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Knowledge Capital

Every business requires people, and it how you keep your key people that matters. You could lose every tangible asset-furniture, fixtures, buildings, cars, files, computers, and everything else-but as long as you kept your key personnel, you could be back in business again tomorrow, generating sales and making profits.

There are three types of knowledge that a business needs to survive and thrive. Personal knowledge, company knowledge, and market knowledge.

Personal knowledge is the specific knowledge, skills, education, background, experience, training, and core competencies that an individual owns and takes with her from place to place. The ability to write, to speak publicly, negotiate, to sell, to make presentations, to type, to prepare final statements, and so on, are all forms of personal intellectual capital. The more of these kinds of knowledge and skills that are relevant to your business a person has, the more valuable that person can be.

The process of interviewing and selection, as well as delegation, supervision, and promotion, revolves around the determination and deployment of these core skills.

The second type of knowledge is the knowledge of your specific company. This form of intellectual capital is very valuable. This includes knowledge about the processes and procedures within your business, the key personalities and their relationships to each other, your products and services and how they are developed, sold, and delivered, and all the other unique factors and features that make your business different from any other.

When a person works for a business for any time, that person absorbs an enormous amount of valuable information about how the business functions. This heightened knowledge and awareness has a real value. If you lose a person who is intimately familiar with many aspects of your business the cost of hiring and training a new individual to the same level of competence can be very high.

The third type of intellectual capital is specific knowledge about the market, your customers, and your competitors; and about your products and services, and the way they are marketed, sold and delivered. The kind of customer and market knowledge can be of inestimable value in the competitive market place. The longer a salesperson, for example works for a company, the more valuable he becomes in terms of his network of contacts and his intimate knowledge of customers-who they are, where they are, why they buy, and the various buying influences that operate on them.

Not long ago, a client company of my friend brought in a new controller who has been entrusted with the function of cost reduction. The controller glanced over the payroll and arbitrarily decided that the top salesman was earning too much money and insisted the corporate office that the commission of the salesman be cut, his territory be reduced, and several of his major clients be turned into “house accounts.”

The salesman concerned represented about 40 percent of the total sales of this medium-sized manufacturing company. When they told him that they were going to cut his commissions and cut his territories, thereby reducing his income by more than 50 percent he protested. He was of the opinion that he has with the company for more than 12 years and has taken a lot of pains in building his customer base.

The company refused to listen and they were of the opinion that the customers belonged to the company and not to him. The customer’s loyalty shall therefore be towards the organization and towards their products and services. Hence they felt that there is no reason for the company to pay such exorbitant money to service accounts. They categorically stated that if you’re not happy with these new arrangements, you can go somewhere else.

The salesman tried to reason with the management, but to no avail. Finally, he quit the organization and walked across the street to their major competitor, taking all the accounts, references with him. His old company’s sales dropped by about 40 percent the following year. They almost went bankrupt. They had no idea that the relationship between the salesman and his customers was perhaps the most valuable form of intellectual capital in the entire company.

The object of elaborating this point is that any employee who possesses personal knowledge, company knowledge and market knowledge is indispensable and the management at all costs has to ensure that he is taken care of. One needs to have more of these kinds of employees rather than having employees being filled against vacant positions. Such employees do not only add value to themselves but add immeasurable value to the organization, society and country at large.

The said article has been written by Mr. Iyer Subramanian. E Mail: iyerpdkgnm@yahoo.com, Cell no. 9892523163.

My name is Iyer Subramanian. My qualifications are as under. Bachelor of Arts, Diploma in Personnel Management and Industrial Relations, Diploma in Labor Laws & Labor Welfare, Diploma in HRM, Diploma in Training & Development.

I have around 25 years of experience in HR and write for Express Hospitality, Hospitalitybiz, Business Manager regularly on HR.

Article Source:http://www.articlesbase.com/human-resources-articles/knowledge-capital-864942.html