What Is Commercial Awareness and Why Does It Matter in Business?
Commercial awareness is a crucial skill for individuals and organisations alike, defined as a broad understanding of how businesses operate internally, as well as the external market and environmental factors that influence them (Owens et al., 1998).
Much like self-awareness—where you recognise how others perceive your actions—commercial awareness reflects how a company understands its own image, reputation, and position both from the perspective of the public and its employees.
How to Develop Commercial Awareness
You can begin building commercial awareness by conducting thorough research on a company. This includes:
Using search engines to gather background information.
Identifying ownership structures and leadership.
Reviewing news articles—both positive and negative—to understand current perceptions.
Checking customer reviews on platforms such as Trustpilot.
Accessing publicly available financial data through official registries like Companies House to gauge the company’s economic health.
By combining these sources, you can assess whether a company aligns with your career goals and values.
The Competitive Advantage of Commercial Awareness
Research by Stephenson and Cook (2005) found that organisations staffed with employees who possess high levels of commercial awareness—particularly in procurement and buying functions—can gain a significant edge over competitors.
Steps to Improve Commercial Awareness in Your Team
To help your team build commercial awareness effectively, follow these practical steps adapted from Owens et al. (1998) and the Trade Association Forum (1998):
Define Commercial Awareness — Clearly outline what commercial awareness means for your specific department or organisation.
Identify Key Roles — Determine which roles, such as marketing or sales, benefit most from enhanced commercial understanding.
Develop Training Programmes — Provide exposure to various business areas and encourage subscriptions to relevant journals, magazines, and industry news.
Facilitate Knowledge Sharing — Use online platforms and regular communications to share competitive intelligence and keep employees informed about the business environment.
The Importance of Knowledge Sharing and Organisational Support
Loi et al. (2006) highlight that successful organisations allocate time for employees to discuss and share insights gained through training, conferences, and meetings with suppliers or buyers. This practice fosters a culture committed to growing commercial awareness.
However, some companies—especially those in manufacturing or production—may struggle to free up employee time for such activities. To address this, concise email updates or newsletters with relevant business news can serve as a practical alternative, keeping staff informed without disrupting workflows.
Measuring Success and Reducing Turnover
Investments in recruitment and training can be undermined by high employee turnover. Loi et al. (2006) and Yapp (2009) emphasise that measuring employee organisational commitment and job satisfaction through questionnaires, focus groups, and meetings is essential to retain talent and maximise returns on training investments.
Failure to invest adequately in these areas often leads to higher turnover rates, which most organisations seek to avoid.
References
Loi, R., Hang-Yue, N. and Foley, S. (2006). Linking employees' justice perceptions to organisational commitment and intention to leave: The mediating role of perceived organisational support. Journal of Occupational and Organisational Psychology, 79(1), pp.101-120.
Owens, G., Vidal, O., Toole, R. and Favre, D. (1998). Strategic Sourcing. In J. Gattorna (Ed.), Strategic Supply Chain Alignment: Best Practice in Supply Chain Management. Gower Publishing, Hampshire, UK.
Raybould, J. and Sheedy, V. (2005). Are graduates equipped with the right skills in the employability stakes? Industrial and Commercial Training, 37(5), pp.259-263.
Stephenson, P. and Cook, S. (2005). E-procurement of Construction Services: A UK Case Study Assessment. Sheffield Hallam University, Sheffield.
Trade Association Forum (1998). Core competencies for the senior managers of trade associations. Available at: www.taforum.org/attach.pl/87/4/Core Competencies.pdf [Accessed 24 November 2011].
Yapp, M. (2009). Measuring the ROI of Talent Management. Strategic HR Review, 8(4), pp.5-10.
This blog is a rewritten version of an academic assignment submitted as part of a Chartered Management course. All company and product references have been removed for general relevance.