guidelines for managing and reporting on intangibles (intellectual

intangible activities. Whenever possible, intangible activities are to be divided into
improvement activities <strong>and</strong> monitoring activities, following the classification presented
in section 3.3.
The relationship between the improvement <strong>and</strong> monitoring activities, <strong>and</strong> the Vision has
to be transparent. In other words, the company must show that it requires a unique
combination of actions to be per<strong>for</strong>med in order to attain the strategic objectives, <strong>and</strong>
that the company is actually carrying out these actions.
The summary of intangible resources <strong>and</strong> activities draws upon both the Identification
<strong>and</strong> the Action phases. It is up to the discretion of the company to decide what
in<strong>for</strong>mation relative to these phases should be disclosed.
A periodic disclosure of its activities would be expected, similar to the periodic
accounting disclosures <strong>and</strong> quarterly statements, while the Report should show a logical
internal coherence that must maintained over time.
5.2.3. The system of indicators
The third part of the Intellectual Capital Report is the system of indicators.
The indicators are the visualization of what the company is doing with its intangibles,
<strong>and</strong> are to allow the readers of the Intellectual Capital Report to assess how well the
company is fulfilling its objectives.
There is presently no fixed <strong>and</strong> predetermined set of indicators required <strong>for</strong> an
Intellectual Capital Report. As mentioned in the previous section, the indicators reflect
what the company itself is considering important to manage <strong>and</strong> monitor.
The set of indicators must refer to the three categories of Intellectual capital (human,
structural <strong>and</strong> relational capital), <strong>and</strong>, whenever possible, should distinguish between
resources <strong>and</strong> activities, i.e., resources owned <strong>and</strong> actions. The indicators can be
financial or non-financial but, whenever possible, the use of financial indicators is
strongly suggested, particularly because it will be easier to relate financial indicators of
Intellectual Capital to other financial indicators of per<strong>for</strong>mance.
For example, if a particular company considers it crucial to use in<strong>for</strong>mation
technologies <strong>for</strong> the supply of a high-quality service, the increase in the ratio of the
number of PCs to the total number of employees could be an useful ratio. However, a
financial indicator <strong>for</strong> the same purpose would be the total investment in the hardware
<strong>and</strong> software upgrades of the current PCs.
In sum, the presentation of a set of indicators has the following characteristics:
• It creates a visualization that allows actions to be translated into a system of
indicators.
• It has an array of indicators that describe the company’s value creation process.
• It typically has indicators from all three components of Intellectual Capital. If
not, the specific reason <strong>for</strong> it should be mentioned.
25