HR Is Obliged to Frame Its Products, Services, and Data As Intangible Assets…

Michael D. Moberly    March 6, 2012

Most HR (human resource), or ‘people’ departments, and their directors/managers, are very skilled at gathering data to identify and track the conventional trends, e.g., recruitment initiatives, retention, training, terminations, absenteeism, attrition, layoffs, outplacement and the attendant costs, etc.

Framing the HR function in the context of its ‘contributory value’ to a company, i.e., as an accumulation of intangible (intellectual and relationship capital) assets is very necessary in today’s intangible asset dominated – driven business environment.  This helps with unit assessment and achieving more effective use of a company’s people-based intangible assets, i.e., intellectual and relationship capital. 

Management teams should demand the data their HR units churn out coincide with a company’s mission, strategic plan, and most of all, the knowledge-intangible asset economic and competitive advantage drivers of the company.  In other words, HR data much reach well beyond the conventional, e.g., the number of job candidates in the pipeline, recruitment and training costs, and/or skill shortages, etc.

Today, HR would be well served to collect, analyze, and explain data that will provide management teams with strategic insights about the impact, inter-connectedness, and use of the full range of people-based intangible assets, again, the intellectual and relationship capital being produced.

Fortunately, there are many HR managers-directors who already ’get it’ by demonstrating that HR’s role and contributions to a company should be guided and executed through an intangible asset lens that recognizes:

  • 65+% of most company’s value, sources of revenue, competitive advantages, and ‘building blocks’ for growth evolve directly from intangible assets.
  • un-used or under-used intellectual, structural, relationship capital will frequently result in irreversibly lost opportunities.

Many of the conventional (HR) measuring points fall into the ‘nice to know’ category but they frequently don’t convey their contributory value insofar as being the real drivers of most company’s performance and/or business transaction outcomes. In other words, some HR units simply haven’t expanded their (data) collection and reporting mission to conceptually or operationally characterize employee-based know how and intellectual capital as valuable intangible assets.

In a global business economy that is clearly and irreversibly tethered to knowledge-know how based intangible assets the kind of data and insight management teams need and want from their HR unit include such things as the readiness and speed in which a company’s workforce can adapt – accommodate changes necessary for sustaining competitive advantages, etc.

A remaining challenge of some HR units lies in their recognition of the data being selected to monitor, measure, and make available to management teams relative to its ‘connectedness’ to sustaining competitiveness and its effect on (business) performance in an ever broadening array of circumstances and transactions, .

 So, I’m advocating a new mantra for HR which starts by justifying:

  • why certain data is tracked-monitored and not others
  • how and why particular data matters to a company relative to its strategic mission and varied transactions.

In other words is the data relevant to helping a company consistently achieve positive and profitable business outcomes and will HR develop a different roadmap for achieving its contributing (added) value to a company?

The following example, in my view, would advance HR’s contributory value (role) and help make it more strategically relevant to a company, i.e., provide management teams with data that integrates a risk assessment feature that links intellectual and relationship capital assessments to specific challenges and/or risks a company faces relative to current operations as well as new (business) initiatives or transactions under consideration.

 A constructive action like this would bring clarity to ‘business risks’ that fall within HR’s purview. Risk, in this context, would include HR’s (objective) assessment about a workforce, i.e., its

  • ability and/or capacity to be innovative and sustain its competitiveness
  • flexibility and receptivity to rapid changes
  • speed for delivering new products and/or services
  • ability to collectively and rapidly solve problems
  • enthusiasm for ‘investing’ in their work, and
  • sum of employee attributes, training, specialties, skills, and know how, etc.

 Simply stated, it’s time HR ‘puts more skin in the game’!

(This post was inspired by and adapted from the work of Mike Prokopeak (Talent Management Perspectives) and his article titled, ‘What Financial Analysts Think of Human Capital’)

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