There are at least two issues involved in the intellectual capital debate.
How to put a "VALUE" on human-capital who generate future returns, and the
affect on "BEHAVIOUR" by knowing that perhaps intellectual capital is on
a downward trend, for example. Gene Taurman talks of Goodwill as
something that contains the value of humans in helping generate future
returns of a company, that ordinarily cannot be reduced into traditional
accounting formulas. Gene is referring to the problem of valuation, not
behaviour. Of course the ability to generate future earnings is contained
in Goodwill, but those accountants who knock together Goodwill numbers
don't do so while keeping in mind the Humans that create the Goodwill in
the first place. They generally extrapolate the going price-earnings
ratios for similar companies and come up with a value, but this value, the
same "value" Gene alludes to, can hardly represent the "real" value of an
organisation.
Value in Gene's context, implicitly implies that any organisation's only
purpose is to maximise value (returns) for shareholders/stakeholders. Now
who would argue with that! In South Africa (SA) these generally accepted
reasons for an organisations existence are becoming more complex. It's
becoming all too realistic that Goodwill (value) of an organisation is
inextricably connected to the overall goodwill of the nation. How do you
measure the Goodwill of an organisation that lowers its return to
shareholders but provides increasing employment for the now-estimated 50%
plus unemployed in South Africa. Huh ? This sounds like some familiar
manifesto... But, perhaps a 10% return on investment is better than 50%
if those that can now share a little wealth will help reduce crime, allow
children to attend schools and generally allow you to sleep at night. It's
more or less like saying, I'd rather have 10% of something than 50% of
nothing, which is exactly the path we're headed down in South Africa if we
don't find new economic solutions. Unfortunately the systemic
implications of all this makes it but a dream. South Africa cannot offer
international investors lower returns than they can get elsewhere; how
will we survive without capital...? And that is why when foreign
investors look at organisations in South Africa, they also look at the
Goodwill of the country at the same time. Valuation of an organisation
takes on new meaning in a country like SA.
On the behavioural side, for those companies in SA that would measure
intellectual IQ, they would be reminded of the ongoing exportation of
intellectual capital out of South Africa. CEOs in SA don't need to be
reminded of this, they know it too well! Which is why I find the whole
notion of intellectual capital measurement a lot of nonsense. Good CEOs
worth their salt, know very well the importance of knowledge and
intellect, he/she shouldn't need it included in the Balance Sheet.
Jeff Blumberg
jeffb@illovo.co.za
--"Jeff Blumberg" <jeffb@illovo.co.za>
Learning-org -- Hosted by Rick Karash <rkarash@karash.com> Public Dialog on Learning Organizations -- <http://www.learning-org.com>