How to develop business acumen in your employees

Do
you struggle with how to develop business acumen in employees?

If
so, you’re not alone. It’s a common concern of managers and business owners.

Your
employees may be great at their individual jobs, whether they’re creatives,
salespeople, engineers, IT personnel or something else. While they’re
intelligent, capable employees, they may lack a formal business education or
even awareness about what other business functions contribute.

In
the long run, that can equate to a lack of understanding in how to add value to
your company or act in its best interest.

Why is business acumen important?

Business
acumen is a critical quality for all employees to have. After all, your
employees make decisions and take actions daily that can impact your company’s
operations, reputation and profitability.

When
employees lack business acumen, organizations can suffer negative repercussions:

• Employee engagement and productivity tend to decrease when employees don’t understand how their role fits into the bigger picture, which can hurt your bottom line.
• Employees can make decisions that don’t align with strategic goals. These missteps can result in lost revenue and wasted time.
• Employee turnover can increase, especially among those who seek promotions to leadership roles. Certainly, a lack of business savvy can be detrimental to career advancement. Some employees may feel as if they’ve hit a roadblock, and they aren’t sure why. Then they get discouraged, leave and must be replaced.
• Businesses miss out on meaningful employee input; specifically, their ideas on how to improve the business. This input could otherwise enhance efficiency, reduce costs or upgrade the customer experience.
• Customer, vendor or partner relationships can be impaired.
• Businesses can open themselves up to liability in worst-case scenarios.

No
employee wants to make a mistake at
work. They want to perform well and be valued within a team. In many
cases, they just don’t know what they don’t know.

As
a business owner or manager, you can maximize employee performance by investing
your time into training your
workforce about business operations and strategic goals, and how each
person makes an impact.

What basic business knowledge should all employees know?  

Ideally,
your employees should be able to answer basic questions about your business:

• How does the
  business operate?
• Who is the
  customer?
• How does the
  business make money (and what are the revenue-generating areas versus cost centers)?
• How do all the
  functions or departments of the business work together and impact each other?
• Which internal
  and external factors affect profitability?
• What are the
  strategic goals of the business, and how can they be achieved?

8 ways to develop business acumen in employees

Employee development is a critical part of any successful business. Here
are a few ways you can add to your team’s skill set and build the business
acumen your company needs.

1. Educate employees on key business goals.

If you understand your personal
goals and know what’s expected of you, it’s easier to make decisions and
complete your day-to-day work.

That’s why you should routinely
share with employees strategic business goals and how each employee’s role contributes
toward these goals.

Once this discussion has taken
place, all projects given to employees need to align with a strategic goal. Understanding
how their contributions help to drive business success can be a strong
motivator.

2. Implement cross-training.

It’s easy to get caught up in a daily routine and focus only on your own job. Silos can form, and employees can start to work without much consideration for what everyone else around them is doing.

Once employees understand how their job
fits into the overall strategy, it’s critical that they also understand the
purpose and function of other departments.

Cross-training, during which an employee sits with
another department and learns how their colleagues perform their jobs, can
broaden perspectives, increase awareness and even alleviate a sense of
isolation.

At the end of the training, ask employees to describe:

• What they learned
• What was meaningful
• How this learning experience impacts
  their job
• What
  suggestions they have for how to improve these other departments

3. Facilitate cross-departmental problem solving.

Closely related to cross-training, cross-departmental problem solving involves gathering a representative from each business function – marketing, accounting, finance, sales, operations or service, to name a few – to discuss how to solve a specific problem.

Diverse perspectives help produce
more creative and comprehensive solutions to problems.

This exercise also enables
employees to continue thinking about what is going on with other departments and
how they all interact with each other.

4. Explain your customer lifecycle to employees.

• How do customers first come to your
  business?
• What is the customer experience
  throughout their interaction with your business?
• How can your business keep customers
  for the long term?

This lesson could be turned into a game in which employee teams represent the different business functions. For every customer scenario, each team explains at what stage of the customer lifecycle they interface with customers and how they affect the overall relationship.

This can help employees better serve customers because they understand the entire process. And if one employee is unable to help a customer with an issue, they know who can within your organization.

Furthermore, employees
will be able to communicate to customers clearly and more comprehensively about
what they can expect in dealing with your business.

5. Teach important financial statements to employees.

All businesses have cash flow statements, budgets, departmental numbers and the like, but few employees ever look at it – or even have the opportunity to see it – much less decipher it.

Employees need to
know how your business made or lost money over a designated time period, and
how their role and department impacted that outcome. They should also discuss,
as a department, how their performance can improve over the next month and
overcome any barriers to doing so.

If your company
is publicly traded, it’s a great idea for employees to listen to quarterly
earnings calls to learn about other factors influencing the company’s success.

6. Encourage and celebrate employee ideas.

No, we don’t mean a celebration in
terms of a party with cake.

Set aside a few days each year during
which employees feel empowered to present ideas for how to
improve their jobs and the overall business.

Employees may want to make a
difference, but they might feel they don’t have the opportunity.

Ideas that align with strategic
initiatives should be considered and, if possible, implemented to demonstrate
to employees that their feedback is valued.

7. Establish business acumen as a core competency.

You probably have a list of behaviors
and characteristics that you require your employees to demonstrate. If you prioritize
business acumen as a core competency and can define what exactly that means to your
organization, this trait will continue to be cultivated within employees.

During annual reviews, you should
discuss with current employees how well they demonstrated business acumen and
how it can be developed further.

For prospective hires, try to gauge
their understanding of this knowledge base during the interview process. Over
time, it will help to reduce your training efforts if new hires already possess
a minimum acceptable level of business acumen.

8. Empower employees to further their education.

There’s only so much a business
owner or manager can do to teach an employee. The final step is to offer your
teams the tools to educate themselves.

Some options:

• Collect
  books or online resources on various business skills and topics for employees
  to review during breaks.
• Partner with
  local academic institutions to facilitate continuing business education for
  employees.
• Offer online
  training courses focused on developing business acumen.

By implementing any of these strategies, you’re granting employees free access to better their own understanding of business issues. This simple step could make a big difference in one of your employees performing better tomorrow.

Summing it all up

Once
your employees demonstrate business acumen, they’re no longer simply doing a
job.

Instead, they:

• Are aware of the
  specific targets they need to reach and can align their work output accordingly
• Understand what
  their role – as well as their colleagues’ roles – contributes to the bottom
  line
• Can differentiate
  between smart and poor business decisions, and can safeguard your business
  against costly missteps
• Are constantly on
  the lookout for ways to improve your business

A workforce that can make educated decisions on behalf of your business is a powerful tool to have at your disposal. That’s why it’s crucial you understand how to develop business acumen.

For
more information about unleashing your employees’ potential through training,
download our complimentary magazine: The Insperity
guide to learning and development.