It's Proven. Talent Drives DJIA Market Value.
The Down Jones Industrial Average should be renamed The Dow Jones Intellectual Average.
We know the marketplace has long shifted from an industrial economy to a knowledge economy. But until now, no one has been able to measure with certainty how talent strategies impact overall company performance.
We recently published the Intellectual Capital Index© to do just that. We found that Leading companies in the DJIA share a common source of value - intellectual capital. We also found a set of facts that cast these companies in a new light:
These hard numbers indicate that intellectual capital—which is solely driven by people--drives more than $4 trillion dollars of the value for companies in the DJIA alone. In fact, human capital is the only active driver in creating intellectual capital, and over time actually has a compounding impact on value, much like the concept of compound interest.
We believe understanding and acting on this is the cornerstone of an effective 21st century talent strategy. That's why we recommend that companies of all sizes:
Ready to see where you rank? Let us show you where you are, how you compare to your industry peers, and how you can improve your talent strategies to drive greater market value.
*Tied with Visa and Johnson & Johnson
The ICI measures the market value of a company above and beyond tangible assets, including internally developed brands, patents, technologies and other intangible assets not recorded on the company’s books (per current accounting rules) as well as those on the books acquired through purchase. (The ratio can exceed 1.00 if a company has made acquisitions and booked intangibles larger than its shareholder equity).
Five of the DJIA stocks (petroleum: Exxon and Chevron and financial: Goldman Sachs, J.P. Morgan Chase, Travelers) were excluded from the study. The accounting rules for these businesses are distinct due to the nature of the asset categories (oil and money) they trade in and do not allow for comparable and accurate analysis. View our methodology.
It’s time to stop treating “human capital” as a buzzword and start managing it with the same level of rigor and diligence as tangible capital. This can be done. It must be done. Talent Valuation will show you how.