guidelines for managing and reporting on intangibles (intellectual

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(1) Recognition <strong>and</strong> measurement processes • Human <strong>and</strong> customer surveys executed on a regular basis <strong>and</strong> in a systematic way can act as a solid base <strong>for</strong> measuring <strong>and</strong> recognizing the importance of intangibles (2) Reporting processes • Continuous <strong>and</strong> well structured internal reports to as many management levels as possible • Investor relation in<strong>for</strong>mation (reports) to analysts <strong>and</strong> other stakeholders (3) Evaluation processes • Evaluation of single indicators by each manager in combination with dialogues between the management levels • Statistical analysis of the indicators providing a view of the trend followed in previous periods. (4) Attention processes • Time is set of <strong>for</strong> meetings focusing on the status <strong>and</strong> trends regarding different intangibles • Structured dialogues <strong>and</strong> work counseling meetings are held on a regular basis • Internal benchmarking activities (identification of best practices) • The indicators <strong>and</strong> measures are connected to the salary bonus system (5) Marketing processes • Internal <strong>and</strong> external marketing activities revealing the intention <strong>and</strong> purpose of the production of measures <strong>and</strong> indicators The examples of supporting processes listed above, or of any other of a similar type, are part of the action exercise. They are not equally relevant. The company should define its own priorities. The most important routines are those truly process oriented <strong>and</strong> try to codify organizational capabilities around lessons learned <strong>and</strong> insights gained. The results, in combination with statistical analysis, affect knowledge <strong>and</strong>, thus, encourage intangible activities. In sum, the action phase is part of a highly dynamic process, where the evaluation of results <strong>and</strong> eventual design of new activities might occasionally overlap with (parts of) the identification <strong>and</strong> the measurement phases. It is the culmination of the process of implementing an intellectual capital management system in the firm. The stronger the integration of the action phase within the organizational routines, the more consolidated the intangible management process <strong>and</strong>, there<strong>for</strong>e, the higher its recognition at external <strong>and</strong> internal levels. The frequency <strong>and</strong> characteristics of the monitoring exercise will vary <strong>for</strong> the different intangibles at stake <strong>and</strong> will be highly specific to the firm <strong>and</strong> the industry. For it will depend on the nature of the intangible <strong>and</strong> on its criticality <strong>for</strong> that particular firm. For example, some banks per<strong>for</strong>m a customer satisfaction survey on a monthly basis. The same frequency would also be adequate to check the use of the company Intranet, 21
ut would be less appropriate to evaluate employees’ identification with the firm’s strategic objectives. The three phases of Intellectual Capital Management can be summarized in Figure 6. Figure 6. A comprehensive model <strong>for</strong> the management of Intellectual Capital STRATEGIC OBJECTIVES INTANGIBLE RESOURCES INTANGIBLE ACTIVITIES Identification Measurement Action The model should be understood in a dynamic sense. Theoretically, the firm starts by identifying <strong>and</strong> measuring its intangible resources at a given time (t). Then it develops different activities that might affect them <strong>and</strong> measures its intangible resources again in period t+1. As a result, the firm monitors the different changes in its intangible resource levels as a consequence of its management actions. In practice, the different stages of identification, measurement <strong>and</strong> action tend to overlap. 5. The Intellectual Capital Reports The Intellectual Capital Report is the report the company discloses on its Intellectual Capital. It is the logical conclusion of the Intellectual Capital Management process: communicating to stakeholders the firm’s abilities, resources <strong>and</strong> commitments in relation to the fundamental determinant of the firm’s value. An intellectual capital report contains in<strong>for</strong>mation on the work carried out by the firm in order to develop, maintain <strong>and</strong> manage its intangible resources <strong>and</strong> activities, highlights the connectivity among the three elements of Intellectual Capital (Human, Structural <strong>and</strong> Relational capital). It is the connectivity among these three elements, what – if organized properly – produces value. At the same time, an intellectual capital report refers to the expected evolution of those intangibles linked with the strategic objectives. It is composed of the following three parts: a) A vision of the firm (strategic objectives, core competencies <strong>and</strong> key intangible resources) which presents the firm’s main objectives <strong>and</strong> strategy <strong>and</strong> the key drivers (or critical intangibles) to reach those objectives. b) A summary of intangible resources <strong>and</strong> activities describing the intangible resources the company can mobilize <strong>and</strong> the different activities undertaken to improve the value of those resources. c) A system of indicators <strong>for</strong> the intangible resources <strong>and</strong> activities, intended to allow external parties to estimate correctly the firm’s future expected earnings <strong>and</strong> risk. In that sense, it is useful to both, external parties <strong>and</strong> to management 22
Page 1 and 2: “GUIDELINES FOR MANAGING AND REPO
Page 3 and 4: which will provide the basis <stron
Page 5 and 6: Acknowledgements The Guidelines <st
Page 7 and 8: how knowledge is produced, accumula
Page 9 and 10: accounting standar
Page 11 and 12: Essentially, the economic notion of
Page 13 and 14: connectivity improvements. Examples
Page 15 and 16: closely linked to their ability to
Page 17 and 18: Figure 3. A breakdown of intangible
Page 19 and 20: Figure 5. Characteristics of indica
Page 21: indicators that are most likely to
Page 25 and 26: strategic objectives established <s
Page 27 and 28: • It may contain a mix of financi
Page 29 and 30: considered useful for</stro
Page 31: Roberts, H. (1999) The Control of I

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