Toward a Business Acumen Competency Model for I-O Practitioners
Matthew Minton
Our discipline is deeply rooted at the intersection of psychology and business. Plainly, without business,1 industrial-organizational (I-O) psychology as we know it would not exist. In a small irony, for those of us who received our education in a department or school of psychology, little instruction or knowledge related to business may have been imparted. Thus, unless we learned it on our own or were fortunate enough to have former business experience, many of us left graduate school lacking in basic business acumen. A lack of business acumen can have a major influence on many facets of our professional life, and it can impact our credibility and success as practitioners when we are required to speak the language of our clients and understand their businesses.
In response to the relative dearth of education related to business acumen among I-O psychology practitioners, the SIOP Professional Practice Committee (PPC) sought to develop a business acumen competency model for I-O psychology practitioners. The desired outcome of the project was a competency model that would benefit all members of SIOP, from practitioners of all stripes to graduate students to academics that develop graduate school curricula. We are hoping the model will help guide continuous and ongoing education efforts to equip practitioners with the skills and knowledge they need to succeed.
The purpose of this Practitioners’ Forum is to present the Business Acumen Competency Model for I-O psychology practitioners that was developed by the PPC. It is divided into three parts. First, I provide context by presenting two definitions of business acumen from two organizations that have a similar focus as SIOP. Next, I briefly discuss the focus groups that generated the initial draft of the competency model. Finally, I present the final competency model and I-O-specific definition of business acumen that resulted from the endeavor.
Business Acumen
Business acumen as a salient competency needed for success by business professionals has seen a resurgence in recent years, some of which can be tied to the popularity of the New York Times best seller “MBA in under 180 pages” pop-business self-help book Seeing the Big Picture (Cope, 2012). Other evidence of this resurgence can be seen in the production of business acumen competency models by government and professional organizations, including the U.S. Office of Personnel Management (OPM) and the Society of Human Resource Management (SHRM). Before describing the process by which the competency model for SIOP was developed, I think it will be helpful to present how business acumen is defined by these two organizations.
The OPM developed a three-pronged business acumen competency model that was part of their larger leadership competency model. The OPM defines business acumen as “the ability to manage human, financial, and information resources strategically” (OPM, n.d.). The three meta-competencies that comprise business acumen are, as can be logically inferred from the definition, financial management, human capital management, and technology management.
SHRM defines business acumen as “the ability to understand and apply information to contribute to the organization’s strategic plan” (SHRM, 2012). The SHRM business acumen competency model consists of 12 subcompetencies, and, like the OPM model, it is presented as a component within SHRM’s broader professional HR competency model. Examples of the subcompetencies include business knowledge, economic awareness, knowledge of finance and accounting, and HR and organizational metrics/analytics/business indicators.
Building the Competency Model
The development of a business acumen competency model has been on the radar of the PPC since the late 2000s. The need for a model was reinforced by SIOP members in the 2015 Practitioner Needs Survey, where respondents noted that receiving training in several business acumen-related knowledge and skills (e.g., strategic skills; presenting data persuasively/showing ROI) would be valuable (Ferro, Porr, Axton, & Dumani, 2016). With multiple prevailing forces indicating that the time was ripe for the development of the model, the PPC scheduled five focus groups with SIOP members in November and December 2014. Participants included a range of I-O psychologists, from internal and external consultants to sole proprietors, practitioners that work in the public sector, and career academics. The mix of backgrounds and perspectives provided for engaging and fruitful discussions along with the foundational information and data needed to develop an initial draft of the competency model as well as multiple definitions of business acumen for I-O practitioners.
Business Acumen Competency Model for I-O Psychology Practitioners
The draft competency model underwent a critical review by the PPC subcommittee that led the project. Ultimately, the subcommittee settled on a model that comprises of six meta-competencies, each of which contained 3 to 10 competencies. This model was reviewed and validated via a survey that was sent to the SIOP membership in May 2015. A total of 503 members completed the survey. The final competency model is presented below along with the definition of business acumen that was rated highest by the survey respondents.
Business Acumen for Industrial-Organizational Psychology Practitioners: Understanding the needs of a client, business, and/or organization and using I-O psychology expertise and best practices to respond to those needs in a business context.
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Business Acumen Competency Model for Industrial-Organizational Psychology Practitioners
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Business environments
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- Knowledge and understanding of organization’s strategy and business model
- Knowledge and understanding of organization’s industry, business landscape, and legal/regulatory environment and how each impacts the organization
- Knowledge of organizational culture
- Ability to take a systems perspective (i.e., knowledge of how parts and pieces [departments; stakeholders] of an organization fit together and how HR processes connect to broader organizational goals/priorities)
- Ability to connect I-O-related product/service/solution to ongoing trends within an organization and/or the larger business world
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Business analytics
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- Knowledge of how to gather, organize, analyze, and interpret organizational data
- Ability to effectively interpret data for an organization and communicate the “story” that the data tells (e.g., using data visualization skills; ability to present data graphically for a business audience)
- Ability to develop and recommend solutions based on analytics
- Ability to conduct a needs assessment
- Ability to conduct a ROI and/or utility analysis (e.g., show/demonstrate the value of I-O psychology in financial terms)
- Ability to apply critical thinking to the problems of a business
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Business communication (Written and Verbal)
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- Ability to speak using business language (e.g., business acronyms; organization-specific acronyms; business jargon)
- Ability to translate (in writing and verbally) analytics/statistics to a business audience
- Ability to present and target a message appropriately based on topic and audience
- Ability to communicate to non-I-O audiences by avoiding technical jargon and speaking in a language that the audience understands
- Written presentation skills (e.g., ability to script a presentation for a non-I-O business audience)
- Verbal presentation skills (e.g., ability to set appropriate context by acknowledging the business-related parameters of the situation)
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Financial concepts, tools, and terminology
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- Knowledge of basic accounting principles
- Knowledge of shareholder value
- Ability to read, interpret, and use business-related financial tools, reports, and metrics (e.g., annual reports, investor reports, P&L statements, financial statements, budgets, contracts)
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Business development
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- Knowledge of basic marketing and sales principles
- Networking skills (e.g., ability to build, maintain, and leverage professional networks)
- Ability to develop and write business proposals
- Ability to build a business case
- Ability to write business contracts
- Ability to explain the value that I-O psychologists bring to organizations
- Ability to sell I-O solutions in terms that the organization understands
- Ability to conduct competitive analysis (e.g., develop pricing models; know where to price oneself)
- Ability to brand oneself appropriately (e.g., as business advisor versus I-O psychologist)
- Ability to connect and build trusting partnerships/relationships with clients/customers/stakeholders in business environments (e.g., respectful of others’ time, positions, and perspectives; focused, motivated, and responsive to others)
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Business operations
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- Knowledge of contracts/contractual business relationships
- Knowledge of business laws and regulations
- Ability to manage a budget
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Postscript
If you would like to learn more about the business acumen competency model as well as hear stories about how developing and using business acumen has benefited the work of several expert practitioners, I encourage you to attend the SIOP panel session “Business Acumen or Stories about How to be Relevant.” It will be held at 12:00 p.m. on Saturday, April 16, 2016. Also, later in 2016, the PPC will publish a formal technical report that documents the development and validation of the SIOP Business Acumen Competency Model for I-O psychology practitioners. The report will include an overview of the methodology followed to develop the competency model as well as a thorough summary of the 2015 survey results. The technical report will be available on the SIOP website. I encourage all practitioners, irrespective of where they are in their careers, as well as academics, especially those that play a role in developing graduate school curricula, to read the technical report and think about how the model can benefit them, no matter their role or place of employment.
1 Broadly construed as industries and organizations.
References
Cope, K. (2012). Seeing the big picture: Business acumen to build your credibility, career, and company. Austin, TX: Greenleaf Book Group.
Ferro, M., Porr, B., Axton, T., & Dumani, S. (2016). Practitioner professional development: Results from the 2015 Practitioner Needs Survey. The Industrial-Organizational Psychologist, 53(3), 114–124.
Society for Human Resource Management. (2012). SHRM competency model (PDF document). Retrieved from www.shrm.org/HRCompetencies/Documents/Competency%20Model%2011%202_10%201%202014.pdf
U.S. Office of Personnel Management. (n.d.). Proficiency levels for leadership competencies (PDF document). Retrieved from https://opm.gov/policy-data-oversight/assessment-and-selection/reference-materials/proficiencylevelsleadershipcomp.pdf