The hidden costs of undertrained managers are far-reaching, impacting overall organizational performance and threatening the company’s long-term success
Managers who don’t have effective leadership skills and lack business acumen are likely to involuntarily create a disconnect between leadership’s direction and the actions of their teams. That’s because they don’t have clarity on the overarching vision, strategic objectives, competitive positioning, and customer value propositions.
The consequences?
Resources may be misallocated.
Efforts may be misdirected.
Valuable time and money go on initiatives that don’t align with the company’s strategic priorities.
These managers unintentionally make misguided decisions because they don’t understand the broader work environment or organizational goals. This managerial approach misses opportunities for innovation, endangers the company’s financial health, and compromises its ability to adapt to changing market conditions.
The lack of business acumen leads to managers struggling to communicate a clear vision or make strategic decisions. They can’t effectively lead their teams because they still need to figure out where the company is going.
The Importance of Business Acumen in Leadership Roles
Business acumen means having a keen sense of how businesses operate. For managers possessing strong business acumen is crucial as they represent the link between strategy and execution. Managers are tasked with translating the organization’s strategic vision into actionable plans and initiatives that drive results. They must understand how various business functions interconnect to deliver products and services to meet customer needs and contribute to overall objectives and effectively communicate this understanding to their teams.
Managers with robust business acumen are better equipped to make informed decisions that align with the organization’s strategic priorities. They can identify opportunities for growth, mitigate risks, and optimize resource allocation to maximize efficiency and effectiveness.
Moreover, business acumen enables managers to effectively communicate the rationale behind business decisions, instilling confidence, trust, and a sense of motivation.
Business Acumen vs Empathetic Leadership – What Are the Differences?
Business acumen and empathetic leadership are both critical leadership skills, but they operate in different spheres and serve distinct purposes.
Business acumen gives managers the ability to understand and navigate the complexities of business operations, including financial management, strategic planning, and decision-making. It involves analytical thinking, problem-solving, and a deep understanding of market dynamics and organizational strategy. Strong business acumen can drive sustainable growth, effective risk management, and informed decision-making that aligns with the organization’s objectives.
On the other hand, empathetic leadership focuses on understanding and connecting with people. It involves active listening, showing compassion, and building a supportive and inclusive workplace. Empathetic leaders can enhance morale, collaboration, and employee engagement, ultimately driving organizational success through empowered and inspired individuals.
Empathetic Leadership is Not Enough
Many organizations train on empathetic leadership skills, but in the absence of business acumen, managers may create engagement and camaraderie in the very short-term, but morale can quickly nose-dive because the team isn’t connected to the bigger picture nor seen as a valued asset to the organization.
Jessica has been a manager for 3 years and has always struggled with an approach that is too subjective to annual reviews. As she acknowledges the need for a more objective evaluation process, she increases feedback frequency beyond the mandated bi-annual reviews. However, performance measurement and feedback remain challenging because she doesn’t understand how to properly measure the results of her team and the individuals in it as it relates to the strategy of the organization.
How does Jessica’s lack of business acumen impact her team?
- Subjective evaluation leads to a lack of clarity and diminished morale as employees can’t see the impact of their work on goals and customer success.
- Without understanding their contribution to overall goals, team members lack purpose and connection, leading to decreased morale and productivity.
- While they may take on tasks, the absence of a broader understanding prevents team members from grasping the bigger picture, limiting their ability to work together effectively toward shared objectives.
How does Jessica’s lack of business acumen impact the organization?
- Employees with low morale don’t perform at their best and are more likely to seek alternative employment, which leads to recruitment and onboarding costs.
- Without clear performance metrics and goals, the team can’t function optimally, potentially leading to delays and errors.
- The manager’s limited business understanding may result in missed opportunities. There’s no shared vision, so the organization falls behind competitors, loses market share, and sees increased costs to catch up with industry advancements.
- Inefficiencies in day-to-day operations lead to higher resource usage, increased labor costs, and delays in delivering products or services, directly impacting customer satisfaction and revenue.
How did Jessica address these shortcomings?
She researched her organizations’ strategy in all its components. She learned to build robust measurement systems that reflected how her team contributed to the most important strategic goals. She then put in mechanisms for effective feedback. Armed with this newfound understanding, she implemented tools that empowered the team to take ownership of new individual and collective goals — monitored and discussed daily and weekly.
Jessica gained important leadership qualities through coaching and upskilling. With data-driven insights, she’s now a successful leader who objectively measures her team’s performance. Team members trust her more because this shift empowered individual team members. Plus, the improved leadership skills made it simple for her to move from plain evaluation to coaching and continuous improvement.
The Link Between Business Acumen and Effective Leadership
Jessica’s story isn’t an isolated scenario but a common issue across many companies. The absence of structured training and upskilling for managers, especially in technical fields, often leaves them without the necessary leadership skills to think strategically. They may be familiar with the mission and vision but need help to identify the tasks required to achieve strategic goals. This gap in knowledge and alignment leads to wasted efforts and lost financial resources.
The bad news is that the challenge extends beyond the individual level, affecting the entire workforce. Many organizations rely on unwritten rules and expect employees to learn on the job, which in time deepens the gap in standardized knowledge of business acumen across teams.
How can companies bridge this gap? Ongoing training and development opportunities enable those in leadership positions to enhance their business acumen and, thus, better guide their teams toward shared strategic goals. Good leadership starts with shaping the success of individual managers. In return, those strong leadership skills will help consolidate the organization.
The Solution: Proactive Training for Effective Leaders
Managers can upskill and apply strategic decision-making in real-time with the help of a confidential coach who has walked in their shoes. People who get the opportunity to upskill will also improve their strategic thinking, which helps them align their actions with organizational goals.
Personalized upskilling that focuses on strategic planning and execution, for instance, provide tools and frameworks that empower managers to analyze market trends, assess competitors, and formulate plans that contribute to the organization’s long-term success.
With innovative leaders taking over, employee engagement will grow. As they improve their leadership skills, managers build a positive work environment. They learn to communicate effectively with diverse teams and motivate employees toward achieving common objectives. These changes result in higher team morale and respect, improved collaboration, and increased productivity.
This environment attracts and retains talented professionals because it prioritizes the growth and development of company employees. Lower attrition means you can keep institutional knowledge in place, increase the chance of meeting business goals, improve innovation and productivity, and see a direct result in EBITDA.
How to Get Started with Proactive Training Programs
Building valuable leadership skills and growing great leaders don’t happen overnight. For your managers to learn strategic thinking and gain business acumen, you must be the first to show a strategic approach.
The mindset has to shift from upskilling and coaching being a nice to have when the budget is flush, to a mindset of upskilling and coaching is a business imperative to meet your organization’s strategic goals. The programs must be linked to business results to get the attention, funding, and support required for success.
Here’s how to get started.
- Align with business goals — identify key performance indicators (KPIs) that link directly to the organization’s success and upskill people so they can help you achieve these goals.
- Create a learning culture — communicate the importance of ongoing upskilling to employees and managers, emphasizing the performance and learning culture required for the future.
- Enable champions — appoint individuals or teams responsible for promoting the programs and encouraging participation.
- Set clear expectations — address concerns or misconceptions early so that all participants get personalized upskilling and coaching in a cost-effective manner.
- Ensure managerial support — when leaders actively endorse and participate in training, it sends a strong message throughout the organization about the importance of upskilling, coaching, and mentoring.
These are your first steps toward a robust pipeline of leaders who can safeguard against financial losses and talent drain. Our expert-driven upskilling and coaching programs are tailored to equip your managers with the essential skills to make difficult decisions, drive innovation, and nurture a thriving workforce.
Are you curious about how leadership development can help your company achieve results? Schedule a call with experienced professionals at Gotara to discuss investing in talent for sustainable growth.
