Professional Documents
Culture Documents
• IA are important
• Problem: corporate performance information provision + gaps
• Importance + challenges: Measuring HR value & Brand valuation (+ approaches)
9.1 Introduction
• 21st C. View: successful companies cannot rely on traditional value drivers / tangible
assets
• Intellectual assets also need managing
• Focus on Intellectual property (patents & trademarks)
• Market to book (MTB) ratios growing in some companies.
• MTB = Business equity market capitalisation / balance sheet book value
• If BEMC > BSBV then => difference is “intellectual”
• Difference might be: accountancy approach, patents, morale, future plans,
opportunities, risks, pessimism, market psychology (all difficult to measure).
• Co. publicly thank employees (skill, dedication -> co. success); little evidence to link HR
to business performance.
• From a financial perspective, there is no generally accepted procedure for measuring
quality / effectiveness of human capital.
• Employees: emphasis on cost rather than value.
• Finance directors are frustrated by the inability to measure ROI in employees and want
a greater role in managing human capital (HC).
• CFO research services 2005: 2/3 see human capital as a major driver, businesses spend
36% of revenues on HC (pay, benefits, training). 16% of financial managers
understand/can measure the return they get. CFOs see HC as important but cannot
apply ordinary financial discipline to HC.
• No objective benchmarks exist to see whether people are “functioning” correctly.
• World pop. ageing
• UK: No. Of pensioners rising, young dependents falling, working age pop. Rising.
• Corporations need to measure productivity and “wellness”