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Get the most out of human capital to drive up your value

Imagine standing on stage at the annual shareholders’ meeting and sharing “We just realised that the biggest expense item on our profit and loss statement – our talent – has not been effectively managed.

Actually, we have little insight into what all these people do, but we are committed to doing it better.”

A shareholder in attendance might remind the executive team of Albert Einstein’s common definition of insanity “doing the same thing over and over again and expecting different results”. In all other areas of the business there is visibility, quality controls and supporting infrastructure, how can it be that the business has not made the same commitment to optimising its huge investment in its talent?

We are not the first to state that human capital is a key to bottom line return. Companies have been paying lip service to the idea that “people are our greatest asset” for years. In today’s business environment, companies need more than lip service to succeed. People drive not only value creation within an organisation, but also cost. More and more of a company’s value is based on intangibles generated by talent. From intellectual property to customer satisfaction, much of a company’s valuation is now intangible. It is no longer possible to look at a balance sheet and tally up a company’s assets to estimate its value. Infrastructure, plant …

Full story from The Nation at http://goo.gl/Dvsy2