Measuring and analysing

intellectual assets: an integrative

approach
Michael Litschka, Andreas Markom and Susanne Schunder
Competence Center for Human Capital Research, Klosterneuburg, Austria
Abstract
Purpose The purpose of this paper is to provide a quantitative assessment model for intellectual
capital in companies.
Design/methodology/approach A brief historical review of former approaches to evaluate
intellectual capital construction of a new formula for an intellectual capital value. A possible empirical
survey of inuence factors on intellectual capital is suggested. Both, taken together, are the grounding
of an integrative management model for intellectual capital still to be developed.
Findings Shows that a quantitative gure for intellectual capital can be found and that such a
gure is needed to convince managers and the public of the usefulness of activities to promote
intellectual (and especially human) capital.
Research limitations/implications A quantitative measure can never picture the complete
interrelations of organizational development, inuence factors on intellectual capital, and performance
of employees. The formula can only be a starting-point for management and further research. Possible
management tools are only touched on briey.
Practical implications Gives the manager a tool to argue his decisions regarding the promotion
of human and intellectual capital. Managers talk about gures and often dislike purely philosophical
arguments. Their awareness of the topic can be raised.
Originality/value Even though there is a growing scientic body of quantitative models for
measuring intellectual capital, this paper uses a new approach: the usage of approximation factors for
motivation, commitment and job satisfaction in one formula.
Keywords Human capital, Intellectual capital, Performance management, Job satisfaction,
Motivation (psychology), Austria
Paper type Research paper
Introduction
It remains a fact that managerial awareness for the importance of human and
intellectual capital is still low, although there is a shift from traditional work
environments towards the situation that knowledge and skills of employees are the
main productive element in todays economy. The development of the Tayloristic
system into a knowledge-based economy requires new approaches in management
especially with employee-orientated actions, because workability, well-being, and the
creativity of employees determine the success and sustainability of an organisation.
This paper aims to show how managers can measure the available human and
intellectual capital by using the assessment model from the EU-funded project
Plexus, and how they can proceed from pure assessment of human and intellectual
capital to explore the causes for its specication, which will be the foundation for
overall management tools for advancing human capital and efciently using
intellectual capital within an enterprise.
The paper proceeds as follows. The next section shows some empirical evidence as
to what view managers still seem to have when dealing with human capital questions
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1469-1930.htm
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Journal of Intellectual Capital
Vol. 7 No. 2, 2006
pp. 160-173
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930610661836
(as part of all intellectual assets) in their companies. Then the general Plexus model
developed in an EU funded project is depicted; after that an explanation is given of how
intellectual assets can be quantied in the assessment model of the Plexus system. A
specic survey tool generated by the Competence Center for Human Capital Research
(CCHCR) is delivered, which is able to explore the causes for some factors of inuence
on human capital like motivation or job satisfaction. Some management tools are then
outlined to promote human capital. The paper concludes by explaining how these
insights can be used to raise management awareness for human capital advancement
in the future.
Empirical evidence
Empirical studies conducted by CCHCR show that executives begin to recognise the
relationship between entrepreneurial success and their employees, but not to the extent
necessary for real human capital management. One reason for the slowness of this
process is the lack of gures managers have to substantiate their decisions. The
authors can draw some conclusions from three studies carried out by CCHCR and other
institutes in Austria.
In the rst survey from 2000 (conducted by the AUVA and Academy for
Occupational Medicine; n 300 managers in Austria), 58 per cent of the respondents
had no specic idea what the term human capital means. If asked more specically,
60 per cent ascribe big importance to intellectual or human capital, but 28 per cent say
employees have a rather low value for their companies. It seemed Austrian companies
did not recognise rather obvious trends in the economy.
In the years 2002 2004, the Austrian Academy of Occupational Medicine (the
parent company of CCHCR) took part in the project Plexus, which was a research
project sponsored by the European Commission in the 5th Framework Program,
Information Society Technology (PLEXUS IST2001-32292 Decision Support Tools
and Methods for Management and Measurement of Intellectual Assets across
Co-operative Networks). In this European network, eight participants with different
backgrounds (universities, academies, and software companies) collaborated.
The overall objective was to investigate and develop methods to identify, measure,
assess and control intellectual assets in co-operative networks and develop a software
for its management. One activity in this project was a Delphi process, with the goal of
investigating the awareness of managers of the interrelations of intellectual asset
categories with management techniques within management systems and
organisational culture. This Delphi process showed a certain level of awareness of
managers of the inuence of human and organisational assets on important success
factors the major results can be summed up as follows:
.
It seems to become obvious for managers that job satisfaction, commitment and
intrinsic motivation are extremely important factors for productivity and customer
related contacts. Customer satisfaction and its close interrelation to human and
organisational assets are seen as important factors for productivity and success of
the organisations, while other factors, e.g. health, lack the attention of managers.
.
There seems to be awareness that organisations have to actively promote their
human and organisational assets like investing in training and other
employee- orientated activities, because these activities are perceived as
benecial for productivity and efciency.
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Incited by this result, the authors decided to conduct another survey in 2004 (conducted
by the CCHCR; n 300 managers in Austria), asking again what importance
managers attach to their companies human capital and what exactly they understand
when hearing the term. This time it seems managers do know more about human
capital. Of respondents, 67 per cent assign qualications and knowledge to human
capital, 56 per cent see it as personnel resources, 44 per cent as intellectual capital. The
percentage of respondents who cannot assign even one notion to the term human
capital is negligible. But when it comes to the value of human capital for them,
managers have an average evaluation of 3.8 out of 5 (1 not important, 5 very
important). This is still a low value considering the generally acknowledged fact of the
change into the information society.
It looks as if the term has settled somewhat in the minds of executives, but the
importance of its meaning is still underestimated. Also, the surveys show that most of
them include only the traditional aspects of HR advancements in their management
system, like fringe benets, exible schedules, and appraisal interviews, whereas more
recent methods like active knowledge management or programmes for an improved
work-life balance are missing. Generally, it can be said that there is a change in the
perception of human capital and that more and more managers are becoming aware of
its importance. One major problem is the missing knowledge of quantitative
assessment models for human and intellectual capital.
Principles of the Plexus model
Historical background and denitions
In the last 40 years, the terms human capital and human asset have reached the
public mind, although most of these concepts miss the real human aspect. Different
denitions were developed and often a confusing mixture with the term intellectual
capital or intellectual asset can be found in literature. Therefore, and in order to
avoid misunderstandings, attention has to be paid to fundamental theories and
denitions, which form the basis of the development of the approaches and models.
Basically, intellectual capital can be divided into three interrelated categories:
.
E1 (denition): Human capital organisational capital other codied
capital intellectual capital.
Human capital comprises of elements like knowledge, abilities, skills and workability
which includes aspects of somatic and psychological health. These are inuenced by
job satisfaction, commitment and intrinsic motivation. Physical health and
psychological well-being are core elements of workability, which has to be
understood as a mix of cognitive, emotional, motivational and biological potential
and is promoted by positive self-esteem and a supporting network of social contacts.
Workability has a profound inuence on the behaviour of human beings at work and
their communication. Employees, who feel their health is in danger, or who are
dissatised, will not be highly creative or innovative. If they feel well it is more likely
that they are committed to work, are completely able to use all their capacities, and use
the chance to develop and learn (Bockerl, 2000, p. 159).
Organisational capital is the complex interaction of formal elements of a
management system and the informal elements of the organisational culture. The term
was strongly inuenced by the St. Galler Management Concept (Bleicher, 1992).
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Under the heading Other codied capital, the authors understand intangible
values like the content of databases, intellectual property rights (patents, licenses,
copyrights, brands, etc.), or the content of process descriptions, books, reports, tapes,
etc. For the purpose of this paper, this kind of capital is not analysed in detail (Figure 1).
The relationship between the terms human capital and human assets
A clear distinction between human capital and human assets must be made. The same
counts for intellectual capital and intellectual assets. In addition one has to distinguish
between whether these terms are used from the viewpoint of an individual or in the
context of an organisation (see Table I).
To give an example: Think about a Hungarian porter in a Viennese hotel who is
only working in Vienna because of the better salaries. Prior to his current job he was a
bookkeeper. The abilities book-keeping and speaking Hungarian pertain to the
human capital of this employee, even though they are of minor relevance to his current
job. Those abilities are not to be seen as human assets in the context of the organisation
he is working for. There is no absolute value of this capital after the enlargement of
the EU and the increased number of tourists from Hungary, speaking Hungarian
could become an important human asset for this hotel. The same framework can be
applied to organisational assets and to other codied assets.
Individual perspective Organisational perspective
Human capital The combined knowledge, skills, and
abilities of a person, including aspects
of somatic and psychological health
Human capital of individuals offered
for potential use by an organisation. It
can, however, not be owned by the
organisation
Human assets The consciously and actively applied
(used) individual human capital
Conscious, active application of human
assets for the added value of the
organisation
Table I.
Relationship between
capital and assets
Figure 1.
Intellectual assets and
their categories
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To avoid misinterpretations towards ancient concepts of slavery, one should stress
Flamholtzs approach, that people are not assets, but the services which people are
expected to provide for an organisation comprise the asset (Flamholtz, 2001, p. 32).
The relationship between employees and organisations
As well as valuing intellectual assets, management also needs a model which depicts
the relationships between human assets, organisational assets, codied assets, and
tangible assets. The basic concept of the Plexus model of intellectual assets is the
interaction between an individual and the organisation she/he works for (Figure 2).
The actual performance and productivity in an organisation is the overall result of the
interaction of human assets, organisational assets, codied assets, and tangible assets.
As already mentioned above, organisational assets neither exist nor have a value
without human assets. Phenomena such as absenteeism have to be seen in context
they are normally not only an expression of the workability or health status, but also of
more than one traceable aspect of an organisation. They root in the whole organisation,
in its management and culture.
To sum it up, organisational structures, its management and the behaviour of
employees are interrelated accordingly human assets and organisational assets are
interrelated, too.
The following sections focus particularly on the elements of human assets and lay
down the scientic evidence speaking in favour of their importance.
The factors of inuence on human capital and their development in the Plexus model
Performance and motivation. Based on the approach, that people are not assets, but the
services which are expected to be provided by those people to an organisation comprise
Figure 2.
The Plexus model
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the asset (see above), we could say that performance is behaviour resulting from the
complex interaction of intellectual assets and tangible assets. As far as services being
nothing more than performance, our starting point refers to the well-known equation
(OUB, 2000, Book 2, p. 18.):
.
E2 (relation): Performance ability motivation
Mullins showed that the basic dimension of managing people is motivation. The
motivation model from Porter and Lawler is based on the same relationship
(Weinert, 1998). Vroom developed this principle towards a viable scientic theory
(Weinert, 1998).
This equation indicates that performance requires both motivation and ability, and
that there will be no effective performance if there is no motivation, but it neglects to
mention the inuence of the organisation on the employee. Speaking in terms of
valuation, it will be seen later that the inuence of the organisation can be taken into
account via some indicators. In the modern working environment especially in the
context of performing intellectual and brain-dominated work the enabler of this
work needs special working conditions to produce the best possible result and to
show high performance (Drucker, 2002).
Workability, health and well being. Physical health and psychological well being
play a decisive role in the willingness for high efciency, exibility and innovativeness
of a person. The subjective perception of health determines what kind of commitment
to work is shown. It is rather obvious that employees workability, health, and well
being are intermediate steps on the pathway to protability.
Organisational structures, its management and the health of employees are
interrelated. Health-promoting structures have to be enlarged by an
employee-orientated management style and a culture of trust in an organisation
the management is one of the most important factors regarding health in an
organisation. They are responsible for the structure and processes in the organisation,
they decide on the workload and the chances of development for their employees
(Bockerl, 2000, p. 159).
Many scientic authors stress the importance of health and workability factors:
The results from Karasek and Theorell (1990) showed a close correlation of the
decision-latitude and health and productivity. Peter Drucker underpins that it is
actually more important today for organisations to pay close attention to the health
and wellbeing of all their workers than it was 50 years ago. A knowledge-based
workforce is qualitatively different from a less-skilled one. Today they are still a
minority of the workforce, but they will become the major creators of wealth and jobs,
because the success and the survival of every business will depend on the performance
of its knowledge workforce (Drucker, 2002, pp. 70-77).
The pioneers of human capital research, Theodore W. Schultz and Gary Becker,
saw health-promoting activities (. . . invest in the health of employees through medical
examinations, lunches or avoidance of activities with high accident or death rates.
)
as
an important investment in human capital, not less important than investments into
general and specic training (Becker, 1975, p. 40).
Job satisfaction. Job satisfaction is a t between individual needs, expectations and
aspirations, and the individuals work experience (Mumford, 1991). It is a positive
emotional state resulting from the appraisal of ones job or job experience (Dougherty
et al., 1985). Ross and Zander found that workers whose personal needs are satised in
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the job are more likely to remain in the organisation, and Fournet, Distefano, and Pryer
concluded that staff turnover is negatively related to satisfaction (Flamholtz, 2001,
p. 167). Increased job satisfaction and psychological and physiological health
ultimately lead to increased productivity (OUB, 2000, p. 37). Harter et al. (2002,
pp. 268-79) concluded in their study that employee satisfaction and engagement are
related to business outcome.
Commitment. Commitment arises from an emotional or intellectual bond linking the
individual and the organisation. Commitment implies acceptance of the organisations
goals and directions, strong desire for membership and a tacit agreement to reject other
investment tracks. An individual with strong loyalty-based commitment feels tied to
the organisation by a sense of obligation (Davenport, 1999, pp. 24-25).
Davenport used other terms, but he showed that the twin concepts of organisational
commitment and job engagement are the foci of human capital investment. When
researchers study the two, they nd that low levels of one (commitment) tend to
increase staff turnover, whereas a paucity of the other (engagement) links with higher
absenteeism (Davenport, 1999, pp. 26-27).
Huselid and Day (1991, pp. 380-391) reports that in 1987, Blau and Boal proved
employees exhibiting both high organisational commitment and high job involvement
to be the least likely to leave the organisation (Blau and Boal, 1987). In a study in 1989,
they found the interaction of organisational commitment and job involvement to be
signicantly related to staff-turnover (Blau and Boal, 1989). In related studies Blau
(1986) and Mathieu and Kohler (1990) also found support for the thesis that
organisational commitment and job involvement correlate with several measures of
absenteeism. De Cotis and Summers (1987) showed strong evidence in their research of
the relationship between commitment and performance. Again, commitment correlates
negatively with the desire to leave the organisation and with actual staff turnover
(Davenport, 1999, p. 29).
Literature research shows that job satisfaction, commitment and motivation are the
major factors that enable the ability to perform and performance is what has to be
measured if the value of human capital needs to be assessed.
Performance measurement the assessment model for intellectual assets
Introduction
Why does one need human asset, respectively intellectual asset measures? Because
intellectual assets will become the most demanded resource. Peter Drucker is not alone
in emphasising that knowledge will become the sole factor of production, overtaking
the meaning of both capital and labour (Drucker, 2002). The fact that most factors of
inuence of those assets are intangible does not prevent their measurement; however,
neither are measurable with standard transaction-based accounting. If one looks back
to the evolution of nancial and marketing measurement systems, one sees that they
began with extremely imperfect data, but with very coherent models of value linkage.
These models guided the subsequent data-gathering, which made the process more
precise and credible and so the renement process continued.
Questionnaires administered to workers have certainly been the most common
method of gathering data on the psychosocial characteristics of work (see, e.g. Hackman
and Oldhams (1975) Job diagnostic survey and Karaseks (1998) Job content
questionnaire). The primary problem with all such instruments is, that as
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measurements of the objective environment, they are far more subject to bias than
instruments traditionally used in the physical sciences. Almost all researchers agree that
it would be better to have more objective measurement strategies, but only a few good
ones have been suggested for psychosocial aspects of jobs. Nevertheless, one has to be
aware that the psychological attribute of the individual and the norms of the social
discourse develop the perception of the individual and inuence his/her behaviour and
behaviour can be interpreted as a synonym of performance (as outlined above).
Many organisations are unaware of the value of their intellectual and human assets
and damage the overall success of their organisation by inconsiderate measures, such
as dismissals, to increase shareholder value. On the other hand, many employees are
not aware of the value of their contribution to the companys success, e.g. by providing
their experience and knowledge. Human asset valuation does not necessarily mean that
we need to know the monetary value of, for example, motivation. As long as human
assets are not the value of humans, but the value of their services provided to the
organisation, we just need to identify the value of these services and the likelihood that
the assets are available for the organisation.
In some cases it would be very easy to dene the measurements of the nancial
result of an employee, such as the number of hours a service was offered, sales gures,
or gures of produced units, which all have a certain monetary value. For employees
for whom these gures can not be calculated directly, it may be useful to use gures of
opportunity costs: what might a certain service have cost the organisation, if it had
been outsourced to a professional business.
In the Plexus approach, the authors use a model that calculates the value of human
assets also for those cases where parameters of performance cannot be directly
observed: Job satisfaction, motivation, and commitment must be analysed by
approximation factors. The following paragraphs explain the chain of ideas from the
concept of performance (which is the basis for human capital assessment) to the
monetary assessment of intellectual assets.
Productivity and value added
Productivity is a general indicator to measure performance taking into account
efciency. Productivity generally takes the form of output divided by input. Output
may be any indicator of what a business is trying to produce, such as revenue, prot,
units produced, etc. Common input measures are time, labour, and other recourses used
in the production of goods or services, e.g. revenue per person. Productivity measures
are also part of the balanced scorecard system and generally rely on some indicators of
output per employee. Huselid and Day (1991) used revenue per employee as an overall
productivity measure. The advantage of such measures is that they are simple, but
they may not be a true indicator of employee competence.
In addition to taking the observed performance as a starting point for the
calculations, a key gure is needed to assess the above factors of inuence on
intellectual assets, and for several reasons this is Value Added. It includes efciency
aspects, is easy to retrieve in most cases, and has a meaning for most managers.
Referring to the approach presented above, one can now nd the core elements in
the following relationships (for a more exact denition see the following section):
.
E3 (denition): Human assets services provided by humans for an
organisation human performance for an organisation.
Intellectual
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167
.
E4 (function): Performance ability
*
motivation f (abilities incl. workability;
motivation incl. job satisfaction; commitment).
Performance results from the complex interaction of abilities to perform and the
factors that reect the will to perform. From an overall perspective one might say
that the will to perform is similar to motivation. Motivation in this context is the
decision of a human to serve with his/her abilities for the economic success of an
organisation. From the organisations perspective, the decision of a human to serve
with his/her abilities can be approximated with the likelihood that the human performs
in the organisation. Performance can be assessed through value added. The
likelihood that a human performs within an organisation is dependent on motivation,
job satisfaction, and commitment, and can be reected by approximation factors as
developed under Valuation of intellectual assets:
.
E5 (formula): Human assets value added
*
availability of human assets.
This formula uses the productivity gure (value added) to calculate a value for human
assets. But because the probability of human assets to be at the organisations disposal
must be taken into account, it has to be multiplied by a probability factor as outlined
above (see also Valuation of intellectual assets).
When it comes to the valuation of human assets it will be seen that the availability
of human assets can be expressed by the turnover rate and the absenteeism rate.
However, both indicators are driven by commitment, intrinsic motivation, and job
satisfaction. Hence, one doesnt need to manage the indicators, which are only needed
for valuation. One must manage the drivers that allow abilities to perform:
Commitment, intrinsic motivation, and job satisfaction.
Valuation of intellectual assets
Valuation of human assets
From an organisations viewpoint, human beings, unlike other resources, are not
owned by them, and this means the probability of realising a specic performance is
less than certain. One must take into account the persons likelihood to leave the
organisation, i.e. staff turnover. The expected realisable value of a human asset may
then be expressed by value added if the availability of the human asset to the
organisation is taken into account.
Value added is dened as the difference between revenue (income from all products
and services sold on the market) and the costs of purchases, depreciation and other
costs. According to Ante Pulic, who developed the Value added intellectual asset
coefcient approach (VAIC), labour costs cannot be regarded as costs in the sense that
they reduce value added. In contrast, they are seen as an important aspect of value
creation and therefore do belong to the value created by intellectual capital. The added
value is an indicator of the ability of an organisation to effectively deploy its
intellectual assets.
Secondly, we need to take into account the availability of humans to the
organisation in order to derive a value for human assets. Two major factors of the
availability can be identied in literature: Staff turnover and absenteeism rate. The
value of human assets can then be calculated as follows:
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.
E6 (formula): Human assets value added
*
((1-staff turnover)
(1-absenteeism rate));
.
E7 (denitions): Value added operating revenue, costs of purchases,
depreciation, other costs;
.
Operating revenue turnover , changes in stock of products, capitalised
service, other operating revenues;
.
Staff turnover full time equivalent of employees that left the company per
year/full-time equivalent of all employees per year; and
.
Absenteeism rate number of hours employees were absent/total number of
working hours.
Valuation of organisational assets
As an approximation of inuence factors on organisational assets, two
process-parameter-indices are used, which may be expanded in the future towards
more accurate means of measurement, e.g. such that may be needed in large-scaled
traditional organisations. The value of human assets was already derived above, and
because an organisation is a social system with inherent values which cannot exist
without humans, the value of organisational assets is related to the value of human assets.
(Other codied assets as part of intellectual assets may be evaluated via
completely different methodologies, e.g. the value of a customer database or a
trademark and are therefore not discussed further.)
The value of an organisation basically lies in its efciency. Organisation is an
activity that is seen here as non-productive it adds no value to services or products.
Hence, every activity that is related to organisational work decreases the overall value
added. In this framework, the efciency of an organisation may be seen as the
relationship between the hours which are spent on core processes and those which
are spent on organisation and administration. The related index is:
.
E8 (formula): Efciency index number of hours worked for the fullment of
core processes /total number of working hours.
In order to reect the sustainability of an enterprise, the investments into the future of the
organisation must also be highlighted and taken into account. The second index therefore,
the so-called Future Index, depicts the ability of an organisation to adapt to the changes
in the business environment; an organisation which invests in R&D, training, and
targeted information collection has a higher and more sustainable value than an
organisation which doesnt. This Future Index is determined by the ratio of the total hours
of R&D, training, and information seeking to the total hours worked per year:
.
E9 (formula): Future Index number of hours of R&D number of hours of
training number of hours of information seeking/total number of working
hours.
For a start, the authors believe the factors listed above are sufcient to make a rst
calculation of intellectual capital (or assets, that is). The value of intellectual assets as
the sum of human assets and organisational assets can be calculated as follows:
.
E10 (formula): Intellectual assets value added
*
(1 (staff turnover rate
absenteeism rate))
*
(Efciency Index Future Index).
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169
Table II shows a simplied calculation of intellectual capital and what happens if one
factor is changed (e.g. by a management measure, or by a change in behaviour of the
staff).
Aetiology of inuence factors
The assessment model for intellectual capital as outlined above can give a general
estimation of the dimension of a companys human capital. But what about the causes?
CCHCRs interdisciplinary survey methods ascribe the approximation factors from the
Plexus model (i.e. uctuation, absenteeism, efciency, and future) to the underlying
inuence factors (i.e. job satisfaction, commitment, and motivation). In the following
paragraphs, the principles of this methodology are outlined.
CCHCR has studied major publications on survey methods for the inuence factors
mentioned above. Some could be found in organisational psychology, some in
occupational health, and some in work sciences. A quantitative questionnaire was
developed, including only items that had been proven before in literature to be valid and
sensible. It has to be answered by the employee and shows his or her self-perception.
After evaluation, it can be taken together with interviews with the personnel management
to depict a general and quantied view of job satisfaction, commitment, and motivation.
From several topics that were found to be especially useful for analysis, the
following three topics to be answered by the employee are relevant for the
measurement of inuence factors in the Plexus model:
(1) Job satisfaction is mapped by questions regarding psychological well-being, e.g.
variety of job contents, professional support by colleagues, or social status
within an enterprise.
(2) Commitment (i.e. accordance with company goals) is mapped by questions
concerning work outcome, e.g. salary, autonomy, career possibilities or security
issues.
(3) Intrinsic motivation (i.e. the degree of the will to work to gain inner satisfaction)
is mapped by questions on personality features, e.g. assiduousness, openness,
or ability to enjoy agreeable things.
And all three topics are grounded again in the basis of human capital: knowledge,
skills and competencies, and workability. This analysis produces the accumulated
picture of the whole survey after the calculation of a monetary intellectual capital
value, and is a step further on the road from assessment of the value of human and
intellectual capital to the revelation of its causes, and nally to an integrative
Intellectual assets management model.
Fluctuation rate 0.53 0.4 0.53 0.53 0.53
Absenteeism rate 0.1 0.1 0.2 0.1 0.1
Efciency Index 0.57 0.57 0.57 0.8 0.57
Future Index 0.14 0.14 0.14 0.14 0.4
Intellectual assets 13.135 17.750 9.585 17.390 17.945
Value added: 50.000
Table II.
Calculation example of
intellectual capital (in
EUR)
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Management of human assets
The Plexus model described above can also give some clues as to how management of
human resources should be turned around in the near future. Management is generally
seen as coordinated activity to direct and control an organisation (ISO, 2000). Taking
into account the above, a paradigm shift is needed from the consumption of human
capital towards its sustainable promotion and development. Any management system
for human capital must focus on the following factors:
.
knowledge, skills, abilities;
.
workability;
.
job satisfaction;
.
commitment; and
.
motivation.
The results of the Plexus assessment model could dene the most important
development areas within a specic organisation, because it indicates problem areas
where interventions are most beneciary and urgent. This tool may help to select
human capital development activities like:
.
health-promotion programmes concerning occupational health and safety;
.
organisational learning and vocational training programmes (in-house and external);
.
development of an open communication structure;
.
establishment of a positive attitude towards learning and failure;
.
empowerment of staff; and
.
usage of modern IT for knowledge sharing and learning.
Human capital development cannot be an organisational task only. Everybody has to
invest in his/her personal knowledge, skills and workability to continue to be an attractive
employee or free lance worker in the changing labour market, to reduce the possibility of
unemployment or enhance the chance of (re-) employment ( Employability).
There is certainly a need for each individual to:
.
take care of personal health, safety and tness;
.
create a personally satisfying work-life balance;
.
be active in life-long learning;
.
use opportunities for personal learning and development;
.
be curious, communicate and share experiences; and
.
use modern IT for knowledge sharing and learning.
To assess the value of the performance of a work force also means that employees will
better know about their importance and therefore may help avoiding misuse of their
qualications.
Conclusion
This paper is concluded by giving some general ndings of the research concerning
intellectual capital and its components:
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assets
171
.
The ideas and concepts of human capital have become slightly more familiar to
managers and employees, but their rating on an importance scale is still too low.
.
Human capital needs to have a more integrative approach and incorporate the
health aspect.
.
More public awareness and public relations for this topic is needed to make more
managers aware of the need for a human capital management concept for their
organisations; individuals on the other hand must be made more prepared to
invest in their personal human capital.
.
Future research work should also concentrate on the following topic: The
interrelation of modern work organisation, commitment, and health is still
somewhat vague. One example would be the interrelationship of family life and
new work forms, where boundaries between private life and work become blurred.
.
The Plexus model for the assessment of human and intellectual assets is a rst
approximation of monetary valuation, that is easy to calculate by using gures
which almost all modern organisations have available without the need for
additional accounting efforts. The limitation of this model is its simplicity, which
does not fully depict the interconnectedness of the included parameters and the
inuence of organisations on human motivation. Managers, though, are interested
in gures, and the results from valuation might induce the wanted change of
paradigm fromshareholder value towards stakeholder and human value. In this
way, the model might be usable to raise awareness in the management of
organisations to take care of the available human and intellectual capital, because
this will become the major resource for business success in the future.
.
In the future, more accurate gures should lead to a standardised assessment of
human and intellectual assets of organisations, and should have an impact on
international accounting procedures, to eventually show the real value of
organisations besides the value of bricks and mortar, also in ofcial balance
sheets.
.
Many employees are not aware of the value of their contribution to the success of
an organisation. This model should also help to create this awareness and so
contribute to the employability in a competitive labour market.
.
Empirical cause studies (aetiologies) are needed to show underlying causes for
specic intellectual capital factors. They need to be interdisciplinary and should
be conducted in companies at least once a year. Together with the valuation of
intellectual capital this will provide a good picture of a companys hidden
resources. This general picture will aid researchers to develop management tools
and managers to substantiate their human capital decisions.
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Corresponding author
Michael Litschka can be contacted at: litschka@cchcr.com
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