Deck 4: Assessing the Intellectual Assets of the Firm

Question 1

Human capital includes

A) an individual's capabilities, knowledge, and skills.
B) the relationships between people.
C) the output from assembly line employees.
D) an improved product.

Answer 1

A

Question 2

Intellectual capital is the difference between the market value and the book value of a firm. Intellectual capital can be increased by

A) increasing retention of below average workers.
B) attracting and retaining knowledgeable workers.
C) decreasing labour costs.
D) increasing the turnover of employees.

Answer 2

B

Question 3

Many companies use referrals by current employees as a source for new hiring because

A) it is more expensive than the fees paid to headhunters.
B) current employees are very competitive and want to outperform those they refer.
C) it is a good test of employee loyalty.
D) current employees are normally very careful in recommending someone because their credibility is on the line.

Answer 3

D

Question 4

BC Biomedical Laboratories, which has been named one of Canada's 'Best Employers' attributes their success to having a

A) pyramid organization.
B) flat organization.
C) top-down organization.
D) bottom-up organization.

Question 5

To take advantage of investment in human capital a firm should

A) rotate workers through functions in the company as quickly as possible.
B) refrain from training individual employees.
C) establish practices that will enhance employee retention.
D) none of the choices are correct

Question 6

Managing a knowledge-intensive workforce is very challenging. The best way for a firm to manage their workforce is to

A) retain knowledge workers.
B) attract the brightest employees.
C) balance efforts in the attraction, selection, and retention of top talent.
D) weed out less effective employees.

Question 7

Tacit knowledge

A) is the same as explicit knowledge.
B) is found mostly at the lower levels of the organization.
C) can be codified but not reproduced.
D) can be accessed only with the consent of the employees because it is in the minds of the employees.

Question 8

Attracting and retaining human capital is a challenge for many firms today. Firms experiencing high turnover should

A) focus on increased recruiting.
B) decrease money spent on human capital.
C) make their work environment less stimulating.
D) adopt effective retention strategies.

Question 9

As the competitive environment changes, strategic management must focus on different aspects of the organization. Recently strategic management has moved from focusing on

A) intangible resources to tangible resources.
B) tangible resources to intangible resources.
C) working capital to fixed capital.
D) fixed capital to working capital.

Question 10

In terms of retaining human capital, Magna's strategy is to

A) allocate 10 percent of pre-tax profits to employees
B) cultivate the creative potential of its workforce
C) distribute 6 percent of profits to senior managers
D) all of the choices are correct

Question 11

Many firms try to protect their human capital and diversify the ownership of their vital knowledge through the following means, except

A) by emphasizing teamwork.
B) by developing learning programs.
C) by recruiting talented individuals from the best research institutions.
D) by shackling employees with 'golden handcuffs.'

Question 12

Firms must compete for top talent. Whirlpool Canada dealt with conflicting demands of family and work by

A) paying for daycare at all offices across Canada.
B) offering additional work/life balance days to each employee.
C) paying 6% of profits to senior managers.
D) developing a flat organization.

Question 13

New knowledge involves the continual interaction between ___________ and ___________ knowledge.

A) intellectual; pragmatic
B) theoretical; practical
C) tacit; explicit
D) detailed; tacit

Question 14

According to Alan Davidson, an industrial psychologist, the single best predictor of an employee's future behaviour is

A) past behaviour.
B) the individual's IQ.
C) academic accomplishments.
D) standardized test scores.

Question 15

At Citibank, a talent inventory program keeps track of 10,000 employees worldwide in order to

A) fire poor performers.
B) track what skills they need to work on.
C) discourage global growth.
D) administer progressive discipline.

Question 16

Maintaining a competitive workforce is very challenging in today's economy. The role of evaluating human capital, in recent years, has

A) increased.
B) decreased.
C) become less important.
D) remained the same.

Question 17

Changes in our economy have forced firms to be more concerned with protecting their

A) tangible resources.
B) physical assets.
C) working capital.
D) knowledge workers.

Question 18

_________ capital includes creativity and problem-solving ability.

A) Physical
B) Human
C) Social
D) Emotional

Question 19

Recently, in developed countries, a knowledge worker's loyalty to his or her employer has __________ compared to his or her loyalty to his or her profession and colleagues.

A) increased
B) decreased
C) remained the same
D) no correlation when

Question 20

In the knowledge economy, if a large portion of a firm's value is in intellectual and human assets, the difference between the company's market value and book value should ___________ a company with mostly physical and financial assets.

A) be equal to
B) be smaller than
C) be larger than
D) not be correlated with

Question 21

Generally, employees are most likely to stay with an organization if

A) the employer provides high salaries to technology professionals.
B) the organization's mission and values align with the employee's mission and values.
C) the firm is in a high-tech industry.
D) the mission and values of the organization change often.

Question 22

The 'two-plus-two-plus-two' program is used by GlaxoSmithKline for

A) developing human capital.
B) attracting intellectual capital.
C) attracting and developing social capital.
D) retaining production workers.

Question 23

Which of the following answer accurately summarizes the downsides of social capital?

A) high social capital may breed "groupthink," i.e., a tendency not to question shared beliefs.
B) socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive.
C) individuals may become less willing to collaborate on joint projects.
D) high social capital may breed "groupthink," i.e., a tendency not to question shared beliefs and socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive.

Question 24

Bridging relationships

A) create a high level of solidarity amongst its members.
B) bring together groups that may otherwise be unconnected.
C) have high levels of trust.
D) have people in the network willing to 'go the extra mile'.

Question 25

Structural holes can be described by:

A) the social gap between two groups
B) the sharing of information through an informal communication network called the grapevine
C) creating value through collaboration
D) the downsides of groupthink

Question 26

To capture key employees from competitors, firms may attract the symbolic leader of a group within a competing firm and hope others will follow. This has been termed

A) the 'Columbus effect.'
B) the 'Pied Piper effect.'
C) strategically competitive hiring.
D) the 'tech exit' effect.

Question 27

The benefits of high social capital include

A) engagement and loyalty.
B) skill and ability.
C) values that are not a part of the company's culture.
D) low levels of persistence.

Question 28

Recent research by McKinsey Global Institute suggests that by 2020, the worldwide shortage of highly skilled, college-educated workers could reach

A) 2 million
B) an all-time low
C) 12 million
D) almost 40 million

Question 29

The use of information technology (e.g., email) has increased in recent years in many organizations. This has helped to

A) increase social capital.
B) make more effective use of time in every situation.
C) restrict social network growth.
D) create smaller social networks.

Question 30

Social capital is a source of strength to many firms. Firms leverage their social capital in an effort to create competitive advantages. A firm's social capital is based on

A) an employee's individual abilities.
B) the relationships among a firm's employees.
C) a firm's allocation of financial resources.
D) an individual's knowledge.

Question 31

In a 360-degree evaluation and feedback system, __________ rate a person's skill and performance.

A) superiors
B) direct reports
C) colleagues
D) all of the choices are correct

Question 32

The creation of knowledge assets is typically characterized by

A) high upfront costs and subsequent high variable costs.
B) high fixed costs and high variable costs.
C) low upfront costs and high variable costs.
D) high upfront costs and low variable costs.

Question 33

Human capital and social capital are vital for superior firm performance. If a firm has strong human capital, the firm may exploit this by building social capital. This can be accomplished through

A) requiring workers to work independently of each other.
B) decreasing the interaction of departments within the firm.
C) encouraging the sharing of ideas between employees in the firm.
D) structuring the firm with rigid departmental and employee divisions.

Question 34

Many Microsoft employees have left to form venture capital and technology start-ups. In general, when such employees leave, they take with them

A) tangible assets.
B) patents.
C) physical assets.
D) intellectual capital.

Question 35

Which barrier to collaboration occurs when people are unwilling to share?

A) The not-invented-here barrier
B) The hoarding barrier
C) The search barrier
D) The transfer barrier

Question 36

Social capital has many potential benefits. However, some argue that social capital

A) is always beneficial to a firm.
B) may or may not be beneficial to a firm.
C) usually restricts the productivity of employees.
D) always hurts firm performance.

Question 37

Which barrier to collaboration occurs when people are unable to find what they are looking for?

A) The not-invented-here barrier
B) The hoarding barrier
C) The search barrier
D) The transfer barrier

Question 38

Which barrier to collaboration occurs when people are unable to work with the people they don't know well?

A) The not-invented-here barrier
B) The hoarding barrier
C) The search barrier
D) The transfer barrier

Question 39

Which barrier to collaboration occurs when people are not willing to provide help to others?

A) The not-invented-here barrier
B) The hoarding barrier
C) The search barrier
D) The transfer barrier

Question 40

Sharing knowledge within an organization helps to build social capital. This can be accomplished through

A) top-down management.
B) providing employees with daily newspapers.
C) hiring for skill.
D) one-on-one conversations.

Question 41

360-degree evaluation and feedback systems address many of the limitations of traditional approaches of evaluating human capital.

Question 42

The more reliance a firm has on intellectual capital the closer its book value will be to its market value.

Question 43

Solectron invests time and resources in training employees annually because technology changes so fast that 20% of an engineer's knowledge becomes obsolete each year.

Question 44

Companies have found that referrals from their own employees are generally an ineffective approach to recruiting top talent.

Question 45

Attracting top talent is a challenge for many organizations. In today's economy, knowledge workers typically have multiple possible employment opportunities.

Question 46

The text suggests that talented professionals are typically most concerned about financial rewards. Money is the top reason why such employees take or leave jobs.

Question 47

Rather than focus solely on financial considerations, many firms offer attractive benefits to entice employees to stay. These may include on-site stores, ATMs and athletic facilities.

Question 48

Writers have defined intellectual capital as the difference between the market value and book value of a firm.

Question 49

Effective protection of intellectual property is necessary to obtain

A) increased diminishing returns.
B) financial investment in an undertaking.
C) conceptual roots going back centuries.
D) zero marginal gains.

Question 50

The importance of intellectual capital has decreased in recent years. For this reason, many firms have placed greater attention on attracting, but not on developing or retaining talent.

Question 51

Encouraging widespread involvement is one of the important ways of developing human capital.

Question 52

In most effective evaluation and reward systems employees only receive evaluation and feedback from their immediate supervisor.

Question 53

The most effective method of improving a firm's retention of top talent is to intensify its hiring efforts.

Question 54

Creation of new knowledge typically involves the continual interaction of explicit and tacit knowledge.

Question 55

BC Biomedical Laboratory was named one of Canada's "Best Employers" for the third year running.

Question 56

Technical skill is a necessary and sufficient condition for hiring an employee.

Question 57

The capacity to build and protect competitive advantage rests on

A) money.
B) police surveillance.
C) employee unions.
D) knowledge assets and competencies.

Question 58

Human capital consists of the "individual capabilities".

Question 59

Merck is well known for its excellent use of human capital.

Question 60

Knowledge workers are more loyal to their companies than traditional workers.

Question 61

What is intellectual capital and what is its effect on the ratio of a firm's market value to book value?

Question 62

Explain how technology can help employers cope with the loss of knowledge when employees leave.

Question 63

Protecting a firm's intellectual capital requires a concerted effort.

Question 64

Provide two examples of each of the three types of intellectual capital discussed in the text.

Question 65

Describe what is meant by the 'three-legged stool'.

Question 66

Why is the management of knowledge and knowledge professionals so critical in today's organizations?

Question 67

Recent research by McKinsey Global Institute suggests that by 2020, the worldwide shortage of highly skilled, college-educated workers will no longer be a problem in North America.

Question 68

Developing social capital is risky for an organization because social capital is specific to individuals and remains with the employee if he or she leaves the organization.

Question 69

Once a knowledge asset (e.g., software) is developed and paid for, it can be used many times at very low cost as long as it doesn't have to be substantially modified each time.

Question 70

Social capital is based on the network of relationships within a firm, not in the skills and abilities of an individual employee.

Question 71

Social capital is found in the knowledge, skills, and abilities of individual employees.

Question 72

The use of email can be distracting to employees when they use it excessively or for personal reasons.

Question 73

Describe the process of "hiring via personal networks".

Question 74

Discuss the attributes of human capital. Give examples of how firms work to develop and retain it.

Question 75

How can the effective management of diversity enhance the social responsibility goals of an organization?

Question 76

One possible negative outcome of building social capital in an organization is "groupthink"-a tendency not to question shared beliefs.

Question 77

Patents typically provide long-term protection for a firm since they do not expire.

Question 78

In an effort to attract and retain top talent, firms provide financial and non-financial rewards to their employees. Give examples of each and describe how the incentives you have chosen may impact individual employees.

Question 79

Many firms attempt to codify the tacit knowledge of employees in an effort to retain that knowledge after the employee leaves the firm.

Question 80

Discuss the adage "hire for attitude, train for skill." What are its implications for the attraction, training, and retention of top talent?