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May

2012

Value People as an Asset on the Financial Statements

"What is your organization's most important asset? CEOs often respond that the organization's people are its greatest asset. But if this is true, where are people accounted for in the financial statements? Today, people are generally classified as expenses on the income statement and liabilities on the balance sheet -- not as an investable asset. Thus, when CEOs seek to increase profit, they cut costs -- like people -- rather than investing in assets -- like people -- that can appreciate. "

www.managementexchange.com/...ple-asset-financial-statements

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humancapital accounting finance assets intangibles intangiblecapital financialstatements balancesheet

In fact, investment advisory firm Ocean Tomo estimates that in 1975 more than 80% of the value in the S&P 500 firms consisted of tangible assets -- like land, plant and equipment. In 2010, approximately 80% of the S&P500 market value is attributed to intangible assets. But, today's accounting systems and financial reporting are still using 20th century definitions, creating a "gap in GAAP" (the Generally Accepted Accounting Principles) on how value is created in the 21st century.
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- . By using the Lev-Schwartz model, which calculates today's value of future compensation to employees of varying ages and experience levels, managers and investors can now track a variety of measures related to Infosys' human resources, such as "return on human resource value" and "value of human resources per employee." Infosys's annual report also includes a "comprehensive intangible assets score sheet" that can be used as a decision-making tool to determine how successful the firm has been at investing in its people from year to year.
- A key factor in the shift toward viewing people as an asset is recognizing that an employee's value can appreciate with training, engagement, and teamwork -- all investments that are essential for 21st century firms
- Currently, there are no apparent leading U.S. or European companies performing this calculation -- or at least not communicating it to their staff or investors. This powerful, transparent reporting on all the assets of a company has the potential to be a catalyst for developing a set of best practices that will provide a reliable methodology for the measurement and valuation of intangibles.
- The massive shift towards people as assets to be invested in can ripple through the management systems, goals and aspirations of the firm.
- Accounting standards will need to ultimately adapt this. The American Accounting Association analyzed this back in the 1970s, and needs to rekindle this approach. A new Sustainability Accounting Standards Board (SASB) is undertaking a new approach and educating the SEC as well.

Gambling With Intangibles

"What if the origin of political division in this country could be traced to a simple glitch of the generally accepted accounting practices?
In other words, charging money for baggage essentially transfers this service from the liability column to the asset column of the accounting statement. As a liability, it can only atrophy under the weight of austerity measures."

www.ingenesist.com/...gambling-with-new-value.html

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accounting balancesheet humancapital customerservice service serviceeconomy

By charging fees, once neglected baggage service departments have become star revenue performers for airlines. Department managers can now justify new technology and equipment. Where before, baggage service only represented a cost, it now provides millions in revenu
The basic problem is that regulators have been working for the last two years to define the difference between hedging and gambling, and can’t.
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- What if that’s what it’s all about; all the fighting, and slander, and division, and prejudice, and injustice, and violence, etc., caused by a simple accounting system problem.
- When we do not have an accounting system for human values, we can only gamble with them.

Apr

2012

Quand le Directeur du Capital Humain remplacera le Directeur des Ressources Humaines | Le Cercle Les Echos

"On ne peut pas envisager d’améliorer la place de l’humain dans l’entreprise sans changer la fonction Ressources Humaine. De la même façon, rien ne changera si on ne change pas la dénomination de la personne chargée de piloter cette évolution. Mais transformer le Directeur des Ressources Humaines en Directeur du Capital Humain cela implique quoi ?"

lecercle.lesechos.fr/...cera-directeur-ressources-huma

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humanresources chro humancapital intangiblecapital investment competencies administration change balancesheet

Aujourd’hui parler de Ressources Humaines est dépassé. Hier, cette expression de Ressources Humaines est venue remplacer celle d’Administration du Personnel
Nous sommes entrés dans un monde industriel, commercial et administratif où l’humain tend à se faire rare. A ce titre de rareté, l’humain n’est plus un facteur de production, il est devenu un investissement stratégique dans le capital immatériel de l’entreprise
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- Dans ce monde des analystes financiers, l’humain a été trop souvent vu comme un facteur, donc comme un coût au lieu d’être vu comme un investissement, donc comme une richesse.
- Considérer l’humain comme un investissement implique de pouvoir lui donner une place dans l’Actif du bilan de l’entreprise en plus de ses lignes de Passif ou au Compte de Résultat.
- L’employabilité ne doit plus être la capacité à retrouver un emploi quand on a perdu le sien, mais la capacité à en occuper un autre dans l’entreprise rapidement en permanence
- L’humain doit être un investissement permanent, ce qui implique non seulement de maintenir ses compétences en termes de savoir, savoir-faire et savoir-être, mais aussi sa capacité à agir et réagir face à l’évènement.
- C’est le savoir-agir, au sommet de la pyramide de la compétence, qui fait toute la différence dans l’évaluation des compétences.
- ’est de cette manière que nous pourrons sortir d’une gestion des compétences par postes et aller vers une gestion des postes par les compétences, telle qu’elle fut notamment définie par le MEDEF dans sa « Démarche compétences » et son « Objectif compétences » en 2002.
- L’exercice du travail et la possibilité d’en changer dans des conditions propices font partie de la prévention des risques psychosociaux
- S’interroger en permanence sur la capacité de ses salariés à s’insérer rapidement dans des processus de changement ou dans l’évolution de l’entreprise doit être une des missions du Directeur du Capital Humain.

Oct

2011

We’re looking at it all wrong: the intangible information gap

"I have been really heartened to see more attention to the way that the intangible information gap skews investors’ understanding of what’s really going on in today’s knowledge-driven companies. This latest article comes on the heels of a Reuters piece last month calling for getting intangibles on the balance sheet."

www.i-capitaladvisors.com/...the-intangible-information-gap

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balancesheet accounting intangible intangibleassets accumulation

He responded by stating that our current accounting system doesn’t value “intangible capital accumulation” appropriately
Most certainly, intangible capital accumulations are “expensed,” not capitalized. Such accumulations increase productivity, foster more efficiency, and drive better financial money flows than are currently measured
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- Manifestly, if you are not measuring a company’s accumulation of “intangible capital” correctly, you are undervaluing corporate America
- What Steve calls intangible capital accumulation, we call i-capex or intangible capital expenditure. That’s what it really is: investment in the infrastructure upon which the future earnings of a company will be produced. There’s nothing really intangible about it. It’s not bricks and mortar but it’s truly infrastructure.
- We know that 80% of the value of the average company today is not represented on its balance sheet.