Key Points

• Intangible assets, including human capital and its management, contribute substantially to the value of a company. However, there are no widely accepted conventions for valuing intangible assets.

• Investors’ interest in human capital is increasing. Only a few companies have distinguished themselves in the disclosure of information about their human capital, how it is managed, and the impact on business performance.

• At this time investors have no magic formulas or easy-to-calculate ratios to look at in assessing a company’s ability to create value from its intangible human assets. Until those things are available, they should look for evidence that a company’s leadership is in command of the facts about its workforce and about how workforce attributes and people management practices relate to business performance.

• The trend is toward fuller disclosure of intangible assets.