The Credibility Gap: Why HR Leaders Who Don’t Think Like the Business Will Never Lead It

Maher Sabbagh explores why HR leaders lose credibility when they ignore commercial realities, and how business acumen, financial fluency, and strategic thinking redefine HR’s leadership impact.

| Written by Maher Sabbagh

If you have spent your career in HR focusing on people, culture, and engagement, you may believe that is enough to earn your seat at the table. I used to think proximity to people strategy naturally translated into business influence. After more than two decades leading HR transformations across the Middle East, Europe, Africa, Asia, and emerging markets, I learned otherwise.

Having worked inside FMCG and Fortune 500 organisations through large scale transformations, business turnarounds, and high pressure commercial cycles, I have seen firsthand what earns credibility and what quietly erodes it. In complex environments where margins are tight and competition is relentless, good intentions are not enough.

In this article, I want to challenge you with a hard truth drawn from real transformation journeys. If you want to lead the business, you must first learn to think like it. That means understanding how money is made, where it is lost, and how your people strategy directly shapes commercial outcomes. Without that shift, HR remains supportive. With it, HR becomes strategic.

When “People First” Becomes Business Last

One uncomfortable reality often goes unspoken in HR circles. Many business leaders have learned to tune out when conversations begin with “the people agenda.”

It is rarely personal. It is pattern recognition.

Executives have sat through too many presentations on employee experience initiatives that sound inspiring yet feel disconnected from quarterly targets, margin pressures and competitive threats. They have listened politely to culture transformation roadmaps that never mention customers, products or markets.

Over time, leaders begin to assume that when HR says “from a people perspective,” what follows may not help them solve the business problems they are accountable for.

The data reflects this concern. Research shows that four in ten CHROs identify business acumen as the most lacking capability within HR talent today. This is not just a training gap. It is a crisis of relevance.

And the uncomfortable truth is that HR has, in many ways, created this perception itself.

Three Questions Every Business Leader Asks

In every executive meeting, whether in a family owned enterprise or a fast scaling startup, three core questions quietly shape every discussion.

How do we make money? Not in theory, but in detail. Which products generate the highest margins? Which customer segments deliver the most profit? Where are the vulnerabilities? HR initiatives that cannot connect directly to revenue engines risk becoming disconnected from real priorities.

What is threatening that money? Competition, regulation, supply chain risks, technology disruption and talent shortages in critical roles all influence strategic decisions. If a people strategy ignores these realities, it becomes background noise rather than strategic input.

What capabilities do we need to win? Not simply what employees prefer, but what the organisation must excel at to outperform competitors. This is where HR strategy should begin. Everything else becomes administration dressed as strategy.

The P&L Test: Why Financial Literacy Is Non Negotiable

There’s a striking contrast between two HR leaders presenting leadership development proposals.

One HR director proposed a thoughtful programme but struggled to answer a simple question from the CFO. What is the ROI? Despite strong intentions, the proposal stalled because it lacked commercial grounding.

In contrast, another CHRO presented the initiative through a financial lens. The programme targeted managers responsible for most company revenue, projected measurable performance improvements, and demonstrated clear payback timelines. The initiative was approved immediately.

The lesson is clear. Without understanding profit and loss statements, balance sheets and cash flow dynamics, HR cannot operate as a true strategic partner. Financial literacy does not require becoming a finance expert, but it does demand understanding where revenue originates, how labour costs influence margins, how capital allocation works, and how ROI thinking shapes investment decisions.

Money is the language of business. Leaders who do not speak it rely on translation, and translation inevitably weakens influence.

HR becomes truly strategic when people expertise is anchored in commercial reality, translating talent decisions into measurable business outcomes that leaders cannot ignore.

The Map Versus the Territory: Understanding How Work Really Gets Done

Formal organisational charts rarely tell the whole story. Informal influence networks often shape real decisions.

He recalls designing a sophisticated performance management system for a GCC family owned conglomerate. On paper, it was flawless. In practice, it failed because it ignored informal power structures, family relationships and longstanding cultural dynamics.

Business acumen requires understanding both formal structure and informal reality. HR leaders must identify where value is created, where operational bottlenecks exist, and who truly influences outcomes. Change rarely happens through formal presentations alone. It happens through trusted relationships and credible influencers.

Speaking the Language: Why Data Is Strategic Currency

Executives are less interested in HR activity metrics and more focused on business impact. Strategic HR leaders translate engagement, performance and talent insights into outcomes tied directly to revenue, productivity and competitive advantage.

Instead of presenting dashboards filled with HR metrics, effective leaders bring diagnostic insights. They explain how leadership quality affects performance, where top performers cluster and what organisational patterns reveal about culture and enablement.

Data literacy becomes a strategic capability when it helps diagnose business problems and guide decisions that matter to those controlling budgets.

The Influence Game: Leading Without Authority

HR rarely holds formal authority to mandate change. Its power lies in influence. In many GCC organisations, this requires navigating complex stakeholder landscapes, cultural expectations and family business dynamics.

Trust is built through consistent demonstration of business understanding and sound judgment. HR leaders should reframe advocacy as collaborative problem solving. Instead of promoting a “people agenda,” leaders should position talent strategies as solutions to business challenges.

Strategic influence also requires judgment. Knowing when to challenge, when to compromise and when to support broader organisational decisions strengthens long term credibility.

Five Ways to Build Real Business Acumen

He offers practical actions for HR leaders seeking stronger commercial insight.

Shadow a P&L owner for a week. See their calendar, their decisions, their pressures. You’ll learn more in five days than in five LinkedIn Learning courses.

Learn to read financial statements, starting with your own company’s annual report. Identify the revenue drivers, cost structures, and strategic bets. Then map your HR work to them.

Attend business reviews, not just HR meetings. Sit in on sales pipeline reviews, operational deep-dives, product roadmaps. Listen for the language and the trade-offs.

Find a commercial mentor. Not another HR person, someone from finance, operations, or sales who can decode how business decisions really get made.

Measure impact, not activity. Stop reporting training hours completed. Start reporting capability gaps closed in roles that drive revenue.

Understanding the Purpose of the Table

Business growth depends on people growth, but people initiatives alone do not guarantee commercial success. The most credible HR leaders bridge this gap by grounding people expertise in business reality.

They discuss EBITDA alongside engagement. They frame talent initiatives as drivers of competitive advantage rather than compliance exercises. They demonstrate value through commercial insight rather than asserting HR’s importance.

When HR leaders think like the business, the business begins to see them differently. Not as a support function seeking a seat at the table, but as strategic partners who understand exactly what it takes to win.