Implications of Intellectual Capital on Human Resources Management

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TITLE: IMPLICATIONS OF INTELLECTUAL CAPITAL ON HUMAN RESOURCES MANAGEMENT

TABLE OF CONTENTS

1. Introduction pg 3 2. Elements of Intellectual Capital pg. 3 3. Preserving Intellectual Capital pg. 4 4. The Importance Of Implementing Intellectual Capital Processes pg. 4-5 5. The Value Factor pg. 5 6. Employee and Management Training & Development pg. 5 -6 7. Capture Process pg. 6 8. Socialization of Knowledge pg. 6 9. Strategies for Implementing Intellectual Capital Knowledge pg. 6-7 10. Examples of the effect of IC components on and HRM. Pg. 7-8 11. Future research pg. 9-10 12. Conclusion pg. 10 13. References pg. 11

INTRODUCTION

The term “Intellectual Capital” collectively refers to all resources that determine the value of an organization, and the competitiveness of an enterprise. Understandably, the term “intellectual capital” from a human resources perspective is not easily translatable into financial terms. For all other assets of a company, there exist standard criteria for expressing their value. Perhaps, this term could more appropriately be called a “non-financial asset.” In an article written by Paolo Magrassi titled "Taxonomy of Intellectual Capital”, 2002, Mr. Magrassi defines human capital as “the knowledge and competencies residing with the company’s employees” and defines organizational intellectual capital as “the collective know-how, even beyond the capabilities of individual employees, that contributes to an organization.” Although there has been an increasing interest in intellectual capital and an increasing interest in how it might be managed, there has been little written to succinctly describe and define the concept. This column is intended to provide an overview of intellectual capital, where it fits into an organization, what the component elements of it are, and what might be done to manage them. Intellectual capital can include the skills and knowledge that a company has developed about how to make its goods and services. It also includes insight about information pertaining to the company’s history; customers; vendors; processes; stakeholders; and all other information that might have value for a competitor that, perhaps, is not common knowledge. Intellectual capital is therefore, not only organizational knowledge, it is also industry knowledge. It is the combination of both cognitive knowledge and intuitive/experience-related knowledge. Elements of Intellectual Capital

In all definitions of Intellectual Capital, the following taxonomy can be recognized: •Relationship Capital: All business relationships a company entertains with external parties, such as suppliers, partners, clients, vendors, etc. •Human Capital: Knowledge and competencies residing with the company’s employees. •Organizational Capital: The collective know how, beyond the capabilities of individual employees. E.g. Information systems; policies and procedures; intellectual property. (Sullivan, 2000) The importance of knowledge pertaining to external parties relevant to an organization has been emphasized as an especially important body of knowledge pertaining to all aspects of the organization.

Preserving Intellectual Capital
The problem today in many organizations is employee attrition through layoffs, resignations,...
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