The human assets of an organization is an important constituents of all assets in business organizations but surprisingly the trend was to accord extremely low importance and recognition or no recognition at all until recently. Land , labour and capital are the principal factors of production in the traditional mindsets. The emergence of the service industry in recent years and its predominance in the national economy has led to some radical rethinking in this regard. The service sector is entirely knowledge-driven and the need to make a proper estimate of the knowledge base of a service-oriented unit whose productive resources are represented by the collective pool of knowledge as intellectual capital of it. Knowledge and creativity significantly add value to an organizations. For example, the acceptability of Asset Management Companies which manage funds is greater for the companies which have high profile heads and reputed performers in their lists as fund managers. The exit of any key persons make newspaper headlines indicating the importance the loss of human cpaital in intellectual terms.

 

Attempt to capitalize company investments in people on the balance sheets were unsuccessfully made in the earlier decades because of problems of finding the appropriate tools to measure it.

With the revolutionary strides made in recent years in information and communication technologies, there are fresh attempts to evaluate and measure the knowledge of individual employees. Thus knowledge has become a key production factor. However, the financial accounts are still dominated by traditional factors of production. The need to develop a proper understanding of the 'knowledge assets' is still at a nascent stage

 

Every business in the world faces the same fundamental problem which is maintaining a competitive edge through the application and building up of knowledge. It is worth noting that much of the operating knowledge of most of the companies is not documented which mostly remains in a tacit form . This corpus of tacit knowledge may be lost when key employees or knowledge workers retire or leave the jobs for some other reasons. Knowledge workers with key competitive and proprietary knowledge are lured away by the competitors . Thus without the ability to organize, store, retrieve and manage it , much hard-won knowledge leave with them. In fact, there is no objective means to measure knowledge in most of the industries. When we use word 'knowledge' it just convey something purely objective and much of what passes for as knowledge is mere information having no clear objective definition. To most of the organizations it is a contribution in a way to the value of the entities. In today's business reality the “knowledge assets “ have to be duly accounted for and recognized as a vital component of the human capital.


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