Power to Your People, Right On

By Raymond Green

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Business Acumen for Employees

Although there is little debate about the need for managers to develop business acumen, organizations sometimes question the need for this understanding at employee levels. But frontline contributors—those who are most directly involved with production or customer service, for example—take actions every day that impact business results.

Consider the service representative who deals with an unhappy customer, or the maintenance person who notices a problem. The actions each of them takes might erode profit margin, lose a good customer, or allow safety issues to escalate. Without an understanding of how their actions impact the company’s results, they might not have the context to consider alternatives.

Many organizations have determined that financial literacy and business acumen aren’t just for managers anymore. They have decided to develop a company of people who understand the business; who know what return on assets and return on investment mean; who know how supplier costs affect results; who understand the importance of positive cash flow; and who see the connection between the company’s financial success and their own health benefits, 401(k) plans, and more. In other words, they need people who understand the “business” of the business. It isn’t about information, it’s about understanding.

In his book Good to Great: Why Some Companies Make the Leap…and Others Don’t, management consultant Jim Collins writes, “We found no evidence that the ‘good-to-great’ companies had more or better information than the comparison companies. None. Both sets of companies had virtually identical access to good information. The key, then, lies not in better information, but in turning information into information that cannot be ignored.”

With an increased level of business acumen, managers and employees can better interpret information, making the connection between their actions and the company’s results.