Business Acumen is the glue that holds your company together. It impacts more than financial results: it clarifies roles, it improves speed and accuracy of communication, it develops respect and morale. It is essential to financial success and for reaching company objectives.
Why is Business Acumen Important?
In the past, business acumen was only thought of as a useful skill for leaders; now, it is identified as a crucial skill for every employee. Companies realize that every employee contributes to the success of the business, and they need business acumen to do so positively.
Business acumen means employees understand all parts of the business and how they fit together; they know how it operates on a day-to-day basis, they know how the business generates profit, and they can embrace the company goals. Business acumen is necessary because it fosters sound decision-making, cross-departmental collaboration, and improved employee engagement - three pillars that are key to a successful company. Without business acumen, your company will suffer, but with it, your company can thrive.
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What Happens When Employees DON'T Have Business Acumen
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What Happens When Employees DO Have Business Acumen
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Poor Decision-Making
Without business acumen, employees don’t understand the company’s goals and they don’t see how their decisions can impact those goals. They can unknowingly make poor decisions that don't align with company goals.
Simple Example: The ACME company has 2 products: Product A is well-known but has a low profit margin, and Product B was recently introduced and has a higher contribution margin. Because it’s an easier sale, the salesperson focuses on selling A. If the company’s goal is to increase Return on Investment, the salesperson might be working against the company’s goals — and doing it with the best of intentions!
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Efficient Decision-Making
When employees have business acumen, they are equipped to make decisions that align with the business's goals. They know the goals and plan to get there; they have the tools and skills to work through complex and ambiguous problems to reach a sound solution and execute a decision.
This is becoming increasingly important as the business world becomes more complex; all employees need the ability to make good decisions quickly to achieve the best possible results for the company.
True Story: Income|Outcome ran a 2-day workshop for an agricultural products company. The salespeople cut the program short when they identified a key real-world issue: there was a lot of old product sitting in warehouses around the country. They recognized this was tying up a lot of money and wanted to get out there ASAP to sell it! They learned about the importance of working capital and applied the learning immediately.
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Poor Cross-Departmental Collaboration and Communication
A lack of business acumen can lead to poor cross-departmental collaboration and communication. ‘Silo thinking’ happens when employees don’t understand how their department impacts others, and how their decisions affect others’ ability to make good decisions.
They don't collaborate on business objectives; they work separately toward their own department goals and create inefficient processes. A significant part of business acumen is being financially literate and knowing the language of business.
Simple Example: Without business acumen, it can be challenging for teams to communicate on a financial level. A sales team might say, “we made $1,000,000 last month,” referring to sales revenue. The finance department might say, “we lost $10,000 last month,” referring to profit. It becomes complicated to communicate within your company if employees don’t have a common language (‘Finance’ is the language of business!).
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Effective Cross-Departmental Collaboration and Communication
Business acumen gives employees a big-picture understanding of the company and how different departments work together. The financial literacy aspect allows employees to speak a common language (‘Finance’ is the language of business) and understand their KPIs.
This fosters a synergetic environment for different departments to communicate and collaborate effectively. Teams working together toward a common goal are more likely to get there faster — and with better results.
True Story: Income|Outcome ran a workshop for a small pharmacy chain that provided prescription drugs to long-term care facilities. Two weeks later, the owner reported that the budget process had run like a dream — department managers participated willingly and the process took days instead of weeks. They learned that the budget is a useful management tool, so they contributed to it willingly and effectively.
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Decreased Productivity, Engagement, and Higher Turnover
Without business acumen, employees struggle to see how their work contributes to the company’s success. They can feel disconnected, unmotivated, and unsure why changes occur. Over time, they may become frustrated and seek opportunities elsewhere, leading to costly turnover.
Simple Example: If people came to work on Monday morning and found that a company truck had been stolen over the weekend, the company would install new security systems to prevent it happening again. Not providing business acumen training is like not having a security system to develop and retain employees.
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Increased Employee Engagement and Retention
Employees with business acumen are more likely to take initiative on the company's behalf. They identify inefficiencies and present viable solutions. They understand the company’s goals and feel more valuable and engaged.
Developing business acumen prepares employees for leadership roles and helps companies retain high performers who already understand the business — reducing hiring costs and improving culture.
True Story: Income|Outcome ran workshops for a box-making facility in Georgia. Days later, a mechanical failure caused a major production loss. Before management could act, workshop participants had already met, developed a plan that balanced production needs with fairness to crews, and presented it. Their solution was adopted — showing true ownership and alignment with company goals.
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Develop Business Acumen in Your Employees Now
Now that you know why business acumen is the glue that holds your company together, you're probably wondering, "how do I develop business acumen in my employees?"
At Income|Outcome, we offer business acumen training through online and in-person workshops. Our simulations incorporate stealth learning* to teach employees business acumen in a fun and engaging way. Teams work through real-world challenges, experience all the operational roles in the business, and compete to achieve the best financial results for their game board company.
When the simulation is over, the learning continues. We use Visual Finance to connect the simulation experience to the real world. Learners come away with the ability to examine the strengths and weaknesses of the parent company (and competitors, and customers). The possibilities are endless!
Book a demo today to learn more about how Income|Outcome business simulations can help you upskill your employees for a brighter financial future.
* Stealth Learning happens when people are caught up in the excitement of the competition and don’t realize that they are actually developing their business acumen!
