Skandia AFS is a federation of financial organizations, headquartered in Sweden and operating in the UK, USA, Colombia, Spain, Switzerland, Luxembourg, Germany, and Hong Kong. It is one of the few organizations in the world that has played an active role in establishing the framework for the valuation of Intellectual Capital.
The company appointed a Director of Intellectual Capital in 1991 (Leif Edvinsson), whose job was to discover the possible ways to value the intangible (or hidden) assets of the organization and to develop a model of management of Intellectual Capital. In 1993 a "Controller" of Intellectual Capital was appointed, with the objective of developing a series of information and accounting systems for Intellectual Capital, which could be integrated with traditional financial accounting. Skandia's Intellectual Capital controller monitors and analyzes assets that do not appear on traditional balance sheets.
Since 1993 Skandia has introduced a supplement to its financial reports that reflects the growth of the Intellectual Capital of the organization. The data entered in Skandia's annual balance sheet on Intellectual Capital does not translate directly into financial results, but the fundamental objective of the organization is to understand the relationship between these first indicators and the financial results obtained.
Skandia's finance department worked with each of the companies that make up the organization, with the aim of developing a set of performance indicators based on the specific situation of each of these companies. All the group companies developed indicators in five areas: finance, customers, people, processes, and renewal and development. They called this set of indicators “Navigator”, and the group companies used it to visualize how they were managing their Intellectual Capital assets.
Skandia's Director of Intellectual Capital describes the following types of non-financial indicators that can help a company determine direction and predict success in creating and managing its Intellectual Capital:
- The number of ideas that customers bring to the organization and how they are developed The number of software packages in relation to the number of employees The number of people connected to the Internet The number of customer-employee relationships The number of good ideas arisen The level of education and training of company employees The number of good ideas exchanged between two major departments The number of registered patents and published articles.
Each company in the Skandia group is developing or has to develop this set of indicators in the five areas mentioned above, to monitor the creation and management of its Intellectual Capital. The set of indicators (Navigator) is different for each company. Some of them have been performing this type of measurement for several years and focus more on the trend than on the result of a specific year. The process of creating the set of indicators is very complex and time-consuming, so the companies that make up Skandia are at different stages of the process. Below we present the set of indicators used by two companies of the Skandia group:
Skandia International Aviation
Financial Approach:
- Insurance result / Employee Loss rate (airlines) lower than the market average.
Customer Focus:
- Visits to the company Days dedicated to visiting clients Market coverage.
Process Approach:
- PC's / employee Laptops / employee.
Human Focus:
- Empowerment index of 1000 (the empowerment index is a Swiss Public Institute of opinion studies that measures employee motivation, help within the organization, being aware of the demands of quality, responsibility - authority, and competence).
Renewal and Development Approach:
- R&D expenses / Administrative expenses IT expenses / Administrative expenses.
Skandia Data Information Technology
Financial Approach:
- Billing / Employee. Customer time / employee attention.
Customer Focus:
- Customer satisfaction survey.
Process Approach:
- Function Points / employee per month (Function points, developed by IBM, are a way of measuring the size of systems in terms of performance and complexity)
Human Focus:
- Empowerment index.
Renewal and Development Approach:
- Quota of hours of “Methods and Technology”. Quota of shared training hours. Quota of development hours.
Based on "The Knowledge Management Practices Book", developed by "The Global Best Practices Research team", January 1998.
