Why Business Acumen Matters
By Lise Michaud
It is no longer enough to be an expert in communications to succeed as a communications professional. A recent research brief titled The Case for Business Acumen published by IC Kollectif spotlights key findings from primary and secondary research on the importance of business acumen for internal and external communications professionals.
According to the Financial Times, “business acumen is keenness and speed in understanding and deciding on a business situation. In practice, people with business acumen are thought of as having business 'sense' or business 'smarts.' They are able to obtain essential information about a situation, focus on the key objectives, recognize the relevant options available for a solution, select an appropriate course of action and set in motion an implementation plan to get the job done. When they discover that changes are required to adapt to unforeseen circumstances, they make adjustments as necessary and keep the activity moving forward. They are more often right than wrong in their assessments and choices and are admired by others both for their acumen and business success.”
A critical capability
Many communications surveys in recent years have studied the need for business acumen among communicators. Findings show that it is a critical capability—one that many communication professionals are still lacking.
In 2013, the Institute for PR cited business acumen as the first of 10 best-in-class practices in employee communications, compiled from interviews with 10 global leaders in the field. In addition, Corporate Communication International recognized business acumen as the second-most important core competency to drive corporate value. Business acumen is also included in the recent Global Capability Framework developed by the Global Alliance of Public Relations and Communication Management, as a sub-capability to offer organizational leadership.
A requirement for practitioners ‘at all levels’
Business knowledge is required not only for the most senior roles but also for entry-level communications professionals who "need to improve their business skills and apply business acumen, including financial literacy, to their everyday job responsibilities.” Recruiters place business acumen among the top 10 most important skills/competencies for internal communications professionals.
For some 62 percent of recruiters, business acumen is the most valued specialist knowledge. Yet, it is the number one skill/capacity that candidates are lacking. Another research study indicates that 74 percent of IC professionals believe that to be successful, they should be seen as business people with expertise in communications. Among the respondents, only 14 percent reported having this competency in place while 42 percent were considering adding it versus 29 percent who didn’t have or were not considering applying these criteria.
Expectations of business leaders
Ron Culp and Matt Ragas have surveyed and interviewed more than 100 public relations executives and their counterparts in senior management, including chief executives, presidents and chief financial officers over the past years. In The Next Level report, they argued that “while public relations pros have recognized the vital role of internal communications for years, perceptions of the function by management have been slow to materialize. Many blame silos within executive ranks, but others realize that too many communications pros simply lack the critical business knowledge that allows them to communicate on the same strategic levels with senior management.”
Matthew W. Ragas and Ron Culp, the authors of Mastering Business for Strategic Communicators: Insights and Advice from the C-suite of Leading Brands, pointed out that the role of being both counselor and advisor rather than simply that of a skilled communications technician demands greater business acumen, not just for the chief communications officer (CCO) or senior agency professionals, but for mid-level and junior-level team members who help support these leaders.
Ragas and Culp note that brands endorsing the importance of business basics for their communications teams include Boeing, GM, MillerCoors, SAP, Southwest Airlines, Starbucks, Vodafone, and Walgreens Boots Alliance. A consistent theme shared by C-suite leaders at these companies is that they need their CCOs and communications teams to demonstrate they’re bona fide business people with an expertise in communications. How can someone provide strategic counsel if they are not an expert on the business, the industry, and the drivers of it? For example, Gavin Hattersley, CEO of MillerCoors, the US operation of global brewer Molson Coors, says: “Whether you are a lawyer, or an HR, finance, operations, or communications executive, I expect that my team has a full understanding of their functional areas and our business overall… Any young communications professional should act as an internal news reporter to understand in-depth each function at the company.”
According to a report by VMA Group CEOs expect basic communications skills, but they want practitioners to have “a firm understanding of the business, how it works, how it’s put together, and what its issues are.” In an interview for The Next Level: The Business Value of Good Internal Communication, Amit Bajaj, CEO of Tata Consultancy Services Europe, told us: “Business acumen, co-existing with communications expertise, is the foundation of good internal communications. IC pros should know how the business works, its strengths, weaknesses, and opportunities. They should have an overall sense of everything that happens inside and envisage the future.”
My second blog on this topic presents views from communication executives explaining why business acumen is imperative for their communication team, what is at risk for those lacking it and offers suggestions on how to build business acumen.
I invite you to download The Case for Business Acumen, part of our research brief series and based on the findings of the global report The Next Level: The Business Value of Good Internal Communication. The report is supported by IABC, The Global Alliance for Public Relations and Communication Management and The Conference Board.