When considering the value and importance of talent, executives need look no further than the stock market. Investors place a tremendous value on human capital in organizations. For example, consider Google, Inc.—a global technology leader focused on improving the ways people connect with information. Based in Mountain View, California, Google is a Fortune 500 company traded on the NASDAQ stock market. Google is a very profitable company with revenues of $16.6 billion in 2007, and a net income of $4.2 billion (Annual Report, 2008).
Google reported total assets on its balance sheet of $25 billion and included not only the current assets of cash, marketable securities, accounts receivable, and inventories, but property, plants, equipment, and even goodwill. However, the market value is much higher. At mid-year the market value was $105 billion. In essence, the tangible assets represent only 23.8 percent of the market value. Investors see something in Google that has a value much greater than the assets listed on the balance sheet.
This “hidden value,” as it is sometimes called, is the intangible assets, which now represent major portions of the value of organizations, particularly those in knowledge industries, such as Google. But what comprises the intangible assets? What do investors feel adds an additional $80 billion to Google’s overall worth? While we don’t have a way to pinpoint it exactly, human capital is certainly a big part of it.
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