Author: Stephan Szugat
Word Count: 915
mmaterial Values in Business Management
Maybe you have already heard that in some ways immaterial values
are important for business management. But you might not found
how to bring them into your management processes or into your
reporting packages. However, first of all we should be clear,
what immaterial values are? Well, this includes the balance
sheet information about intangible assets, but is going far
As we all know, decisions are mostly based on feelings or emotions,
than on logical judgement. A feeling is an energy. Energy is
not material, it is immaterial. The overall emotions or motivation
of employees in a business is a immaterial value, it could have
positive and negative impact on the business development. Does
sound very esoterical for you? Might be, but today we know that
our emotions drive a lot of our life.
Not only the feelings of the emplyoees have an impact on the
business development, also the feelings of potenial customers
have it. These customer feelings could be measured as customer
satisfaction, as how customers see the company or itís products
and services and so on. There is more energy, which is immaterial,
included in our business life as we are aware of.
Until today we might know about these energies or have read
that businesses have to be more aware of them. But to find Solutions
which are able to measure these energies are not very common
and hard to find. Business Management still uses hard figures
such as ratios based on financial values and just forgets that
there has been more than only the numbers from the accounting
and the money in the pocket.
If you only look to the accounting figures of a business, you
only look to this company as if you were looking at an iceberg.
You only see a fraction of the iceberg, only what is above the
surface. Everything below the surface is out of your view. While
the iceberg is melting away, it still brings up new parts of
it self. But you only see this new parts, when the iceberg is
melting. Itís just the same with the accounting figures as soon
as you see them they are gone. That means they are old, itís
nice to knew them, but they relate to business already accomplished.
The accounting figures are just like to iceberg when it comes
above the surface while it is melting away. Now, wouldnít it
be great to see the whole iceberg, even if a big part is below
the surface? Yes, it would be great. The immaterial values of
your business are just below surface. If you bring them up,
you could see the whole picture of your business.
Running a business only focusing on profit could lead to running
into a collapse. It might take time, but soon customers and
employees will find out that just the profit counts to a specific
company. Well, itís correct, no business could survive without
profit, but first of all every business has to make profit on
immaterial items, such as image, motivation of employees and
One day from these immaterial profits the financial profit arises.
Thatís the theory. Propably you already read about this, but
have you found a way to measure immaterial values of your business?
Itís not that difficult, but it needs some thoughts. First of
all it is important to make a list of immaterial values which
have the most impact on the business development. When this
has been finished, methods to measure and valuate the immaterial
values have to be found.
And at last, the values for all the selected immaterial items
have to be analysed regularly. Setting up such a Reporting System
for immaterial values could be a long lasting task. You might
try to do it with a spreadsheet program or with a database,
but either way will take itís time. Using ready made Standard
Software might be another option, but there are not much choices.
In case you use the Balance Scorecard, you might think having
all the data mentioned above and you might think having a good
solution for analysation.
The Balance Scorecard has itís advantages, but for a short,
fast and regular analysis of immaterial values it is far to
complex and much to slow. There is just the need to measure,
store and analyse some data. About 30 items will be enough to
have an overview of immaterial values and some material values
as well. Most of the necessary data are usually already stored
in every business. They only need to be concentrated into one
table and have to be analysed.
Are immaterial values important for every business? Yes. This
includes big businesses as well as the one-man-business, retail
stores, mechanics, freelancer and so on. You may find more information
on immaterial values in business management, when searching
for Early-Warning-System, Early-Recognition-Sytems and something
similar. You are able to find one or the other immaterial value
included in Management Methods, Ratio Systems and Financial
Analysis. But still, most Reports and Measurement System are
based on financial data.
A Solution which every business, no matter of size, could use,
is the abenetis ERS (Early-Recognition-System). It is called
Early-Recognition-System, because with the used immaterial values
every business could be aware of tendencies in itís business
development soon. At the moment the abenetis ERS is available
only as Online-Service, but could soon be delivered as Intranet-Version,
too. More details are available at our ERS-Subscription Page.
About the author:
Stephan Szugat is founder of abenetis a web-based service about
Business Management Solutions focusing on the core needs of
business management. This includes operational and strategic
analysis especially Early-Recognition-Systems, Knowledge-Management
and other Services for small and mid-sized businesses. He has
approx. 15 years experience in the Finance and Accounting Area
from companies of different size and from various industries.
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