Should an HR professional have a complete understanding of the business knowledge? According to a study, business knowledge is one of the core competency an HR person must possess in order to gain competitive advantage for the company and for himself/herself.
The dilemma with HR people here is that they are limited to the scope of Human Resources only. What happens because of this? HR is unaware of the exact skills and competencies required for a job. This leads to inappropriate questions in the interview and consequently, wrong hiring.
All blame doesn't go to HR people only. In my view, this is the most neglected department when it comes to trainings. The irony is, HR dept is the one that recommends and sends staff to trainings but when it comes to its own trainings, it comes in mind the last. The other case is that HR people are sent for HR-related trainings only - which is good by the way, but not sufficient. The top management needs to realize that this is THE department which must have at least the basic knowledge of say, finance, engineering, supply chain etc. The reason for this is that it is ok for other departments to specialize in their own fields; but not for HR because being the support department, HR must be in a position to give recommendations that facilitate the company's long-term planning. For example, it is the HR that can tell the management if their resources are enough and have the desired skills set to meet the targets set by the company or if they need to outsource. But if the HR doesn't know what are those required skills, it will be dependent on departmental heads for the input - which can be dangerous at times.
In sum, advice for top management: train your HR people too. At the same time, advice for HR executives: know your company and its core competencies. There's also another risk for HR professionals if they don't learn. According to a research I read somewhere, marketing and production people ranked highest in being promoted to senior positions such as GM and CEO while HR ranked lowest! Reason? Because of lack of business knowledge! So guys, this is serious stuff!