Financial literacy

Financial literacy is an important tenet of business acumen, but is not a synonym. In a SHRM article entitled, "Business Acumen Involves More Than Numbers" Chris Berger, a principal and member of the human resources practice at CTPartners, explains that business acumen starts with the ability to understand how a company makes decisions, and that leaders must be financially literate and be able to understand numbers on company financial statements. But he says those demonstrating business acumen have the ability to take their knowledge of business fundamentals and use it to think strategically and then take appropriate action. "It's really the ability to think and act," he adds.

An October 2007 research paper based on the book The Three Financial Styles of Very Successful Leaders (McGraw-Hill, 2005) the book's author E. Ted Prince reports that, "Financial literacy is almost never the need for senior managers and high potentials. Most already possess degrees in business, including MBAs, and many have also had significant experience in the business sides of their professional roles. The real need for these managers is to understand how their actions and their behavior impact their financial decision-making and how this in turn affects financial outcomes at the unit and the corporate level." It's evident that an individual with business acumen has some level of financial understanding and knowledge - but someone who is financially literate doesn't necessarily possess strong business acumen.