Selecting your best measures

To assist in the use of suitable measures of intangible value Table 15.1 lists examples of metrics which are commonly appearing in reports . This list is general in nature and does not propose to be all-inclusive. It is designed to give you a sense of the area and a chance to explore choices. The goal here is to promote conversations in your business as to how you could better place the value of your know-how and improve your capacity and the power of your knowledge.

Customer capital

Agreements, contracts and permits

Average response rate to customers

Customer acquisition cost

Customer churn rates

Customer satisfaction

Customer yield

Listings and numbers of customers

Market share

On-line sales per day

Ratio of sales contacts to sales closed

Revenue percentage per customer

Repeat orders

Service awards

Share of new customers

Human capital

Average years of service

Brain drain “ rate and cost of voluntary separations as a percentage of headcount

Employee satisfaction “ percentage of employees scoring in top quartile of job satisfaction survey

Hiring cost

Expert turnover

Hours and $ investment of training/employees

Level and type of education

Literacy levels “ percentage of key employees who have met competence standards

Number of employees

Proportion of support staff to the core business

Profitability per employee

Rookie ratio

Success of employee suggestion programmes

Staff morale “ percentage of employees who indicate concerns with existing culture and climate

Staff turnover

Succession planning “ percentage of key positions with at least one fully qualified person ready

Brand and internet domain names

Computer software and licences

Industry awards

Rights (for example, broadcasting or servicing agreements)

Patents, copyrights, franchises, trademarks (that is, perceived value)

Patents cited by others

Unpatented technology (for example, secret formulas)

Relationship capital

Business partnerships

Contract portfolio

Cross-functional teamwork “ percentage of projects based on interdisciplinary collaboration

Knowledge-enhancing customers and suppliers

Projects being undertaken with others (colleagues, customers and idea groups)

Strategic alliances

Joint ventures

Systems performance

Administration expenses as a percentage of sales

Breakeven time for new product or service development

Cash flow

Cycle times to process services or products

Knowledge reuse hits from learning archives or databases

Investment in IT or knowledge management systems

New product introductions

On-time delivery

Productivity gain due to new ideas or equipment

Research and development expenditure and percentage directly involved

Quarterly sales growth

Sales generated from new products and services

Time to completion of new products

Unit cost for manufacturer or service delivery

The metrics in Table 15.1 have been chosen because it was felt that they need very little or no explanation. The goal here is get you thinking and to explore a wider range of options. Where I found measures very specialized to a particular business or industry, I have left them out. You will also find that some metrics could be listed under a different category depending on your point of view. However, my role here is not to pass any moral or intellectual judgement on their usefulness or categorization but these measures are in use and you might wish to consider some of them in your reporting processes.

The listing of intangible asset measures in Table 15.1 comes from a variety of sources including work by Karl-Eric Sveiby, Jac Fitz-enz, the Saratoga Institute, the US Financial Accounting Standards Board, Kaplan and Norton, Skandia AF and the Danish Agency for Development of Trade and Industry.

As a supplementary comment to Table 15.1, please do not see this listing as complete but go out and discover more for yourself. Like me, you will find it fascinating to see the degree of inconsistency across industries not only between businesses but also, and more alarmingly, between divisions or work locations within the same operation.

For example, where you would expect to find a measure to be used in different parts of a business they often are not and are substituted with another measure. Such inconsistency does not help the cause for improving the case of better reporting. It does on occasion raise more questions than answers. Are the claims being made purely idiosyncratic or are they just self-promotional or, worse still, a misrepresentation of the truth? I suppose when we can track performance over time we will have a better gauge of its true performance in improving knowledge and innovation.