Features
Feature
Safeguard Your Most Important Asset
Intellectual capital is critical from an HR perspective.
by Sid Adelman and Charles P. Leo
Organizations need to understand the importance of intellectual capital. Safeguarding this wealth of knowledge directly contributes to a company’s bottom line, as well as to its survivability and sustainability.
By definition, intellectual capital consists of the skills and experience an organization has developed about its goods and services—virtually any information that might be of value to a competitor. It includes information about a company's:
- History
- Customers
- Vendors
- Processes
- Stakeholders
In many cases, this knowledge resides with employees and so new human resources (HR) management and technology approaches should be at the heart of protecting this intellectual capital. HR departments, therefore, are well positioned to capture and leverage employee insights and, in turn, nurture the preservation of intellectual capital.
At-risk Asset
Because preserving intellectual capital depends so much on retaining employees, staff attrition through layoffs, resignations, retirements,etc., pose a major problem for organizations. So employers must ask themselves: "When the job market rebounds, will our most valuable employees walk out the door?"
While workers may be reluctant to change jobs amid the current economic uncertainty, that is bound to change as the recovery continues.
Loyalty alone can't be relied upon to retain crucial staff members. The Bureau of Labor Statistics reports that the engagement or loyalty of top-performing employees has dropped by 25% over the past year, largely because people who kept their jobs have been soured by extensive layoffs, cuts to benefit programs and a lack of promotions.
Employers should be mindful that when the job market improves, many of these workers might have become disenchanted and will leave for new opportunities. Therefore, intellectual capital is not only today’s asset but also tomorrow’s challenge.
Implement Processes
Individually and collectively, employees have tremendous knowledge about business processes, their jobs and the information that supports them. They know what works and what does not.
Unfortunately, in most situations, workers have no means—or incentive—to share their knowledge. So when key people leave, this information is most often lost to the organization. A critical challenge for HR professionals and managers is to methodically and routinely obtain and store information about:
- Core job knowledge of all employees, their experience and their skill sets
- Training
- Performance review systems based upon meaningful metrics
- Effective succession planning
- Leadership and management development programs
Meeting this challenge requires successful implementation of new technologies, which depends upon many factors, including the efficient management of HR systems and processes. HR departments are central to ensuring the success of such a knowledge-management program. A successful implementation involves:
A KNOWLEDGE REPOSITORY
The knowledge repository's value to the organization is almost incalculable, considering the collaboration and communication opportunities and all network/peer relationships that have been established. The repository is an invaluable resource database that enables intriguing opportunities for problem solving and interactive sharing.
TRAINING AND DEVELOPMENT
Training new employees using the knowledge repository, once it's stablished, is critical. The repository provides a ready-made reference source when there are problems to solve. Capturing intellectual capital and the resulting organizational insights can become core and important functions of HR management.
METRICS
Metrics are useful to determine usage, indicate what is and is not being accessed, and give management a sense of the repository’s value. The types of knowledge that are relevant for intellectual capital are business data definitions, processes, rules and procedures, specialized technical knowledge, the fit with the corporate culture, management styles, organizational history with customers and vendors, and how data flows throughout the organization.
CAPTURE PROCESS
The capture process includes structured interviews specific to each department and functional area within the organization and specific to the types of knowledge seen as most important. The results of these interviews then need to be validated for accuracy and usability. The knowledge repository must be organized properly to make it both useful and accessible.
Clear Focus
The current business environment has resulted in extensive layoffs, the scaling back of employee and leadership development programs, and reductions in compensation and benefit programs important to keeping top employees and recruiting new talent. Therefore, it’s crucial that principles of intellectual capital remain in focus.
It’s imperative to properly manage the intellectual capital of the organization’s stakeholders, including the intangible aspects of knowledge of those stakeholders comprising employees, managers, customers, vendors, owners and investors/partners. Doing so can be of tremendous strategic importance to managing human resources and of critical importance to the success of the organization.
Sid Adelman is principal and founder of Sid Adelman and Associates. He specializes in planning and implementing data warehouses and in establishing effective data architectures and strategies.
Charles P. Leo is a full-time practitioner professor in the Applied Behavioral Science Department at the Pepperdine University Graziadio School of Business and Management.