Summary
Intangibles drive an organization's market value other than earnings. Forward-thinking companies will develop a deep understanding of how workforce management practices can influence important factors like clear strategy, technical competencies and unique capabilities. Intangibles affect the market value of any publicly traded firm. And in not-for-profit firms, they represent the goodwill of those who invest in, fund or sponsor the organization. Finance professionals realize intangibles matter -- the numbers are very clear; but still, in their heart of hearts, they may not be convinced that HR really matters. The architecture of intangibles has four steps: 1. Keep promises and manage expectations. 2. Create a clear strategy. 3. Have the core technical competencies needed to deliver the strategy. 4. Develop capabilities -- those things that make a company stand out in the minds of customers. Many investors know that intangibles matter, but hesitate to ask for intangible reports because even they do not know what to ask for.
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Extract
In Touch with Intangibles
Do intangibles matter? Asking that seems like a rhetorical question, but if we go back 20 or 30 years, the answer would have been "What are they?" and then once the concept was understood, "No." Up to the early 1980s, the typical company was worth just about the same as its book value. This made sense in a lot of ways. If a company had a building and three injection-molding machines, why would you pay more for the company as a whole (market value) than you would pay for its component parts (book value)?
However, in the 1980s something happened to the stock market. The market value ...See the full content of this document
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