ease, something Indian companies struggle to address today. Examples of these questions include:

In which part of the business is cash being tied up? And what can you do about it?

How do you spot opportunities in the market and how does this relate to the strategic objectives or the big picture in your company?

How can you explain the health of a company using financial statements?

To grow and nurture these skills, there are three critical focus areas that middle managers need to master:

Understanding finance: Middle managers need to understand how to read a P&L and how to interpret key financial statements and how to analyze annual reports.

Understanding of the market: Having a customer-centric orientation means being able to understand the needs of the customer and being able to think from their point of view. Another key element that middle managers need to focus on is their competition. Who are the competitors and what value do they bring to their customers? While middle managers can be enabled using training modules, on-the-job mentoring and coaching are critical to driving business results as well as developing people capabilities in the business.

Cross-connect business areas: This capability is critical to middle managers aspiring for leadership roles. For example, An HR professional, Branch Manager or an Operations Head should be able to understand the importance of customer experience and see how it is linked to employee performance and to the enabling culture in the organization. Being able to cross-connect ideas also means that professionals without conventional exposure to the business are alert to the potential opportunities.

There are several innovative methods by which companies are enabling their managers to develop these skills – gamified learning modules and business simulations tend to be the most effective approach for sustainable learning. It is important to remember that business acumen is not merely shaped by training alone. It is honed by application in real life situations, and it will take years before professionals start to exhibit the right leadership behaviors that are essential to drive actual business results. Hence, it is critical to developing the business acumen of middle managers today, as this will shape tomorrow’s leadership.

Contact Us to Learn More

BTS is a public company traded at the OMX Nordic Exchange Stockholm under the symbol BTS b
© BTS All Rights Reserved