INTELLECTUAL CAPITAL:

Intellectual capital is the amount by which the

market value of a firm exceeds its tangible
(physical and financial) assets less liabilities.
This contrasts with physical and financial
forms of capital; all three make up the value
of an enterprise. Measuring the real value and
the total performance of intellectual capital's
components is a critical part of running a
company in the knowledge economy and
Information Age. Understanding the
intellectual capital in an enterprise allows
leveraging its intellectual assets. For a
corporation the result will optimize its stock price

It is defined also as collective knowledge (whether or not documented) of the individuals in an

organization or society. This knowledge can be used to produce wealth, multiply output of
physical assets, gain competitive advantage, and/or to enhance value of other types of capital

Classifications of Intellectual capital:

Human capital:

The value that the employees of a business provide through the application of skills, know-how
and expertise. Human capital is an organization’s combined human capability for solving
business problems and exploiting its Intellectual Property. Human capital is inherent in people
and cannot be owned by an organization. Therefore, human capital can leave an organization
when people leave, and management has failed to provide a setting where others can pick up
their know-how. Human capital also encompasses how effectively an organization uses its
people resources as measured by creativity and innovation.

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Structural capital:

The supportive non-physical infrastructure processes and databases of the organization that
enable human capital to function. Structural capital includes processes, patents, and trademarks,
as well as the organization’s image, organization, information system, and proprietary software
and databases. Because of its diverse components, structural capital can be classified further into
organization, process and innovation capital. Organizational capital includes the organization
philosophy and systems for leveraging the organization’s capability. Process capital includes the
techniques, procedures, and programs that implement and enhance the delivery of goods and
services. Innovation capital includes intellectual property such as patents, trademarks and
copyrights, and intangible assets. Intellectual properties are protected commercial rights such as
patents, trade secrets, copyrights and trademarks. Intangible assets are all of the other talents and
theory by which an organization is run.

Relational capital:

Consisting of such as customer relationships, supplier relationships, trademarks and trade names
(which have value only by virtue of customer relationships) licenses, and franchises. The notion
that customer capital is separate from human and structural capital indicates its central
importance to an organization’s worth

Managers who are interested in developing intellectual capital for their own organizations
should follow these eight steps:

1. Make knowledge management a requirement for evaluation purposes for each employee in
your organization - assign personal targets to intellectual capital development. For example,
companies can have each employee aim to learn something that the organization currently does
not know;

2. Formally define the role of knowledge in your business and in your industry -find and secure
the greatest resources of intellectual capital;

3. Assess your competitors’ and suppliers’ strategies and knowledge assets - find and secure the
greatest resources of relational capital;

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4. Determine the extent of intellectual capital resources available to you from government and
industry associations;

5. Classify your intellectual portfolio by producing a “knowledge map” of your organization

- determine in which people and systems knowledge resides;

6. Evaluate the relative worth of the intellectual capital - use monetary values if at all possible, or
company - developed indices or metrics;

7. Identify gaps you must fill or holes you should plug based on weaknesses relative to
competitors, customers and suppliers; and

8. Assemble your new knowledge portfolio in an intellectual capital addendum to your annual
report and continuously assess the development of your intellectual capital.

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KNOWLEDGE WORKER

Knowledge workers are workers whose main capital is knowledge. Typical examples may
include software engineers, doctors, architects, engineers, scientists, public accountants, lawyers,
and teachers, because they "think for a living”

It also defined as all workers involved in the chain of producing and distributing knowledge
products.

Knowledge workers spend 38% of their time searching for information. They are also often
displaced from their bosses, working in various departments and time zones or from remote sites
such as home offices and airport lounges

Knowledge workers are employees who have a deep background in education and experience
and are considered people who "think for a living." They include doctors, lawyers, inventors,
teachers, nurses, financial analysts and architects. As businesses increase their dependence on
information technology, the number of fields in which knowledge workers must operate has
expanded dramatically.

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Even though they sometimes are called "gold collars", because of their high salaries, as well as
because of their relative independence in controlling the process of their own work, current
research shows that they are also more prone to burnout, and very close normative control from
organizations they work for, unlike regular workers.

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CHALLENGES THAT FACE HR EXCUTIVES IN EGYPT:

For the research made by SHRM in 2012, that was about the challenging that face HR
executives, if we replicate the same research in Egypt I think we will not get the same conclusion
because Egypt and employees in Egypt have different perceptions, lifestyle and interests.

The most effective tactics that can be most effective in Egypt:

1- Retaining and rewarding the best employees

When the company initiates a rewarding system or follows the motivation theories “goal
setting theory” that shall motivate and maintain employees.
2- Obtaining technology and optimizing technological capital investment
3- Providing flexible work arrangements
4- Offering a higher total rewards package than competitors
5- Finding employees with the increasingly specialized skills the company need

Thank You!
MAGDY SABER ELSAYED IBRAHIM

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