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Business Acumen Competency - Coggle Diagram
Business Acumen Competency
Business & Competitive Awareness
Value
Value definition: Organization's success in meeting strategic goals (distinct from organizational "values").
Purposeful activity in strategic planning and management aims to yield greater value.
Pre-planning, consider how value is created, retained, and increased.
:warning: One set of management may see value as shareholder returns, while the other may be more concerned about employee well-being and security.
Influences on Value Definition:
Mission:
For-profit: Value tied to assets and ability to generate value above production costs.
Military: Value measured by effectiveness in fulfilling mission (safeguard/protect).
Culture (Organizational, Global, Workplace):
Common conflict post-mergers: lack of agreement on value.
Conflicts can be driven by differences in ethnic cultures (global organizations/diverse workplaces).
Value defined by functional culture (e.g., Operations: output; Sales: satisfied customers).
HR's Role in Value:
Must understand varying perceptions of value as they drive strategic goals.
Can provide critical guidance in acknowledging and resolving cultural conflicts (due to strategic change, global organization, M&A, restructuring).
:check: What is the primary role of HR when perceptions of value conflict within an organization?
Value Chains
Definition: Process by which an organization creates a product/service; also called its
business model.
Sequential and simultaneous contributions of internal/external participants.
Each participant adds value; total value is more than sum of parts.
:warning: Global Value Chain:
Multiple organizations producing parts of good/service across geographical regions, each adding value.
More integrated than simple outsourcing; participants share expertise.
Important for economic development despite governance challenges.
Competitive Advantage:
Achieved by being superior in one functional area (e.g., R&D, marketing, production).
Achieved by more effective coordination among functions.
:warning: HR's Contribution to Value Chain:
Quality and availability of "pivotal talent pools" (employees with skills critical to strategy).
Protects value: manages labor supply for optimal productivity.
Enhances value: leader and performance development processes.
Adds value: acquires strategically important new talent areas.
HR Service Delivery:
Meeting periodically with internal customers to understand needs.
Establishing Service-Level Agreements (SLAs): defines expected output (e.g., services, time frames, responsiveness).
:check: A Service-Level Agreement (SLA) primarily defines what aspect of HR service?
Organizational and Product Life Cycles
Concept: Industries, organizations, brands, and products have characteristic life cycles (introduction, growth, maturity, peak, decline/demise).
HR must be aware as organization's and HR's priorities shift.
HR strategic plan must adapt accordingly.
Distinction: Different from employee life cycle (hiring to exit).
Life Cycle Stages & Outcomes:
Introduction:
Low revenue, little market awareness, resistance to change.
Focus: Create identity, develop value proposition (requires imagination, business acumen, leadership).
HR Impact: Talent acquisition (build foundation), culture definition, risk control (compliance, stress management).
Growth:
Revenue increases; focus shifts to efficiency without stifling innovation.
Requires some formalization without affecting vibrant culture.
HR Impact: Tactical talent buildup, increased structural/policy complexity, redefine leader roles, formalize job descriptions, manage growth-related changes.
Maturity:
Market saturated, growth via new products/customer groups or acquisitions.
Narrower profit margins, increased efficiency focus, greater formalization/bureaucracy.
HR Impact: Building/retaining productive workforce, stable leadership (succession planning), policy implementation, reinforcing culture, improving communication, maintaining agility, consulting for productivity issues, environmental scanning.
Renewal/No Growth/Decline:
Demand decreases; need to adapt.
Renewal: Change offerings/competition methods; return to innovative roots; revenues rise.
HR Impact: Workforce reductions (
right-sizing
), leadership/workforce requirement changes, streamlining structures/policies, added staff responsibilities.
No Growth: Accept low revenue, limited resources for growth.
HR Impact: Maintaining engaged workforce with fewer resources, dealing with increased turnover, delivering HR services with shrinking budget.
Decline: Shrinking size/assets, increased in-fighting, autocratic control.
HR Impact: Reducing workforce, helping manage stress/changes, attracting necessary talent (creativity needed due to reduced assets).
:check: During which stage of the organizational/product life cycle is HR most focused on "talent acquisition, finding the resources needed to build a foundation for the enterprise"?
Macroenvironmental Forces Influencing Strategic Decisions
Macroenvironmental Forces Influencing Strategic Decisions
Definition: Factors outside the organization influencing strategic decisions.
HR leaders must be familiar with and informed on these to manage human capital.
PESTLE Analysis helps acquire information and improve competitive market position.
Political: Governmental/political forces (e.g., taxes, employment laws, trade tariffs).
Economic: Market/economic conditions (e.g., interest/exchange rates, wages, cost of living).
Social: Societal trends (e.g., health/safety, demographics, growth rates).
Technological: Changes in tech capabilities/availability (e.g., production, literacy levels, research).
Legal: Laws/regulations affecting operations (global organizations need extra care).
Environmental: Geographic/climate changes (e.g., extreme weather, disruptions).
HR's Role: Understanding how these factors affect core competencies helps HR provide the right number of workers with the right skills.
HR professionals must regularly scan and research external factors.
:check: Which macroenvironmental force in a PESTLE analysis would primarily address changes in population demographics and growth rates?
Improving Environmental Awareness
Methods for HR Professionals:
Regularly read business press (including international publications like The Economist) and follow social media for trends.
Stay current with academic HR research (local academics, institution websites).
Analyze organizational performance (financial reports, strategic goals, performance patterns, indebtedness, cash levels).
Monitor performance of other organizations (competitors, major employers) to inform employer branding, compensation, engagement, and diversity strategies.
Use third-party information from government agencies, international bodies (World Bank, UN), nonprofits, professional associations (SHRM).
Scan annual reports from businesses/groups with comparable markets/workforces for insights into issues and solutions.
Information Gathering: A skill that needs regular updating and expansion.
:warning: HR professionals must also focus on expanding and deepening their channels of information—inside and outside the organization.
Networking within the organization for management philosophies, preferences, and attitudes.
Developing relationships with finance function for understanding financial performance metrics.
Developing contacts within stakeholder communities to uncover emergent issues (e.g., educational challenges affecting future worker pool).
Networking can build allies for future actions.
Useful Business Terminology
Supply and Demand:
Demand: Customers' desire to purchase and willingness to accept price; typically drops as price rises.
Supply: Availability of good/service; typically increases with high prices, decreases with falling prices.
Strategic Plan:
Defines organization's purpose and direction; guides HR on core values/objectives.
Components: Vision/mission, core values, goals/objectives (long/short-term), SWOT analysis, action plans.
:check: What are the typical components of a strategic plan according to the text?
Competitive Advantage: Factors enabling an organization to outperform rivals (produce better/cheaper).
Factors include branding, product quality, customer service, distribution, geographic location, access to resources, intellectual property.
Financial Projections: Estimate of future financial performance (typically 12-month, monthly/departmental breakdown).
Tool for translating goals into targets, feedback/control; deviations assess strategic plan changes.
Quality: Measure of comparison for products/services (superior/inferior vs. rivals).
Based on product/service characteristics and how well they achieve intended function.
Key Performance Indicators (KPIs): Specific, quantifiable or qualitative measures of critical business areas.
Vary by use; used to analyze long-term goals or critical success factors.
:check: What is the primary purpose of Key Performance Indicators (KPIs) in an organization?
Fixed and Variable Costs:
Fixed Costs: Recurring, regardless of output (e.g., interest, rent, utilities, insurance).
Variable Costs: Depend on output; increase/decrease with production (e.g., labor costs, materials).
Semi-variable costs: Mixture of fixed and variable (e.g., volume discounts, salary + commissions).
Revenue: Money generated through sales; gross income (average sales price x units sold).
Net Income: Revenues minus costs; net earnings (for organizations/individuals).
Subtracted costs include expenses (operating, administrative), taxes, interest, depreciation.
Profit and Loss:
Profit: Positive result (revenue > expenses).
Loss: Negative result (expenses > revenue).
Business Analysis
Business Intelligence
Definition: Using information to understand an organization and its performance, making sound, fact-based business decisions.
Supports good governance, informed, transparent, and accountable decisions.
Three Basic Components of a BI System:
Data Gathering: Routine collection from various computer systems (e.g., point-of-sale, transactions, employee/customer records, security).
Data Warehousing:
Data translated to standard format, cleaned (scrubbed).
Stored in specific-use databases (operations, finance, sales, HR).
Enterprise Resource Planning (ERP) System: Integrates distinct databases for organization-wide access to current data, improving communication/coordination.
"Suites" of integrated applications (Finance, Supply Chain, Manufacturing, Customer Relationship, Human Resource Management).
Data warehouse divided into integrated data marts for shared reporting/analytical needs.
HRIS (Human Resources Information System): Captures HR-related data (payroll, workforce planning, performance appraisal, training, succession planning).
Some ERPs support Electronic Data Interchange (EDI) for external automation (e.g., outsourcing, vendor payments).
:check: What is the primary benefit of an Enterprise Resource Planning (ERP) system in relation to data warehousing?
Query and Reporting Capabilities: Users access, sort, describe, analyze data using software, create report graphics.
Business Intelligence Portals
Definition: User's point of access to data and applications on an information system.
Characteristics of an Effective BI Portal:
Customizable to user needs (simplifies navigation, avoids overwhelming).
Important for HR when selecting/designing self-service portals.
Presents information logically (visual cues for relationships).
Supports easy navigation.
Uses automated tools (e.g., "click to open," "drag and drop").
Scalable to different media (monitors, handhelds, mobile phones).
Provides security (restricting access/actions by user privileges).
:check: Which characteristic is most important for an effective business intelligence portal when designing a self-service portal for managers and employees?
Balanced Scorecard
Definition: Useful tool for gathering business intelligence; provides concise impression of overall performance.
Focuses organization/functions on key strategic activities, crafts responses to goals, creates metrics.
Supports clear line of sight from strategic goals to strategic performance.
Multiple scorecards possible (organization-level deconstructed to departmental).
Kaplan & Norton's Four Uses in Strategic Management (linking short-term to long-term):
Translating the Vision: Includes accountability and measurable results; HR tailors efforts to achieve results.
Communicating and Linking: Provides clear overall objectives; departments align objectives; HR ensures talent acquisition aligns with overall strategy.
Business Planning: Clarifies goals; departments integrate plans; HR ensures correct resource allocation for workforce management (e.g., hiring, skills development, travel budgets).
Feedback and Learning: Provides opportunities to learn from ongoing performance; HR adjusts strategies based on real-time feedback.
:check: According to the balanced scorecard creators, which of the following is not one of the ways the scorecard can be used in strategic management?
Analytical Processing
Definition: Business analysis enhanced by computer processing power and Internet accessibility.
Online Analytical Processing (OLAP): More common, embedded in HRIS products.
Analyzes data faster and in more ways than traditional relational databases.
:warning: Offers multidimensional analysis.
Relational Database:
Stores data in separate tables (rows = records, columns = attributes).
:warning: Queried to find relationships between data.
OLAP Application:
Uses a server between user and database.
Stores data in a compact, multidimensional "cube."
Each dimension (e.g., employees) contains all attributes (gender, age, function, pay grade).
Quickly finds varied intersections of dimensions.
Enables different types of analysis (e.g., time series for hiring trends, regression for retention vs. promotion).
:warning: Data can also be organized hierarchically, which allows the user to “drill down” for a more granular look at the situation or “drill up” for a bird’s-eye view.
Example: HR analysts can drill down from all employees to female managers with college education.
Advanced Business Analytics
Distinguished by Temporal Focus:
Backward (Historical Data / Trend Analysis):
Analyzes past data (e.g., recruiting statistics effectiveness).
Used by HR to extrapolate future labor demands.
Current (Dashboard Analytics):
Focuses on current data measuring performance in key areas (e.g., employee retention rates).
Presents data in various ways (geographically, functionally, by age/gender).
Forward (Predictive Analytics):
Uses historical and current data to sense/shape the future.
Applies formulas/algorithms to predict outcomes (e.g., forecasting hiring decline due to noncompetitive wages).
Simulations can be run based on different scenarios.
Machine Learning: Information system makes decisions based on data received.
Improves self-service for managers/employees.
Predicts interests based on interactions (e.g., reviewing resumes, sending job ads).
Valuable Applications for HR Professionals (Predictive Analytics & Trend Analysis):
Identifying objective performance/engagement metrics (top performers, culture fit).
Facilitating retention and succession planning (tracking success indicators, potential flight risks - cautiously).
Enhancing talent acquisition (best hiring sources, future high-performers, diversification efforts effectiveness).
Improving fraud detection through pattern recognition.
Forecasting Benefits: Improves decision-making, responsiveness to changes, long-term planning effectiveness.
Limitations: Prediction is not flawless; unpredictable events (crises); technological developments can impact workforce growth (e.g., automation reducing need for replacements).
:check: Which type of business intelligence analytics uses historical and current data to forecast future trends and predict outcomes?
Scenario Planning
Approach to Looking Ahead: "What if" planning for events beyond organizational control (political disruption, natural disasters, pandemics).
Purpose: Mitigate severity of potential future risks.
:warning: HR's Role: Use past experiences/events to devise plans for future challenges (e.g., pandemic response informing future crisis management).
Example Questions for Exercise:
Appropriate employee supports (tech, health)?
Preparations for remote/hybrid work?
Ability to locate/repatriate overseas employees?
Ability to meet new staffing needs post-crisis?
Key: Plans must be revisited regularly for updated information.
Benefit: Ensures organizations have plans to navigate potential future crises/challenges.
Strategic Alignment and Assessment of Resources
Budgets as Strategy Tools
Purpose: Allocate limited resources to programs/activities that achieve strategic goals.
Strategic budget alignment occurs at organizational and functional levels.
Budget Definition: Planning and measurement tool.
Anticipates income/disbursement timing and amount.
Identifies quantity and type of work/results to be produced.
:warning: HR will be competing with other functions for the organization’s limited resources.
Control and Transparency:
Provides control over assets and transparency in their use.
Performance assessed by meeting budget projections (results and resource use).
HR's Role:
Understand organization's budgeting process and its impact on HR.
Justify budget requests by demonstrating how resources advance HR's and ultimately the organization's strategy.
:check: What is a key challenge for HR professionals when developing a strategic HR budget?
Budgeting Process
Variations: Collaborative, top-down/bottom-up processes (leaders set goals, departments propose, negotiation).
Ensures reflection of leadership's strategic needs and granular department knowledge.
Budgeting Methods: (Organizations may use multiple methods)
Incremental:
Traditional (line-item budgeting); prior budget basis for next, increased/decreased by set percentage.
Additional funds requested based on need/objectives.
Less time-consuming, but doesn't recognize changing business circumstances.
Example: New computer equipment or training requires separate request on top of usual budget.
:check: Which budgeting method is characterized by using the prior budget as the basis and adjusting it by a set percentage?
Zero-based:
All objectives/operations prioritized.
Each unit/goal ranked, funds allocated in order of priority.
All expenditures justified for each new period; budgets start at zero.
Time-intensive initially, more efficient with experience; reduces wasteful spending.
Example: Department must justify entire budget and show goal alignment.
Activity-based:
Recognizes interrelationships among value-creating activities.
Basis: cost to perform different enterprise activities, not dividing set amount.
Funding allocated based on strategic significance of activities.
More precise estimates once historical cost info accumulated; gives leaders more control.
Example: Organization asks functions for resources needed for specific outputs; resources transferred from lower-priority areas.
Formula-based:
Different units/operations receive varying percentages of budget.
General funding changed by specific amount, unit budgets adjusted accordingly.
Example: Government agency experiences system-wide 5% budget decrease, spread by different percentages among units.
Capital Costs:
One-time investments in physical assets (buildings, land, equipment).
Not common in HR but can occur (e.g., new information system).
Budgeted separately from operating costs.
Some HR activities may be included in other functions' budgets (e.g., consulting, special training).
Budgeting Process Requirements (Understanding):
How organization allocates costs (HR-related costs assigned to functions or HR?).
Which costs are variable vs. fixed for the year.
When costs occur (e.g., temporary workers seasonal?).
Organizational/functional strategic plans affecting HR (e.g., reorganization impact).
Risk factors affecting budget (contingency funds?).
Challenge for HR: Being aware of human resource needs of internal business partners due to HR's cross-organizational span.
HR Budget
Includes:
Ongoing operational costs for essential HR services (recruitment, employee relations, talent management).
Overhead costs not directly contributing to HR function/service (utilities, maintenance, occupancy).
One-time project costs for HR strategy/objectives (e.g., executive salary review).
Operational Side (Resources related to):
Talent acquisition
Training and development
Compensation and benefits
Employee and labor relations
Health, safety, and security
Information technology
Planning
Philanthropy/SCR
Variability: Many expenses are variable and affected by organization's/HR's strategies (e.g., growth/retraction affects headcount, recruiting/outplacement; structural/cultural change requires consultants/development).
:warning: Having several years of HR data to establish rules of thumb and trends in expenses will be helpful in defining a new budget.
First Step for HR Leaders: Compare previous/current activities and budget allocations with needs to support proposed organizational strategy.
Creating a Business Case to Secure Resources
Purpose: Strategic activities/projects outside HR's operational budget compete for resources; funded by strategic priority.
Success depends on clear alignment with organization's strategic goals.
Relationship set forth in a business case.
Business Case Definition: Presentation to management establishing a problem and arguing proposed solution is best in terms of time, cost efficiency, success probability.
Formality varies (written with financial analysis, oral slide-supported).
General Components:
Executive Summary: Summarizes project purpose, condition/change impelling action.
Example: HR aware of South American growth strategy; lack of common policies/processes and shared culture would inhibit.
Recommended Solution: Defines ideal solution objectives, describes proposed action, may discuss alternatives and reasons for not recommending.
Example: HR proposes customized salary/benefits survey for growth areas and current countries; building policy/practice "culture" for individually run countries to facilitate acquisition/organic growth.
Risks and Opportunities: Outcomes decreasing success chance, new opportunities requiring action, risks of doing nothing.
Example: HR foresees difficulty in obtaining data (poor records), included extra time/resources; unresolved legal issue in one country; opportunity for smoother acquisition integration.
Estimated Costs and Time Frame: Project budget includes all foreseeable elements plus reserve for unforeseeable; time frame considers project/organization needs.
Longer projects may be phased with gates/review milestones.
Example: HR provides cost estimate and estimates benefits in event of acquisition/merger.
Post-Approval: Projects should be revisited periodically to ensure business case soundness (no new risks, environmental changes).
Tips for Effective Business Cases (Exhibit 1-34):
Research Carefully: Gather facts, investigate alternatives, consider risks.
Align Proposal: With organizational strategy.
Get Early Buy-in: From key decision makers/influencers.
Put in Writing: Explain issue/needs, describe solution with facts (not emotion).
Include Specific Metrics: To evaluate effectiveness.
Financial Statements
Financial Statements as Measure of Business Performance and Health
Key Financial Statements: Balance Sheet, Income Statement, Cash Flow Statement (integrated, information from one used in others).
Benefits for HR Professionals:
Understand internal/external stakeholder perspectives (economic issues driving management decisions, investor analysis of growth/risk).
Identify opportunities for HR to improve financial performance (e.g., developing new competencies aligned with financial goals).
Understand factors affecting HR strategies (e.g., weak revenue affecting executive compensation, poor cash flow limiting HRIS investment).
Gaining Financial Understanding:
Consult with finance colleagues; regular meetings.
Learn about financial challenges and how HR can help.
Can create an influential ally and advisor.
:check: What is a key benefit for HR professionals in understanding an organization's financial statements?
Balance Sheet
Definition: Indicator of financial health; statement of assets, liabilities, and equity at a particular time (snapshot).
Balance Sheet Equation: Assets = Liabilities + Equity (or Equity = Assets – Liabilities).
Assets: What an organization owns.
Tangible: Cash, inventory, property, equipment.
Intangible: Copyrights, patents, proprietary knowledge.
Include investments and accounts receivable (money owed to organization by customers).
High doubtful accounts indicate need to consider customer financial strength.
Current Assets: Easily liquidated or converted to cash (e.g., cash, inventory, accounts receivable).
Fixed Assets: Tangible value, long-term investments, not for quick liquidation (e.g., buildings, land, equipment).
Liabilities: What an organization owes.
Examples: Rent, loans, unpaid wages/benefits, reserves, fines, tax debts, accounts payable (money owed to vendors/suppliers).
Equity: What a company owes to its owner(s)/shareholders.
What is left of assets after liabilities discharged.
Stockholder equity: Value of all stock held by investors.
Includes retained profits (for reinvestment, growth).
:warning: Important Points for Balance Sheets:
Basic form: Assets = Liabilities + Equity.
Provide a snapshot at a given moment in time; change with new transactions.
Every financial transaction is an exchange; both sides entered (assets, liabilities, or equity).
Only transactions measurable in money are recorded.
:check: Which characteristic is unique to the balance sheet compared to other financial statements? (Equity)
Income Statement
Definition: Compares revenues, expenses, and profits over a specified period of time (year/quarter).
Also known as Profit and Loss Statement (P&L).
Indicates Net Income ("Bottom Line"): Provides key information about performance.
Equation: Net Income = Revenue – Expenses.
Components:
Revenue (Net Sales): Total sales minus returns/discounts.
Cost of Goods Sold (COGS): Raw materials, purchased items, direct labor.
Gross Profit: Revenue - COGS.
Total Operating Expenses: Selling expenses (advertising), administrative salaries, lease payments.
Depreciation: Loss in value of assets.
Earnings Before Interest and Taxes (EBIT): Gross Profit - Depreciation.
Net Income: EBIT - Interest - Taxes.
Metrics from Income Statement:
Gross Profit Margin: (Gross Profit / Net Sales) - shows percentage of revenue after direct costs.
Net Profit Margin: (Net Income / Net Sales) - shows what is available for reinvestment/distribution.
Downward trend or uniqueness to company could be problematic.
Healthy margin indicates ability to obtain financing and reinvest.
:warning: Important Points for Income Statements:
Basic form: Revenues – Expenses = Net income.
Reflect performance over a specific time period.
Some expenses are non-cash outflows (depreciation); some paid partly in current/next period (COGS).
Owner withdrawals are distributions, not operating expenses.
:check: What is the primary purpose of an income statement?
Cash Flow Statement
Illustrates effect of all organizational activities (consume/produce value) on cash on hand.
:warning: Shows how money is flowing into/out of the organization through operations, investing, and financing over a defined period.
Financial data from income statement and balance sheet.
Three Areas:
Operations: Cash flow from core business activities (e.g., income from sales, depreciation, increase in accounts payable; negative from increased inventory/accounts receivable).
Investing: Cash flow from purchase/sale of assets (e.g., capital expenditures like new manufacturing lines).
Financing: Cash flow from debt, equity, and dividends (e.g., paying dividends, short-term borrowing).
Interpretation:
Combined cash flow from three areas impacts overall cash balance.
Often interpreted by financial experts as signs of sound/weak management.
Negative cash flow in operations: low sales and/or high production cost.
Positive cash flow: ability to repay debt, meet expenses.
Negative cash flow in investing: not investing in self (new skills/products).
Over-reliance on borrowing: indicated by financing cash flow compared to operations/investing.
HR's Role:
Poor cash flow may mean fewer resources for HR programs.
Opportunity for HR expertise to improve cash flow (e.g., work with operations for leaner manufacturing, sales/marketing for incentive systems).
:check: A negative cash flow in which area might indicate that an organization is not investing in its own development?
Financial and Nonfinancial Ratios as Indicators of Business Health
Financial Ratios: Compare two values to measure performance against benchmarks.
Argument against excessive use: overemphasize short-term results (viewing as trends lessens effect).
Must be used within industry context (profit margins vary by industry).
Discussion with finance should include industry metrics.
Sample Financial Ratios (Exhibit 1-38):
Current ratio (liquidity)
Debt to asset ratio (leverage)
Debt to equity ratio (leverage)
Accounts receivable turnover (activity)
Gross margin (profitability)
EBITDA margin (profitability)
Profit margin (profitability)
Return on Investment (ROI) (profitability for specific investments)
Earnings Per Share (EPS) (profitability for equity holders)
Price to Earnings (P/E) (market value, confidence in earnings)
:check: Which type of financial ratio indicates the level of working capital and is preferred to be higher by creditors?
Nonfinancial Performance Measures:
Examine changes not measured in currency, but whose effects can be monetized.
Examples:
Share of market (competitive strength).
Achievements in social responsibility.
Efficiency (use of current/efficient technology/processes).
Activity ratios (efficiency of resource use to generate profit: inventory turns, age of inventory, collection/payment periods, asset turnover).
Employee retention and job satisfaction ratings.
Employee engagement.
Market position (reputation, brand awareness, employer brand, quality/customer relations/innovation reputation).
SWOT Analysis: Helps identify relevant financial/nonfinancial measures, areas for resource allocation to achieve goals/exploit opportunities.
Repercussions for HR Strategy:
E.g., if brand not well-known, hire brand ambassadors (adjust hiring, travel policies/budgets).
E.g., expanding abroad, HR incorporates new legal/regulatory considerations into workforce management.
Sales Pipeline
Definition: Visual representation of an organization's sales process.
Manages and tracks process through smaller components.
Helps forecast revenue, project cash flow, identify bottlenecks.
Components (Common):
Identify leads (prospecting): Exposure to customers via campaigns, PR.
Gather information: Investigate viability of leads (needs, affordability, legitimacy).
Create proposal: Detail how product/service meets needs (costs, benefits, process, pricing).
Negotiate: Counterproposals, demonstrations, financial sense check.
Close sale: Final details, contract signing, payment received.
Monitor: Regular customer monitoring for service, cross-sell/up-sell opportunities.
Refinement: Should be revisited and refined with new information.
Benefit: Measures sales team performance (meeting targets, underperforming).
Identifies skill gaps, suggests training for struggling reps.
:check: What is a key benefit of using a sales pipeline for management?
Business Documents
HR Professionals should familiarize themselves with nonfinancial business documents for strategy/plan refinement:
Business Plan: Founding document for organization; organizational-level business case.
Establishes purpose, includes structure, marketing plan, financial projections.
Strategic Plan: Outlines how organization fulfills purpose; more detailed version of business plan.
Includes mission/vision, strategic objectives/goals/initiatives, budgetary info, KPIs.
Organizational Chart: Diagram illustrating hierarchy, reporting relationships.
Useful for HR to assess right number/skills of employees in correct roles.
For dispersed organizations, tracks employee location and fit in structure.
:check: What information does an organizational chart primarily provide to HR professionals?
Standard Operating Procedures (SOPs): Formal, step-by-step guides for repetitive/low-variance work processes.
Enhance efficiency; common in HR (hiring, onboarding, training, exit interviews, annual reviews).
Familiarity with other organizational SOPs helps HR navigate interdepartmental activities.
Grants: Financial assistance from government for public service/economic stimulus projects.
Examples: environmental, educational, cultural, job creation, disaster recovery.
Contracts: Legally binding agreement between parties (exchange of goods, services, cash).
Defines rights and responsibilities.
Business Continuity Plans: Outlines how organization maintains operations during unplanned disruption.
HR has its own plans as part of risk management.
Considers every affected aspect (supplies, equipment, employee disposition, data backups, backup locations).
HR plays pivotal role in development and during crises; leaders should be familiar.
:check: What is the primary purpose of a business continuity plan?