(1888PressRelease)
March 06, 2007 - New York University, N.Y.—March 5, 2007 - With the loss of their ability to walk down the hallway and see all of a company’s employees at work, business owners are beginning to realize the importance of the contributions their employees make to the success, or failure, of their company.
How does one determine the value of what an employee brings to a company? How does one measure an employee’s knowledge, experience, or education, especially when they rarely work at the actual location of a company?
Many successful companies today, especially in the field of technology, are based solely upon knowledge or information, as opposed to selling a concrete product or service. As they have no physical assets, how does a company determine their wealth without under- or over-valuating their stocks, especially when borrowing money or taking part in a merger?
Charles Njogu, a graduate student at New York University, currently conducted a study that tackles this sticky problem. Through assessing the current methods of determining human or knowledge capital used by the top companies in the US, he has been able to propose a universal tool for valuing this type of capital in all industries. Njogu argues that, “Any organization that wants to stay competitive in today’s challenging environment must learn to manage knowledge or human capital more effectively or they will not succeed as an organization.”
In his thesis, titled “Managing Knowledge Capital: How Organizations Measure Knowledge Capital and How They Make It Grow,” he details the importance human or knowledge capital has upon the success of a company and explains how the treatment and valuing of employees at highly profitable companies has played an important part in their growth.
“The importance of human capital includes improved customer services, faster problem solving, innovation, high productivity, and a competitive advantage,” he states.
However, he goes on to explain that none of the companies he surveyed is using a tool that accurately enables it to gauge its human capital. Most use a slipshod, and ultimately ineffective, combination of methods borrowed from their human resources and finance departments.
This is an opportunity for employers to increase productivity by determining exactly how employees factor into profits, and presents a way for employees to be truly appreciated for the wealth of experience and knowledge that they bring to a job. Instead of using out-dated methods to valuate current needs, Njogu’s ground-breaking thesis proposes an enlightening method that is capable of accurately determining the value of the businesses of today.
