| The Global Banking Industry is witnessing
dynamic enormous consolidation. To consolidate,
either through mergers or acquisitions means putting
a value on your people, this is the sole greatest
asset of any viable banking system that will survive
the 21st century. The new economy is often called
the knowledge economy. Emerging from an industrial
age, this new economy distinguishes itself
by a large amount of the value of the company
residing in the head of the employee
instead of in the tangible assets of the company.
It is not enough therefore to estimate the worth
of any bank in terms of only the IT, branch
network and deposits liability in order to ascertain
the bank’s candidature for either a merger
or an acquisition. The compatibility of people
and work culture is also of enormous importance
if not of greatest importance, because it is people
who work on the IT, to drive the process that
makes an organization successful or unsuccessful.
Another illustration of the intrinsic value of
intangible and human capital is the historical
evolution of the ratio of the S&P 500 between
the market value and the book value. The ratio
of book value to market value was approximately
1 in the early 1980s. In 2000 it had risen to
about 6; meaning it increased 6 times in the last
20 years. Among those companies, current employees
are now perceived as a key element, along with
the ability to attract and retain talent.
The human intellectual asset like many physical
assets is hard to value. An insurance company
will value your hand if you lose it, but how much
is it really worth to you? To value your people
therefore is to measure the worth of your training
and development investment that has gone into
shaping them.
The various models available to value human
assets of corporations are only approximate and
not supposed to be a true science. However, it
is not the absolute value of human capital that
is critical; but more of its significance as
an indicator of the importance that management
should pay to it. Employees have moved from
being a cost to be seen only on the income statement
but more in the balance sheet as an asset or a
capital.
Once I am confident that I have the right people
on the right job plus the right skills and right
knowledge upon the right attitudes; then
I have a competent workforce with necessary prerequisite
to take the company to the next level. Organization
can ascertain these various values by engaging
the services of human capital consultants.
Submitted by Afolabi
Imoukhuede, Managing Consultant, MCS
Consulting Limited Ikoyi, Lagos
aimoukhuede@mcsworldgrp.com
Valuing Your Human
Capital: A Necessity For Mergers & Acquisitions
[download
article]
|
