How International Medical University (IMU) value its assets and what is the accounting method followed?

International Medical University (IMU) considering their employees are their main assets. The employees which falls in human capital play major role in organization development. Therefore, IMU value its employee base on following criteria;

• Education level
• Year of experience
• Performance rate

Each of the employee is an assets for the organization. The value for their assets base on the salaries given to them. The organization will continually accessing the value of employee by measuring their performance rate. On the other hand, the organization drive the employee’s knowledge and skills to meet an organization’s goals.

IMU consider employee’s knowledge and skills as an assets and measuring it into number and summarize it from level 1 to level 6. All the measurement will be done using Performance Review spreadsheet which will be given to employee every year. Each of the employee goals need to match organization’s goal and create a value to organization. Following are the component that will include in employee’s performance review:

• Individual goals that aligned with the organization’s goal.
• Individual competencies level in working.

The accounting method that applied by organization is 30% for individual goals and 70% for individual competencies. Organization give more priority for individual competencies in order to create an environment where all their employees share their knowledge and skills and work as a team to create a value to organization. 

Value creation and value extraction activity

How does the organization get a value from intellectual capital is depends on how they extract the value from it. Value creation is generate from the human’s brain. Organization need to well-planned and well-execute set of management initiative to convert their knowledge and skills into value. 

The value creation activity is a performance of action that generate intellectual property or assets. For example, we as an instructional designer train the lecturer to use software application to create an interactive lecture slide for students. The figure below shows how the value has been generate from above scenario.

Figure 2: Value creation and value extraction process

Value extraction means how to utilise someone’s knowledge, skills, and ideas to benefit the organization and generate the profit. Following are the value that can extracting from intellectual capital:

1. Profit
2. Strategic Positioning
3. Acquiring the innovation to others
4. Customer loyalty
5. Cost reduction
6. Improved productivity

Value creation activities is employees development planning. This can be done by providing or attending workshop, seminar, or conference that will improve their skills and knowledge. Some organization funding their employees to continue their studies to higher level with some bonding to generate value for organization. On the other hand, organization also creating working environment and culture that give comfort ability to employee to produce and share good ideas among the cliques and higher people. For example the group chatting, cubicle setting, internal email system.

One of the common value extraction activities is providing projects for employee. Employee will be rate according to their achievement on their projects that benefit the organization. Writing journals and conducting training to others also activities for value extraction. Value extraction activities is anything that generate value from human capital such as profit from product and cost reduction from strategic planning. 

Value creation and Value extraction activities in my organization

Major types of value creation activities that can implement at IMU is in-house training. Rather than sending large number of employee to same training, organization can send few selected employees to related training and they train others in organization. This activities not only creating value, but also extracting value from those who already went to training. By doing this, organization cost for training purposes can be utilised more effectively.

Another value creation activity is to create environment and culture that allowed employee interact and share their ideas. The good relationship and communication among other employee from different department can open the room for them to shares their knowledge. Organization activities such as festival party and company trip create a platform among employee to mingle and get to know each other area of interest.

Rather than providing training and creating a good environment, organization can manage their intellectual capital by giving good benefit. For example, by giving good yearly increment, bonus and recognition, employee less changing their job. The employee knowledge and experience is an assets for the organization.

The role for value extraction activities in IMU is given to department’s manager. The department manager will give the projects to employee under them base on their skills and measure their achievement during performance review process.

Another major activities that can applied for value extraction is portfolio creation. Each employee cam create their own portfolio with all their works and share with public or own department. By putting all their works into portfolio, management can value their skills and keep their intervention in a document format. The employees portfolio also an intellectual assets to an organization.