TABLE OF CONTENTS If an employee's time can be sold to a client at $120 per hour, the business will not pay that person $120 in wages. Why? Because the purpose of revenue is to satisfy:
Staff costs (wages, bonuses, salaries, commissions, etc.)
Expense costs (rent, electricity, marketing, accounting, etc.)
Debt servicing
Return to shareholders
Business expansion
Whereas it is true that debt can be also used to satisfy these ends, debt requires a cash flow (generated, or eventually generated, from revenue) capable of repaying the debt.
Revenue generation, therefore, is a critical determinant of a firm's success.
"If employees are nonproductive for every hour of their employment, how much revenue will the firm make?" In most cases, the organization will not make any revenue. Hence, there is an almost perfect correlation, and causal effect, between an organization's employment levels and the revenue it is capable of generating. When one organization generates more revenue than another organization of the same size in the same industry, it is because the high-performing firm is leveraging its knowledge assets, relationship assets, emotional assets, and time assets more effectively. In other words, the factor that distinguishes high-performing firms from low-performing firms is the management of intangibles, or executive skill in the field of intangible management.
The Financial Accounting Standards Board (FASB) has long argued that intangibles need to be measured. The FASB has encountered difficulties in the measurement of intangibles and their disclosure...
