C E N T R E F O R P U B L I CS E R V I C E I N N O V A T I O N

November 2007

Human CapitalDevelopmentReport

An effective public service depends on the capacity of its people. To build this capacity,the public service must change its approach to development. It must be less fragmented, lessprescriptive and less supply driven. It must be more practice-oriented, more logically sequencedand more responsive to the changing structures, needs and requirements of the Public Service.

(Minister of Public Service and Administration Budget Vote Speech, 2007)

CENTRE FOR PUBLIC SERVICE INNOVATION

in collaboration with

THE SOUTH AFRICAN MANAGEMENTDEVELOPMENT INSTITUTE (SAMDI)

presents the third

F U T U R E W A T C H R E P O R THuman Capital

Development Report

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FUTURE WATCH

FOREWORD 4ACKNOWLEDGEMENTS 6ACRONYMS 8INTRODUCTION 10The Intangible Economy 12

Human Capital and related concepts 13

Relevance to the South African Public Service 17

CRITICAL REVIEW OF TRENDS INHUMAN CAPITAL DEVELOPMENT(HCD) AND RELATED CONCEPTS 22Human Capital Development (HCD) 23

Human Capital Development in an organisational context 32

CHAPTER 1

CHAPTER 2

Contents

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MEASURING THE RETURN TOHUMAN CAPITAL DEVELOPMENT 38Human Capital Development Framework 39

Intangible Assets Monitor 41

Balanced Scorecard 43

Comparing IAM and BSC 45

Skandia Navigator“and IC Index“ 45

Conclusion 47

IMPLEMENTING HCD STRATEGIES INORGANISATIONS UNDERGOING CHANGE 48Conclusion 50

RECOMMENDATIONS 52CASE STUDIES 56Purpose of the Case Studies 57

Case study 1: West Sussex County Council 57

Case study 2: Enhancing knowledge exchange through Communities of

Practice at the Inter-American Development Bank 58

Case study 3: Measuring the value of human capital investments: the SAP case 60

Case study 4: South Gippsland Shire Council (SGSC) 62

Case study 5: Enhancing Skills Development through e - Learning 64

Case study 6: Toyota South Africa Motors (Pty) Ltd. 65

Case study 7: State of Virginia Department of Education 67

CHAPTER 5

CHAPTER 4

CHAPTER 6

CHAPTER 3

FOREW

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Scaling up on Public Sector HumanDevelopment

Sustainable development reflects a processthat meets the needs of the present withoutcompromising the ability of future generations tomeet their own needs (Human DevelopmentReport: UNDP, 2003).

This third Future Watch Report, titled TheHuman Capital Development Report (HCD),advocates the need for continuous growth and life-long learning for individuals and institutions to meetthe challenges of service delivery. The report pointsout the many opportunities that exist for better co-ordination and alignment of development initiativesthat are already taking place within the Public Service.

The HCD Report considers local andinternational good practice that can be rapidly appliedto address the capacity challenges faced bygovernment in ensuring effective service deliveryby the Public Service. The use of job rotation andself-managed capacity development to improvehuman capital are just some of the recommendationsmade in the report.

One of the shortcomings of Human CapitalDevelopment is the limited systematic collectionand the analysis of data on the quantity, quality andperformance of Human Capital Development in thePublic Sector in South Africa. This shortcoming isdiscussed in the Report as a serious oversight thatneeds to be addressed urgently.

Furthermore, it is clear that we need toreconsider how induction, internal training,mentoring, coaching, and monitoring are conductedin the Public Service. In addition, it is important toimplement and understand exit interviews to improvestaff retention. The Report will greatly assist thosesections of government that need to address vacancyand retention challenges and therefore respond tocapacity deficits.

A strong and achieving Public Service isnecessary for a competitively successful nation. Thispublication aims to facilitate the sharing of experiencesand good practices through a comprehensive but

easily accessible text. The Future Watch - HCDrecommendations should be used in conjunctionwith the initiatives government is currently embarkingon that are providing effective human resourcesthat are responsive to the needs of the citizens.

Let us therefore move forward to fast trackservice delivery and continue to build an effectiveand efficient Public Service that meets the citizensneeds. For us to achieve a sustainable and forward-thinking Public Service the necessary resources,infrastructure, research, training and legal frameworkneed to be established.

I congratulate both the Centre for PublicService Innovation (CPSI) and South AfricaManagement Development Institute (SAMDI) onthis joint research publication.

Geraldine Fraser-MoleketiMinister for Public Service and Administration

Foreword by the Minister for PublicService and Administration.

ACKNOW

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The CPSI would like to thank all thosewho shared their experiences and reflections,and who provided input and direction onHuman Capital Development.

1. Imraan Patel - DST2. Dr Thabo Rapoo - GPG3. Lindani Mthethwa - CPSI4. Fakazile Myeza - CPSI5. Tshidi Masutha - SAMDI6. Leonore Neethling - SAMDI7. Rufus Mmutlana - SAMDI

The CPSI would also like acknowledgeKNC and Associates for their work inresearching, preparing and compiling thispublication.

F U T U R E W A T C HThe Learning Government

ACRONY

MS

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BSC Balanced ScorecardCBO Community Based OrganisationCoP Community of PracticeCPSI Centre for Public Service InnovationDIC Direct Intellectual CapitalDPSA Department of Public Service and AdministrationDti Department of Trade and IndustryECoP External Community of PracticeGED General Educational DevelopmentHCD Human Capital DevelopmentHCDF Human Capital Development FrameworkHRD Human Resource DevelopmentHRM Human Resource ManagementHSRC Human Science Research CouncilIAM Intangible Assets MonitorIC Intellectual CapitalICAM Interactive Learning, Communication and ManagementICT Information and Communication TechnologyIDB Inter-American Development BankIIP Investors in PeopleKM Knowledge ManagementMCM Market Capitalisation MethodsMIDP Motor Industry Development ProgrammeNGO Non-Governmental OrganisationNHRDS National Human Resource Development StrategyNSDS National Skills Development StrategyOSCA Office of Strategic Crime Assessments (Australian Public Service)PDP Personal Development PlanPSLDP Presidential Strategic Leadership and Development ProgrammeROA Return on AssetsSAMDI South African Management Development InstituteSEP Senior Executive ProgramSETA Sector Education and Training AuthoritySGSC South Gippsland Shire CouncilSLC Strategic Learning ContractSML Self-Managed LearningSMS Senior Management ServiceSNA Social Network AnalysisTM Talent ManagementVCoP Virtual Community of Practice

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F U T U R E W A T C HThe Learning Government

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The Centre for Public Service Innovation (CPSI)is an initiative of the Minister of Public Service andAdministration, established to identify, support and nurtureinnovation in the public service with a view to improvingservice delivery. This CPSI initiated report is the third ina series of Future Watch reports and it explores innovativeapproaches to Human Capital Development for publicservice employees and the critical role of organisationallearning. It hopes to introduce innovative approaches andthinking to human capital development processes andinitiatives currently underway within the broader publicservice.

This Future Watch report aims to engage decisionmakers and other interested parties on emerging trendsin Human Capital Development (HCD) with a view offacilitating the successful introduction of these trends intothe work of government departments and agencies anddevelop a future-oriented framework for HCD withinthe context of the South African public service.

The adoption of a HCD framework in the publicservice should enhance skills development and retentionwithin the public service to enable the provision of firstrate public services. An indication of the strategic importancethe Minister of Public Service and Administration attachesto this was highlighted in her 2004/2005 budget votespeech when she noted:

My vision for the future involves building themillion or so members of the public service into a professionalcorps motivated, skilled people who provide the kinds ofpublic services that address poverty and facilitate prosperity .1

She notes further thatIn the modern economy, service delivery

techniques and practices are changing and improving atan astonishing rate. This means that the skills and knowledgebase in the public service must be continuously upgradedand developed so that we are able to make use of newpossibilities that constantly present themselves .

The public service is human capital intensive andhuman capital is the primary source for organisationalinnovation and renewal, hence HCD has the potential toaddress effectiveness and efficiency issues within the publicsector and increase productivity. In addition, budgetarypressures make it imperative that the state learn how tomake better use of the employees it currently has at itsdisposal.

The commitment by government to improveSouth Africa s human development index, enhance social

development and increase international competitivenessare well documented. The over-riding priorities for thegovernment have been:

¥ To increase skills to improve productivity and efficiency of government and theprivate sector, competitiveness of industry, business commerce and service delivery so asto remain competitive within the globaleconomy

¥ To address the challenges of social developmentand the eradication of poverty.

Some of initiatives in the field that have beenintroduced since 1994 include:

¥ Human Resource Development Strategyfor the Public Service builds on thefoundations that have previously beenput in place through the National SkillsDevelopment Strategy (NSDS) and theNational Human Resource DevelopmentStrategy (NHRDS). The HRD Strategyaims at addressing the major humanresource capacity constraints currentlyhampering the effective and equitabledelivery of public services.

¥ Skills Development Act was passed in1998, introducing a new approach to thepromotion and development of workrelated skills in South Africa. The overallvision is of an integrated skills development system, which promotes growth inemployment, social development and the economy, through focusing on integratededucation, training and employmentopportunities.

¥ Investors In People Standard (IIP) providesa simple framework to achieve successthrough people. It aims to change theworkplace into an active lifelong learningenvironment and looks at all options ofhow the organisation can be improvedthrough staff development which in turnwill lead to job satisfaction and thusincreasing the efficiency of staff.

The adoption of a comprehensive HCDframework would enhance all the above strategies asHCD represents a planned, strategic and integratedapproach to managing and developing the entire valuechain of human capital on whose skills and capabilities thesuccess of the public service depends.

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Introduction

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The Intangible EconomyThe availability and use of knowledge

represents a key challenge that has been identifiedby both private and public sector organisationsglobally. The industrial revolution of the 18thcentury was the catalyst that transformedagricultural economies into industrial ones. Asimilar but less definite shift started to occur inthe 20th century when the movement ofinformation became quicker than physicalmovement, ushering in the Information Age(Wikipedia). In this era, information was a scarceresource and competitive advantage was createdthrough the generation, capture and distributionof information. When information was no longerconsidered a scarce resource the focus turnedaway from the mere generation of informationand towards how it can be more effectively utilisedfor economic benefit. This environment is whatis commonly considered to be the knowledgeeconomy. Some of the literature indicates thatthis trend has developed further and that thecurrent economic era is the Intangible Economy.

In the Intangible Economy there are fourfactors of production. They are knowledge assets(what people know and put into use), collaborationassets (who people interact with to create value),engagement assets (the level of energy andcommitment of people), and time quality (howquickly value is created). These are the four keyresources from which economic activity andcompetitive advantage are primarily derived anddelivered (Wikipedia). From this, the emergingvalue of human capital becomes clear.

The relative importance of the previouslymentioned intangibles will vary between sectors butin the future, the effectiveness of any organisationwill primarily be determined by the manner in whichthe intangible assets are managed and developed.

Thus the rules and practices that determined successin the industrial economy of the 20th century needto be rewritten for an interconnected world whereresources such as know-how are more critical thanother economic resources.

The public sector is an example of anorganisation that is fundamentally dependent onthe skills and capabilities of the people in itsemploy. At the fifth global forum on re-inventinggovernment Geraldine Fraser-Moleketi, theMinister of Public Service and Administrationemphasised this when she said:

The development of human capitalwithin the public sector directly impacts on theability of the state to create an enablingenvironment for growth, poverty alleviation anddealing with the challenges relating to globalsecurity. This is particularly evident in developingcountries. The state needs to embrace the notionof human capital as a resource impacted on bythe changing nature of the global environment,and be prepared to consider new staffing practicesthat challenge many of the assumptions uponwhich bureaucracies have historically been built .2

Towards the end of 2004, the Presidentidentified the urgency for Government to ensurethat the state machinery had the requirednumbers of properly qualified, motivated andresourced people dedicated to ensuring thesuccess of our social and economic developmentinitiatives. This culminated in a report preparedby the Human Science Research Council (HSRC)for the Department of Public Service andAdministration (DPSA), which highlighted theskills needs of the developmental state,particularly with regard to South Africa, andidentified key short, medium and long termstrategies to address these needs.

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Human Capital andrelated concepts

The literature on the subject defines humancapital as the know-how, education, work-relatedcompetencies and psychometric assessments ofemployees.3 Other academics define it as the sumof all individual competencies in organisations4

or a combination of genetic inheritance, education,experience and attitudes about life and business.5

Whichever definition is used, the bottom line isthat human capital represents the capability ofthe organisation and is resident in the minds ofthe employees. It incorporates the capacity toact, both individually and collectively, in a widerange of situations to achieve organisationalresults.

In the profit driven private sector, it iswidely believed that people are the last weaponof competitive advantage in the knowledgeeconomy.6 Products can be easily duplicated andservices cheaply emulated but innovation,execution and knowledge cannot. Removing theprofit motive and examining the approach for thepublic sector does not dilute the value of astrategic approach to human capital managementand development. The nature of the serviceprovided by the public sector means that thecapabilities of the employees, i.e. the human capitalare fundamental to the effective functioning ofthe government. Therefore there is a continuingshift in focus towards maximising the competitivedifference housed in an organisation s employees.

Organisations the world over stand upand proudly proclaim that their employees aretheir greatest asset and indeed, the nature of theintangible economy supports the notion. However,if this truly is the case, then it needs to bementioned that the organisation s greatest assethas its own mind, makes its own decisions andwalks out the door every evening. Therefore,focusing exclusively on developing individual HCwithout understanding the nature of knowledgein an organisation exposes one to the risk oflosing valuable knowledge when people leave.Thus two additional concepts, structural andstakeholder capital are introduced.

This report introduces phrases such ashuman capital development and structural

capital which may sound like nothing more thanthe new business buzz words that describe anolder concept, Human Resource Development(HRD), dressed up in a shiny new suit. While thecontent of this report does have the potential tobecome just another business fad if it is notimplemented correctly, the holistic view that istaken builds on the strengths of previousmethodologies to create an approach to managingan organisation s knowledge that is stronglyfounded in theory as well as in practice.

Structural / Organisational capitalStructural capital is the mechanisms and

structures of the organisation that help supportemployees in their quest for optimum performanceand therefore overall business performance.9

Structural capacity represents the ability of anorganisation to learn and remember lessons learnt.Knowledge and experience are tacit when theyare housed in the minds of the employees. Oncethe knowledge is written down in some form itis explicit. Structural capital is the ability to converttacit knowledge into explicit knowledge so thatthe organisation is able retain knowledge. In otherwords it is what is left after the employees havegone home.

The value of structural capital is bestdescribed in the form of an example. ConsiderThemba, who is a director in the Department ofTrade and Industry. Themba has substantial humancapital in the form of knowledge as well asextensive experience relevant to the role that heplays in the Dti. Over the last three years Thembahas had many successes and a few failures, all ofwhich influence the manner in which he performshis function. Now, let s assume that Themba isoffered a Chief Director position in a differentdepartment and he accepts. The question is: wasinformation regarding projects that werecompleted, the lessons learned, and the reasonsbehind certain decisions recorded? If not, notonly does the Dti lose Themba and all his skills,but also all the knowledge that was gained withinthe Dti that is specific to the job that he wasdoing. In such a case, the directorate would bedoomed to repeat mistakes with an obviousimpact on service delivery.

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Structural capital would be the ability ofthe Dti to remember what Themba had learntduring his three years in the post — in the absenceof Themba. Examples of how this can be achievedare: operational manuals, debriefing reports,databases, learning histories as well as the sharingof the knowledge amongst his colleagues andsubordinates.

Stakeholder CapitalIt is not difficult to imagine that there is

valuable knowledge regarding the running of anorganisation and the delivery on its mandate instores external to the organisation and itsemployees. This information can be housed in theorganisation s customers, suppliers as well aspartners in the service delivery chain.

There are a number of relevant points thatneed to be made. Firstly, the government isprimarily a service organisation and it is acharacteristic of service organisations that thecustomer is involved in some element of theproduction of the service. For example pensionerscollecting their social grant. Consequently thereis knowledge regarding the effectiveness, efficiencyof the service as well as possible ideas on how toovercome shortfalls. Secondly, the machinery ofgovernment is extensive and thus there are oftena number of partners in the delivery of the serviceboth within the government (national, provincialand local) as well as external to the government(NGOs, CBOs). All of these partners will haveknowledge that is relevant to the delivery of oneanother s service. The value of this stakeholdercapital is dependent on the organisations abilityto access, capture, store and analyse the knowledgethat is embedded in these stakeholders. The easewith which this is done varies from stakeholderto stakeholder but it does represent an area ofinterest considering the government s intentionto move to a single public service.

The majority of the literature on this subjecthowever, is very heavily slanted towards theprivate sector. The arguments focus on themarketing concept which states that companiesshould structure their product offering aroundthe needs of the consumer and not create productsand then push them to market. This clearly haslittle relevance for the non profit driven publicsector. However, a small body of literature existsand will be examined in the next chapter.

Relationship between Human, Structuraland Stakeholder Capital

The sum of Human, Structural andStakeholder Capital is widely considered to makeup an overarching concept called IntellectualCapital (IC). Intellectual capital can be definedas the total stock of capital or knowledge basedequity that a company or organisation possesses.7

In other words, the skills, competencies andknowledge that are housed within anorganisation s employees, processes, databasesand stakeholders that provides the organisationwith the ability to fulfil its mandate whether thatbe maximising profits for shareholders oroptimising service delivery.

A significant amount of overlap exists inthe three dimensions of IC that were discussedpreviously as they are largely interdependent.For example the effectiveness of an individualemployee (human capital) is enhanced by efficientprocesses to maximise the use of the knowledge(structural capital) and the usefulness of adatabases (structural capital) is dependent onthe skills of the employees (human capital) inadministering the process. Figure 1 below showsthis inter-related nature.

HumanCapital

StructuralCapital

StakeholderCapital

SocialCapital

Figure 1 - Dimensions of Intellectual Capital

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Another concept which can be added intothe mix at this stage is social capital. Again, thereis much discrepancy in the literature regardingexactly what constitutes social capital but for thepurposes of this assessment it will be defined as theconnections in the human networks.8 In other wordshuman capital is knowledge that resides in peopleand social capital is the knowledge that resides intheir relationships and interactions in the workplacetowards the achievement of organisational goals.

Structural capital can be developed by meansof sharing information (social capital) or by capturinglessons learnt in some explicit form. For example,even though Themba was the individual who followeda particular process, learning what worked well andwhat didn t work so well (human capital), he sharedthese lessons with his colleagues (social capital) andit was also recorded in the project documentation(structural capital). In this situation, the socialnetwork enhanced the retention of knowledgewithin the organisation. So when Themba leaves,a greater proportion of his knowledge remainswithin the Dti. Taking advantage of social capitaland its influence on the individual s as well as theorganisation s ability to learn is a strong drivingforce in the trends in human capital development.This is discussed in detail in the next chapter.

The focus of this report and the bulk of itscontent will be on Human Capital Development.However, while the development of the individualis fundamental to moving the organisation forward,the organisational context of that individual shouldnot be ignored and to this end, discussions onStructural and Stakeholder Capital Developmentare also included.

Knowledge and Talent ManagementTwo concepts that go hand in hand with

this discussion on HCD are those of knowledgemanagement and talent management. While notthe explicitly subject of this document, an elementaryunderstanding of these topics is required and is thusdiscussed briefly below.

Knowledge ManagementUnfortunately, there is no universal definition

of knowledge management (KM), just as there’s noagreement as to what constitutes knowledge in thefirst place. For this reason, it is best to think of KMin the broadest context. Succinctly put, KM is theprocess through which organisations generate valuefrom their intellectual and knowledge-based assets.

Consider the example of a golf club andassume that the caddies are knowledge workers.The role of the caddie is not just to carry the bagand look for errant tee shots (labour) but ratherto provide valuable information to the golfer onlayout, reading greens, club selection etcetera.Accurate advice would improve the golfer s gameand would result in a higher tip or the golferplaying more frequently at the course and thusincreasing profits. An example of the knowledgemanagement process would be for the course tomaximise the abilities and knowledge of its caddies.This could be done by the caddie master rewardingcaddies for sharing their tips by offering themcredits for pro shop merchandise. Once the bestadvice is collected, the course manager wouldpublish the information in notebooks and distributethem to all the caddies. The end result of a well-designed KM program is that everyone wins. Inthis case, caddies get bigger tips and deals onmerchandise, golfers play better because theybenefit from the collective experience of caddies,and the course owners win because better scoreslead to more repeat business.9

In this example it is clear that knowledgemanagement is the capture, retention, and reuseof the information as well as the process forimparting an understanding of how all these piecesfit together to some other person or persons.

The value of KM relates directly to theeffectiveness with which the managed knowledgeenables the members of the organisation to dealwith their current situations. Without on-demandaccess to managed knowledge, employees canonly address a situation with what they themselvesbring in to it. With on-demand access to managedknowledge however, every situation is addressedwith the sum total of everything anyone in theorganisation has ever learned about a situation ofa similar nature.10

Increasingly organisations are using socialnetwork analysis (SNA) - a component of KMstrategy - to find out how knowledge flows throughtheir organisation. This is a process of mappinga group s contacts (whether personal orprofessional) to identify who knows whom andwho works with whom. For instance, the Canadiangovernment s central IT unit used SNA to establishwhich skills it needed to retain and develop andto determine who, among the 40 percent of theworkforce that was due to retire within five years,

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Relevance to the South AfricanPublic Service

Since the advent of democracy in SouthAfrica, the public service has undergone majoradministrative reforms and transformation. Thesehave been informed not only by peculiarcircumstances in South Africa and the imperativesfor change, but also by lessons from other countriesin Africa and other parts of the world. In evaluatingthe performance of their public services, developedand developing countries have been influenced bythe previously mentioned global shifts in theireconomies from goods-based production to high-skill, high-technology service-based growth. Astudy by the HSRC (2003) Education, Employmentand Skills in South Africa on the labour marketreveals a similar trend in South Africa. Theknowledge and intangible economies demand thatgovernment policies put more emphasis onupgrading human capital through providing accessto general education and incentives to continuouswork-related training and learning.

The emerging knowledge economy andglobalisation are putting tremendous pressure onthe Public Service for increased adaptability,innovation and process speed. The public serviceinherited in 1994 by the democratic governmentof South Africa was characterized by a plethoraof rules, regulations and legislation, which left little

room for innovation, creativity and responsivenessto the service delivery needs of society. Inresponse, the 1998 white paper on public servicetransformation introduced the 8 principles thatwere to guide the new and improved public servicecalled Batho Pele principles. Thus, on-goingtransformation has to be underpinned by a focusedhuman capital development strategy, given theneeds of society and the imperatives of aknowledge economy. A focused HCD strategyeases the transformation process as it improvesimplementation capacity within the Public Serviceand can be directed at areas that impinge onservice delivery.

HCD processes, for instance Communitiesof Practice (CoPs), accelerate transformation bylinking transformation leaders and implementersacross geographical boundaries who can thenshare information on common challenges and thusprovide a mechanism for coordination andadaptation to changing circumstances as well assharing lessons learned.

The restructuring process of the PublicService aims to transform the State machinery tomake it more responsive to the needs of citizensand to operate in a more efficient manner.

had the most important knowledge andexperience to begin transferring to others.SNA can help organisations identify keyleaders and then set up mechanism-such ascommunities of practice-so that those leaderscan pass on their knowledge to colleagues.11

Talent ManagementA similar concept is that of talent

management . Wh i l s t KM dea l s w i thmaximising the available collective knowledgein an organisation, TM relates to ensuringthat the relevant levels of talent exist in theorganisation. Thus the focus is on acquiringtalent, not in quantity but rather the correctquality of talent. This is achieved by means

of attracting and selecting candidates wisely,retaining and developing leaders as well asplacing employees in the positions of greatest

impact given their capabi l it ies.12 Talentmanagement is a continuous, integratedp r o c e s s t h a t h e l p s e m p l o y e r s t o :

¥ E f f e c t i v e l y p l a n t a l e n t n eed s¥ At t r a c t t he v e r y be s t t a l en t¥ S p e e d t i m e t o p r o d u c t i v i t y¥ Mot i v a te t he r i gh t behav iour¥ Develop targeted capabilities and

knowledge¥ Reta in the h ighest per formers¥ Enable talent mobility across the

organisation

Fur thermore , the needs o f theemployees are taken into account and thusthe employees are not merely exploited forthe needs of the organisation. This symbioticapproach fosters trust and the ability for theorganisation to gain a competitive advantage.

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Restructuring has involved the identification ofskills and job descriptions and the retraining ofstaff.13 A comprehensive HCD framework usinginnovative learning processes can accelerate thetraining of public servants given that some of theprocesses detailed in this report offer a highercalibre of knowledge transfer than classroombased training initiatives and also present theopportunity for the standardization of workingpractices within government departments.

In view of the critical role played by theSouth African developmental state in reducingthe social deficit and bringing about neededeconomic development and growth, theimportance of the capacity of the state cannotbe overemphasized. As highlighted in the Stateof the Public Service (2006), the Public Servicehas to confront issues of its transformation whileit is simultaneously required to rise up to thecritical challenge of effective service delivery.14

Towards a Ten Year Review (2003) revealedthat effective service delivery is being hamperedby the general lack of technically skilled personnel,particularly at provincial and local governmentlevels which is aggravated by instability causedby skilled and experienced personnel being lostto the private sector. HCD imperatives whenapplied in the Public Service will not only improveskills which are primary to government deliverybut will also improve institutional memory andsupport retention strategies.

The South African Public Service has aweak implementation capacity — the skills andother resources needed to successfullyimplement policy and achieve their intendedobjectives —due to the problems the publicsector faces in accessing skil led humanresources15. Implementation capacity cantherefore be increased through betterknowledge and improved skills. HCD processesfacilitate lifelong learning as access to learningon an on-going lifelong basis is continuouslyproffered within organisations that implementa HDC framework. This is especially importantin knowledge and intangible economies thatdemand that government policies put moreemphasis on upgrading human capital throughproviding access to general education andincentives to continuous work-related trainingand learning. Knowledge is now recognised asthe driver of productivity and economic growth,leading to a new focus on the role of informationtechnology and learning, in economicperformance.

As noted above, South Africa is facingskills shortages as well as skills gaps amongholders of positions that are critical for servicedelivery. This has been confirmed by the HSRC(2003) study, Education, Employment and Skillsin South Africa. Interventions to improve skillshave been constrained by a number of factors.Professor Richard Levin, Director General, DPSA,in his speech during the 2005 Senior ManagementService (SMS) Conference, stated:

Government s efforts to build skills havebeen constrained by a range of factors includinginstitutional weaknesses, a poor capacity forhuman resource management, planning anddevelopment, widespread gaps in quality andrelevance of training and institutions, poorlinkages and partnerships between governmentand training providers and an inadequate focuson norms, values, attitudes and orientation ofpublic officials

A broad and creative HCD frameworkcan ease some of the constraints the governmentis facing especially in terms of quality andrelevance of training. Techniques highlighted inthe report, for instance, Self Managed Learning(SML) and E-Learning can drastically improvethe quality of training and bring them in line withdepartmental training init iat ives whi leconcurrently standardizing norms and practicesof public officials.

The HSRC (2003) report further notedthat lack of properly skilled workers is just onepart of the problem and does not exist in avacuum. Hence, efforts to improve skills in thepublic sector should be complemented by effortsto improve the context in which these skills areutilised. This refers to the human resourcemanagement and planning functions which canimpact on the skill shortages and gaps. Twocomponents involved in developing an effectivehuman resource planning strategy relate to (1)investing in human resource development andperformance and (2) assessing and sustainingorganisational competence and performance.The execution of these components containsmechanisms that generate the correct skill sets,invest in staff development and performance,and productively employ them in the organisation.The second component provides a means toassess and sustain the competence andperformance of the organisation and the peoplein it with regard to outcomes that theorganisation seeks.16

To be effective and able adapt, thepublic sector leadership must recognizethe value and contribution of its employees.People within the Public Service should betreated as an asset rather than an expenseitem. Thus money spent on people shouldbe treated as an investment in an importantasset , which is a far more appropriatemindset than treating such expenditure asan expense - to be kept to the minimumamount necessary . Furthermore , suche x p e n d i t u r e s , e v e n i f d o n e a s a ninvestment, should not be done blindly butrather within a strategic framework thatcomp lements the w ider goa l s o f thegovernment.

Every effort should be taken, whether formallyor informally, to develop skills and abilities and toprovide opportunities for people to maximise theircontribution to the achievement of both personal andorganisational goals. The improvement of skills bodeswell for the fulfilment of Batho Pele principles whichaim to enhance the quality and accessibility of governmentservices by improving efficiency and accountability tothe recipients of public goods and services. HCD willequip public servants with tools to deliver high qualityoutcomes, give best policy advice and programmeimplementation for government and the people in afast moving and increasingly knowledge based economy.HCD also offers the opportunity to improveaccountability to and the contact with, the electorateby different levels of government.

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Having clarified the context and the theorysurrounding Human Capital, understanding thedifferent facets it represents as well as itsimportance to the South African public service,this section outlines the most innovative theorieson how an organisation is to develop human,structural and stakeholder capital. The techniquesraised in this section are by no means exhaustive;rather those issues that are most relevant to thepublic sector are explored here.

In order to achieve maximum leverage ofits knowledgebase, an organisation needs tounderstand the interplay between human,structural and stakeholder capital. Effectivedevelopment of human capital is not likely to beachieved if one was to select one or two techniquesthat sounds interesting. Rather, the approachshould be used to stimulate debate and a strategicprocess that will identify a holistic approach toIntellectual Capital.

Critical review of trends inHuman Capital Development(HCD) and related concepts

Human CapitalDevelopment (HCD)

Unlike storing physical inventory in traditionalmanufacturing organisation, stocks of skills and knowledgethat reside in human capital become obsolete overtime. This is not necessarily due to the knowledgebecoming outdated but rather that human beingsbecome unmotivated when they feel that they are notbeing utilised or challenged17. This is confirmed by astudy that found that 90% of University of Londongraduates expected their employer to aid them in theirdevelopment18 and one third of a sample of high flyerssaid that they would leave their organisation if theycould not broaden their skills.19

The link between training and organisationalperformance has long been acknowledged. However,current thinking in the field of HCD is moving awayfrom traditional classroom teaching techniques in favourof more interactive and dynamic methods of learningwithin organisations. In his book, AcceleratingPerformance, Sunny Rostron reported that peopleremember:

¥ 20% of what they read¥ 30% of what they hear¥ 40% of what they see¥ 60% of what they say¥ 90% of what they see, hear and do20

By using more interactive, practical techniqueslearners are able to not only retain more informationbut also assimilate that information into their own workcontext. The following techniques take advantage ofmultiple modes of learning as discussed above.

SimulationsSimulations are an imitation of a real-world

process or situation, with which the learner can interact.21

They are becoming a popular method for deliveringtraining and are widely used in business, education, andeven in the military. Some of the evidence indicatesthat there is beneficial transfer of skills after trainingusing simulations. Simulations play an important partin IT training for example where they are used to givethe learner the freedom to explore in a ’safeenvironment’, with no risk to real data. Proponents ofsimulations make the argument that parents do notteach a child to ride a bike by showing them a detailedlabelled diagram, teaching them all the terminology andhow they interact to make the bike go forward. Similarlywhy should business acumen be taught in the sameway? A parent teaches a child to ride by giving thema bike and if someone wanted to learn how to run abusiness, they should be provided with a business.Simulations provide an opportunity to experiment withnew concepts and put into practice the theory that hasbeen learnt but in a safe environment.

The effectiveness of simulation is dependenton a number of factors:

1. Is the simulation realistic? A simulation needsto be more than a game. For example, asimulation could be set up that is easy tounderstand, fun to play but is not an accuratereflection of how a company works. In sucha case, any knowledge obtained would be

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useless and after attempting to implementit may even prove detrimental. A suitablesimulation needs to have business logic,structure and the drivers impacting on thatbusiness need to be convincingly represented.

2. Is the simulation an accurate reflection ofthe environment? Context is very important.A capital intensive company, a knowledgecompany, a retailer and the public sectorhave very different forces that influence whatwould constitute the effective running ofthe organisation. The simulation needs toconsider the context so that learning isrelevant.

3. Is the simulation comprehensible? Realismin a game or simulation is dependent onaccommodating as many of the forces thatwould interact in the real would into thegame. Thus, as the realism increases so doesthe complexity of the simulation. Verycomplex rules may hinder learning as theprinciples that are being taught may be lostin the incomprehensible game play.

As mentioned previously the prevailing businessmindset is biased towards tangible assets and investmentinto projects where the return on investment can bemeasured. However, in the public sector, the primaryasset in delivering quality services is arguably the intangibleskills and capabilities of employees. Therefore if one isto make a paradigm shift to embrace the value ofemployees, a simulation is an ideal platform to do so.

The leading knowledge management centredsimulation framework in the world is currently Tango“.Tango“ was developed by Swedish knowledgemanagement gurus Karl Erik Sveiby and Klas Mellengerand has been successfully run around the world. Utilizingan engaging business model, Tango“ simulates aknowledge company which competes in two markets-- for customers and for key personnel. Tango“participants learn how various groups within thecompany can align the three factors critical to overallprofitability:

¥ competence -- when knowledge istransformed into action

¥ cooperation -- when personal chemistryis used to develop effective long-termcustomer relationships

¥ continuity -- when an intangible (likeknowledge) is converted into profit, andthat result is pursued and sustained overthe long term

As participants work with Tango s highlyexperiential business model, they are able to immediately

identify, test, and evaluate the consequences of theirdecisions.

The relevance to public sector organisations isquestionable as they are not profit seeking and theydo not compete for customers. However, theframework for managing the organisation s intangibleassets remain the same. This led to the developmentof a public sector version of Tango“ in Australia. Thebox on the following page outlines the experience ofthe Australian Attorney-General s Office.

Tango“ also has its critics. Some believe thatthere are a number of flaws including: a lack of formaldebriefing, limits of the facilitators, high cost and a fewarguable assumptions.22 All these criticisms need to beinvestigated and evaluated by an organisation prior toembarking on a simulation in order to ensure therelevance and the value it will have on the effectiverunning of the organisation.

Tango in the Australian Public SectorAs knowledge-intensive organisations

become a more important part of the neweconomy, creating, capturing and sharingknowledge become ever more vital toorganisational performance and survival. But thiselusive thing called knowledge is much less easilygrasped than these approaches would have usbelieve. To start with, a knowledge managementstrategy needs to reflect the type of business theorganisation is in. An organisation that deals withknowledge that is easily codified requires a strategyvery different from an organisation whoseinformation is more difficult to codify. Many publicsector organisations fall into the latter category.Here knowledge processes are people processesand that is where the focus of knowledgemanagement should appropriately be.

˚The focus on people, organisational

relationships and communication, together witha focus on strategic thinking and learning howto value intangible assets such as knowledge,competence, image and reputation, is whatmakes the Tango“ simulation so valuable. Itreinforces the relevance of and provides practicaltools for meeting many of the criteria set outin the recently released Senior ExecutiveLeadership Capability Framework. There isplenty of fadism in much of the current hypeabout knowledge management, but properlyconceived and executed knowledge managementwill be a critical element of future success.

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Communities of practiceA community of practice (CoP) is a

group of people who share a concern, a set ofproblems, or a passion about a topic, and whodeepen their knowledge and expertise in thisarea by interacting on an ongoing basis.23 Whilea community may have a common interest, acommunity of practice is work related focusingon a professional activity, skill or topic.

Learners become involved in a CoP andlearn through social interaction. As thebeginners or newcomers move from theperiphery of the community into the centre,they become more active and engaged withinthe culture and eventually assume the role of

expert or old-timer. As they do so they becomeable to influence that community in differentways. This feature is neither linear nor simplein that expert status also has to be continuouslyrenewed and newcomers can challenge existingpract ices with fresh ways of thinking.

CoPs are usually very informal but thereare cases where they have been formalised.The value seems to be in the informalinteraction and that the groups are nourishedrather than managed.

˚Many members of the Senior ExecutiveService will question whether or not they havethe time to spare to participate in the Tango“simulation. My own experience may beinstructive. My organisation, the Office ofStrategic Crime Assessments (OSCA) is anintelligence assessment and coordination bodywithin the Attorney-General s Department.OSCA is a knowledge organisation and its successdepends almost entirely on the knowledge andskills of its people, the adequacy of its processesand the quality of its relationships. These are allintangible assets that require careful nurturing.

The Tango“ simulation proved a veryefficient way to attune the OSCA team to awide range of issues surrounding the effectivemanagement of knowledge and relationships, tobe introduced to some useful tools and to initiatea process of further organisational development.OSCA has begun the development of its ownIntangible Assets Monitor (using the modeldeveloped by Dr Karl-Erik Sveiby) as a way ofmeasuring its intangible assets and monitoringperformance. The sessions run by PSMPC sofar have been attended mostly by middlemanagers, who have rated them highly. But theinsights gained are especially relevant for seniormangers. I would highly recommend attendanceby SES teams if the full value of the learningexperience is to be gained by organisations.Tango“ is stimulating, challenging and fun. Andthe issues raised go to the very nature of thefuture of public sector organisations.

Dr Grant Wardlaw, Director, Office of StrategicCrime Assessments, AustraliaSource: Knowhouse

At the Hill s Pet Nutrition facility in IndianaUSA, a group of line technicians meet weekly totalk about recent successes frustrations as wellas challenges looming ahead. The group has amayor who was selected by his peers to keepthings on track and that people with the relevantexpertise are present when required.

At one of the weekly gatherings 12technicians were gathered around a table in theconference room overlooking the plant. One ofthe technicians, Roger, had made a special trip tothis meeting to help John with his proposal tosubstitute pneumatic tubes for the currentconveyor belt that carried the pet food kibblesto the packaging bin. Roger s background inplumbing was particularly relevant to the discussion.

Senior management in the company hadnot warmed to the idea saying that it was unprovenand incompatible with current technology.Nevertheless community members encouragedJohn to persist, knowing that there would be apositive improvement in efficiency. Before discussingJohn s proposal the group spent time on theirusual routine of small talk and sports commentary.Following this they picked up the proposal. Vincebegan by reviewing management s concerns. Johnthen explained that the latest version of his proposalincluded evidence that the technology was reliableand that it could be integrated with the currentsystem. Roger confirmed this from his ownexperience and offered to go with John next timehe presented to management.

The community s support for John s workultimately paid off. The company installed thetechnology which resulted in a significant reductionin downtime as well as wastage in the packagingprocess.

Adapted from Wenger & Snyder (2000)

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While in function communities ofpractice have been around in one form oranother for literally thousands of years, theterm Community o f Pract ice and thea s s o c i a t e d m e t h o d s o f k n o w l e d g emanagement have only been used in the lastdecade. Although they do not seem to bevery widely practiced or even make sense,CoPs have had large scale successes in awide array of businesses. Some of thepossible benefits of operating CoPs are:

¥ They help drive strategy.¥ They start new lines of business.¥ The help solve problems quickly¥ Transfer best practices¥ Develop members professional skills¥ Help companies to recruit and retain

talent23.

Communities of Practice seem to have thepotential to add value to an organisation but it isimportant to remember a few things:

1. They lack a formal structure and are notstandardised. It will be difficult thereforeto establish how well they are working oreven if they are working at all.

2. Difficult to locate and define3. Membership determined by the community4. They tend to break apart as easily as they

are established24

The use of Communities of practice in theSouth African public service can be very effective,especially if these were formed across the threetiers of government (discussed further understakeholder capital), facilitating the exchange ofrelevant information across policy makers andimplementers. For example a community of practicegroup could be made up of employees from theDepartment of Housing (national, provincial andlocal government) and could serve as a platform fortackling issues relating to housing delivery in thecommunities.

Virtual Communities of PracticeA community of practice (CoP) becomes

a virtual community of practice (VCoP) when themembers use ICT as their primary mode ofinteraction. This does not exclude the use of faceto face meetings but the use of ICT has thefollowing advantages:

¥ A group can contain people from vastlydispersed locations with marginalchanges in the operating costs of thegroup

¥ Depending on the methodology chosenby the VCoP, meetings become easierto fit into the employees schedules.

A VCoP may make use of traditionalcommunications such as tele-conferencing andemail or more sophisticated tools such a videoconferencing, news groups and shared databasesto support i ts members interact ion.

While VCoPs have a few advantages, thereare also a number of disadvantages:

¥ The relaxed attitude of an informalmeeting is somewhat compromisedthrough meeting electronical ly.

¥ Building trust and a sense of belongingthat is important for an open exchangeof ideas will be more difficult to nurturein a virtual environment.

¥ Technical training in ICT may berequired for some members

¥ The VCoP leader may need a differentset of skills altogether in order tomaximise the value of the group25

Self-Managed Learning

A CoP group in America of five to sevenconsultants in the retail banking industry beganmeeting between appointments with a focuson new business opportunities for clients. Fouryears since their first meeting the communityhad created a new line of marketing approachesfor financial services companies as well asconvening two hundred people from their firmfor its annual conference. The community actedlike a Petri dish for entrepreneurial insightsthat ultimately generated more clients, shapedthe firms strategy and enhanced its reputation23

I once heard a physicist describe QuantumTheory as a major problem because it:

¥ Accounts for all known facts regardingsub-atomic behaviour; and

¥ Makes no sense.His error was to attempt to live in a

Newtonian world and not recognise the paradigmshift necessary to appreciate Quantum Theory. Iexperience the same issue when we talk to traditionalisttrainers and human resource (HR) managers aboutthe idea of using self-managed learning approach fordevelopment purposes. It is a problem to thembecause:

¥ The approach responds fully to all theexisting knowledge about learning; and

¥ It makes no sense.Ian Cunningham, Chairman of Strategic DevelopmentsInternational

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Self-Managed Learning in PPPHealthcare

A vital part of the SML programme isthat one is part of a learning group. That isfundamental to the process. In the past, a lotof my learning has been with me as an island,or just me talking to my boss. The relationshipis not open as the relationship [in the learninggroup] where there is not a formal hierarchy.Being in a relationship with peers, I can discussopenly ideas, actions. They can challenge me,build on them, suggest observations which Ihave not considered myself and suggest thingsthat they have encountered that they think willbe of value to me

I think they re very useful, particularlyin the context of a learning group. Yourcolleagues keep you on track and keep youcommitted. I don t think it would work so wellif I just sat down and wrote one [strategiclearning contract] completely on my own andhad no one else to review it. I think the strategiclearning contract helps clarify your thoughtsand gives you deadlines as well as you lookback

Serpis, Aspinall & Shorrick (2000)

Self-managed learning (SML) is a developmentalprocess in which adults take on full responsibility fortheir own learning.26 Similar to Communities ofPractice (CoP), SML is based on learning in a groupbut there are a few key elements that differentiateSMLs from CoPs. Firstly, as mentioned above in thedefinition, the onus of learning lies with the individualand secondly the SML groups are more formal as itinvolves each group member writing up his or herown strategic learning contract .

SML groups usually consist of about six peopleand a learning group adviser who is there to supportthe group in its work. The role of the group isprimarily to support learning. This support focuseson each individual at the start, as each person hasto write up and agree on their strategic learningcontract with the group and then later on how thoselearning goals are to be achieved. As the groupprogresses over time, people come to see the valuein learning from their peers. Groups will usually meetone day every five weeks for a period of about ninemonths.27

The strategic learning contract (SLC) is adocument which outlines the skills that an individualwould like to gain in a specific period. While similarto the more widely used personal development plan(PDP), the strategic learning contract has a numberof key differences8.

1. A SLC is a goal driven rather than processdriven. People develop their learningprogrammes around a number of clearlystated goals that relate to the needs ofthemselves as well as their unit ororganisation. In other words, the contractis outcomes based focusing on what willhave the greatest impact rather thanfocusing on the activity or process ofattending a training program.

2. A SLC is more likely to have a long termstrategic focus as PDPs are normallyattached to the annual performanceappraisal system which may bias it towardsa more short term view.

3. Finally, the SLC is drawn up with theemployee s peers as well as his or hermanager. This is the critical piece thatmakes it social capital as well as humancapital. The contract is drawn up by theindividual, for the individual but they haveto justify relevance to themselves and tothe business through interaction with theirpeers. This collective agreement alsoinitiates a process of mutual support tomeet learning goals.

Some of the benefits identified in the PPPHealthcare Case28 were:

¥ The reference to me as an islandshows that SML moves the process ofdevelopment into the social domain.

¥ SML groups tend to create a trusting,non-threatening environment whichfacilitates learning.

¥ The PPP HR manager mentioned thatthe SML programme is not a soft optionbut does address organisational issues.

¥ The SML programme createsorganisational knowledge (discussedfurther in the next section)

A reason why many organisations arehesitant to introduce SML groups is the perceptionthat it would be very expensive to implement theactual training. However, the evidence offered byorganisations providing self-managed learningprograms suggests that they are cost-effective.29

One simple model is to give individuals or groupsthe budget for development. This means that thegroups cannot overspend as everyone knows thatif they want more money for their developmentthey have to find it themselves. In organisations

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where this approach has been implemented, peopletend to under spend as they become creative aboutways of learning that cost little or nothing. For exampleinstead of opting for a high-priced external coursethey may visit organisations or get coaching insidethe organisation or read articles. In one hi techcompany, a group of technical staff did need to learna new approach that was only available in an expensiveexternal course. However, they agreed that oneperson in the group would attend the one-weekcourse and then come back and coach others. Thecoaching session took just a couple of hours. Notonly did they learn all they needed about the newapproach, but they also learned that they could domore to help each other to learn: a conclusion thatthey carried through into their working practices.

A more detailed discussion on the process,impact and value of running SML groups is includedin case study 1.

E — LearningE-learning is a method of learning that is

facilitated and supported through the use of informationand communications technology30. The nature of thetechnology can vary from CD-ROM to streamingvideo or from interactive web sites to email; the keyhowever, is that learning is taking place.

E-learning is a powerful, interactive way foremployees to acquire critical personal and professionalskills. It involves the use of interactive e-learningtoolkits that enable users to develop basic skills usingself-paced learning modules and thus develop capacityto improve service delivery. Launching an e-learningsystem requires that employees have access to theInternet or intranet and possess at least basic computerliteracy and have access to the requisite hardware,software and network.

Since it is internet / intranet based, the e-learning products / toolkits are regularly available andare easy to access and are thus on hand just-in-timeand just-in-case.31 The advantage of e-learning is thatit is self-directed and therefore allows learners theflexibility and freedom to learn anytime, anywhereand at their own pace. E-learning toolkits are expectedto develop departmental knowledge and capacity andso improve access to and quality in the delivery ofpublic services.

E-learning offers unique benefits comparedto conventional classroom learning. Learners can betaught with minimal loss of productivity as they donot have to be physically drawn away from theirwork stations. To study all they need is to dedicate

short blocks of time when it is convenient to themand log onto the virtual classroom. Other benefitsof e-learning include flexibility, reduced travel expenses,quicker access to information and enhanced knowledgesharing.

As in all cases of distance learning, it s crucialto find ways to help learners (employees) maintainthe discipline to stay focused on the learning. Managersneed to give employees the time and space to do thetraining. That means allowing the workspace tobecome a classroom during the workday to avoiddistractions and interruptions. Putting School InProgress signs on office doors and adjusting staffcoverage to allow people to set blocks of uninterruptedtime can help e-learning succeed.32

Management must demonstrate that it valuesthe fact that its employees are engaged in learning.It could be a simple acknowledgement or formalrecognition, for example, if a learner passes enoughtests on a given subject then he/she would qualify forformal certification. Ongoing learning not only improvesprofessional skills, but it also enhances the company sskill set as well and since it s an investment in productcost and time for integration within the workday, e-learning requires buy-in and support from the toptier to succeed.

Training Coordinators responsible for theimplementation of the required training should identifyemployees who must complete required training andcoordinate their registration. They should then trackthe successful completion of required training basedon employees certificate s of completion or progressreports (e.g. on a monthly basis) submitted to thecoordinator by the registrar and forward results torespective supervisors. From time to time knowledgeassessments should be conducted as a means ofconfirming that individuals possess the requiredknowledge. Employees who did not successfullycomplete their training should submit a plan to thecoordinator on how they will successfully complete,within a reasonable period of time, the requiredtraining.

E-learning offers the opportunity to standardizepractices within government departments, throughthe uniform training of employees at every location,in every region. It provides a practical and effectiveway to meet the goals of departmental learninginitiatives. A significant advantage of e-learning is thehigher calibre of knowledge transfer resultant fromthe allowing of subject matter experts to blend theirpresentations with audio input, notes, and interactiveinstruction that is available to the learners.

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E-Learning in the Canadian Public ServiceTo support learners, the Canada School of Public Service has divided the public service

population into individual communities to make it easier to determine the required or recommendedtraining for each group. Each community is identified by a colour and shape:

All Public Servants Managers Senior Managers Functional Specialists Senior Leaders Supervisors

Online announcements, news and discussions are colour coded to make it easier for usersto identify what relates them:

Announcements

Appointment to the Canada School of Public Service Board of Governors - 2006/12/21

Leadership Development Opportunities 2006-2007 (PDF). This Reference Guide providesan overview of the current learning solutions and opportunities available to Senior Leaders tosupport the leadership development of managers and executives at all levels

Learners are provided with learning roadmaps that begin by explaining how the government spolicy on Learning, Training and Development affects the learner and in addition outlines howthe Canada School of Public Service can help the learner achieve their learning goals throughouttheir careers and in particular meet the requirements of the Learning Policy.

The modules are specific to each community, for example, modules relating to SeniorManagers are divided into (1) Your Foundation (Required Training) - Foundational learningprograms will help you understand your roles, responsibilities and delegated authorities in thepublic service. (2) Striving for Excellence (Recommended Learning) - Key learning programsto lead change in your organisation and deliver results for Canadians and (3) Beyond the Basics(Additional Learning Opportunities) - to round out your knowledge as a senior manager .

On successful completion of the course employees are issued with certificates of completion.Knowledge assessment instruments are also administered in prescribed intervals to the successfulemployees to validate the acquired knowledge.

Source: Canada School of Public Service

One drawback associated with e-learningis the sense of isolation felt by learners andcritics suggest that being in a classroomenvironment provides a better experience. Bute-learning advocates note that seclusion canhelp employees focus exclusively on theircoursework. The sense of isolation is alsolessened as a result of the ease with whichlearners can communicate with the instructor.Another drawback is the self-policing style ofe-learning which allows for intrusions from the

day-to-day business tasks—both students andinstructors can be called away in mid - sessionto cope with emergencies. Additionally thereis little attendance oversight—individuals areusually given the responsibility to completetraining. Both issues are a concern, thoughattendance can be tracked by enabling thenecessary software and what s more, managerscan receive reports at given intervals on whichstaffers have passed tests on any given e-learning course.

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Human Capital Developmentin an organisational context

An important point that HCD staff needto take cognisance of is that each employeeoperates within an organisational / departmentalcontext and that the organisation should striveto maximise their HCD investments. In mostsituations, knowledge gained by an individualwhether it is through training or experience, oftenhas value to others in the organisation. Thereforethe overall effectiveness of the organisation canbe improved if systems are created that allow,encourage and facilitate the sharing of knowledge.

Another related point is that the long termeffectiveness of an organisation is enhanced bythe ability of the organisation to remember thelessons that it has learnt. If individuals are developedin isolation, all knowledge gained by theorganisation would be lost if that person was toleave. In a high churn environment like the SouthAfrican public sector, inefficiencies are createdwhen a new employee has to recreate theknowledge generated by his/her predecessor.Therefore, the propensity of an organisation tostore knowledge independent of individuals hasa great effect on its ability to deliver on its servicedelivery mandate.

This section addresses the two previouslymentioned points by discussing techniques thatwill enable the public sector to develop the othertwo elements of Intellectual Capital, namelystructural and stakeholder capital.

Structural Capital DevelopmentAs mentioned previously, the primary asset

in a knowledge organisation is the knowledgeimbedded in the minds of its staff members.However, if the minds of the employees are theonly storehouse of knowledge, there is a risk oflosing that asset as it walks out the door everyevening and may be hit by the proverbial bus.Therefore an organisation needs to find ways oftransferring the knowledge contained in itsemployees brains to:

¥ Other employees through enhancingsocial capital.

¥ Explicit knowledge sources that areindependent of the employees

Social capital is the knowledge that isembedded in the relationships between people.One author states: Human capital representsability, social capital the means to leverage it.That is why, even though the knowledge is stilllargely tacit, i.e. existing in the minds of people,the information is shared and increases the abilityof the organisation to retain knowledge. That iswhy for the purposes of this report, social capitalis referred to as the overlap between individualand structural capital.

Communities of Practice and Self-Managed Learning

Structural capital arises out of thesetechniques based on the sharing of knowledgebetween members of the groups. In bothapproaches, individuals are encouraged to learntogether, both from external sources and fromeach other. That way, organisation specificknowledge in particular is no longer resident onlyin the individual that made a particular discovery.

An employee from PPP Healthcare saidthe following with respect to SML groups:

One of the most wonderful things aboutthis process is that through the learning groupsand discussions, you re creating corporateknowledge. And because you make things explicit,things happen Organisational knowledge iscreated when tacit knowledge becomes explicit— when it is shared and articulated throughsocialisation within the learning group The morepeople are talking to each other, communicating,the sharper the organisation will be. If peoplekeep all their brilliant ideas and thoughts tothemselves, nothing will happen.

It is clear that both CoPs and SML groupshave a very positive impact on both human andstructural capital. This is reinforced by an empiricalstudy that was conducted in Spain33. The studyfound that knowledge creation as well as thetransfer and integration of knowledge were verystrongly related to work teams that possessed:self-management, individual autonomy, and aclimate of trust. Leadership in the group whilstnot related to the creation of knowledge was verystrongly associated with the transfer and integration

Xerox launched a knowledgebaseproject called Eureka, which is essentially adatabase of tips and best practices establishedto assist especially the remotely locatedtechnicians. Instead of the managers managingthe database, responsibility was handed to thetechnicians themselves. Similar to the academicpeer review process, the tips and best practicesare calibrated, tried and tested to reflect thetrue best practice. The result is that personalknowledge becomes a valuable corporateresource that enables fellow workers to deliverfaster, more efficient service. Xerox estimatethat the improved efficiency as a result of theEureka project has saved the company around$100 million.

Source: van Deventer (2002)

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of knowledge, whereas a common understandingand the heterogeneity of the groups were stronglyassociated with the former but not the latter.

In conclusion, the concept of learning teamsas part of an organisation s knowledge managementstrategy, whether they be CoP, VCoP or SML,has strong evidence to support the positive impactthey have on an organisation s intellectual capital.

Knowledge SourcesKnowledge sources in the context of

intellectual capital are referred to as explicit(written down) knowledge that is independent ofthe person who acquired it. In other words ifDave learns how to best implement a specificpolicy through a long process of stops and starts,structural capital will be built if that knowledge isidentified, written down, stored and madeaccessible to other people so that they mighteffectively implement the same policy withoutthemselves going through the same learningprocess. Recall the example given earlier aboutthe caddie master who collected tips from hismost experienced caddies and compiled theminto a handbook. The handbook was then usedby all caddies so that they could all know thenuances of the course normally only gained throughyears of experience. The handbook represents aknowledge source or structural capital as it isindependent from the human beings in the club.

This section will detail some approachesthat organisations can adopt in order to generatestructural intellectual capital.

KnowledgebasesKnowledgebases are electronic databases

that store as much explicit intellectual capital aspossible for an organisation. When implementedcorrectly, they provide a rich source of researchmaterial to aid in problem solving and a sharedforum for competitive intelligence.

Many organisations are now implementingknowledgebases as a strategy for making more oftheir employees’ tacit knowledge explicit. Thisknowledge is captured and documented and storedin formal systems such as databases, libraries andfiling systems and made accessible to all in theorganisation. They can be a good source ofinformation, and prevent reinvention of the wheel,if processes are properly captured. When thepotential "learner" confronts an unknown situation,there are three ways in which he can learn.

1. He can search the knowledgebase tosee if the situation has been encounteredbefore and the answer already is known.

2. He can find several "related" but notexact circumstances and derive ananswer by combining pieces ofknowledge from the knowledge base,creating new knowledge in the process.

3. He can access his relational network,asking other people for information.

4. He can generate new knowledge,34 oftenthrough a process of hit or miss.

In the absence of a knowledgebase, theemployee would most likely adopt a hit or missapproach if the people in his social network werenot able to assist him. Therefore the experiencegained by an organisation may be lost and mistakesrepeated if the knowledge is not captured in someway.

In theory, it is easy to motivate for aknowledgebase but the logistical issues surroundingthe capturing of knowledge in a format that canbe used again are complex. A knowledgebase

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needs to be supported by personnel, process andfinance. Some examples of the manner in whichknowledge can be captured is included below.

Learning HistoryAsk individuals within a company about a

major event and they will often report that theyunderstand exactly what went wrong (or right).They might say that the new product fizzledbecause no one in marketing listened to thepeople in manufacturing, or vice versa. Or thenew product soared largely because R&D ordistribution "finally got their act together." Eachof these points of view represents a valid, butlimited, piece of the answer to the puzzle of whathappened and why. If all these perspectives couldsomehow be melded together coherently, theorganisation as a whole might learn whathappened, why it happened, and what to do next.In other words, in corporate life, even whenexperience is a good teacher, it’s only a privatetutor. People in organisations may act collectively,but they only learn individually.

A group of social scientists and businessmanagers from MIT got together to find out howthe experiences of the organisation can be retainedin the organisation rather than in the individuals.After four years of development and testing, thesolution proposed was called a Learning History.35

To create a learning history, a page isdivided into two columns. In the right handcolumn, the events are described by the peoplewho were directly involved or affected. This couldinclude managers, factory line workers, secretaries,and outsiders such as customers, advertising copywriters, or suppliers. Each would tell their partof the tale and it would be woven into a coherentstory. Each person is quoted directly, and identifiedonly by title. The left hand column is a commentaryor analysis by the "learning historians". Thehistorians would be a small team comprised oftrained outsiders, usually consultants andacademics that specialise in organisational learning,along with concerned and knowledgeable insiders,usually drawn from the company’s humanresources. This team has sorted through hoursof interviews to "distil" the story in the right-hand column and in the process, they have comeup with the text for the left-hand column, whichidentifies the themes, poses questions andimplications of what happened.

A learning history is not completed justto be distributed wholesale through the

organisation and read, or more often shelved, byindividuals. Instead, it is used as the basis forgroup discussions for those involved in the event,and those who might learn from it. Where afuture project follows similar lines, the projectteam can draw on the learning histories to guidetheir way forward. Histories should not befollowed blindly but rather serve as a discussionpoint to ensure that lessons that were learnt inthe past are taken cognisance of and thus theorganisation and not just the individuals learnfrom experience.

Figure 2 gives an example of an annotatedlearning history from the MIT website35

Best PracticeBest practice and benchmarking are

concepts that are largely understood and as aresult will not be examined in too much detailhere. A brief critical analysis is provided for each.

The notion of best practice is derived fromthe idea that if there is no effective method forcapturing and making available informationdescribing the best practice, it is possible forworld-class and mediocre performance to co-exist in the same company. Thus, if the details ofthe world class performances are made availableto all the relevant employees in the organisation,such successes can be repeated while avoidingthe mediocre performance. However, the processof learning from best practices is not easy for thefollowing reasons:

¥ There is a gap between what somethinglooks like in a manual versus what itlooks like in reality

¥ There is often a gap between whatpeople think they do and what theyreally do

¥ Even when on pays close attention, itis possible to miss the tacit knowledgeproduced by improvisation andinnovation.

¥ Best practices are very specific tocontext and as a result a repositorymay be easier to fill than to reuse

BenchmarkingBenchmarking is defined as the art of

finding out in a perfectly legal and above boardway, how others do something better so thattheir techniques may be imitated in order toimprove performance.36 Organisations can bebenchmarked according to processes, productsas well as organisational

The Epsilon Project is Worse than Red!As they practiced their new management approach, the Epsilon product launch team

came to feel isolated from the rest of the AutoCo culture. They felt that senior managerssometimes applauded them, sometimes supported them, sometimes ignored them, andsometimes invalidated their efforts. Meanwhile, some senior leaders perceived the Epsilonteam as withdrawing into its own true believer approach — as if Epsilon leaders felt theyknew how to achieve results that the rest of the AutoCo organisation did not. This problemcame to a head around change requests (CRs) — the engineering reports of issues, problemsand impending changes on a part — which reached a count of 524, at a time when a moretypical car launch would have a high of 200.

Is it required thatother groups share theperspective of what a metricrequires and how it is used.What does this require ofgroups who seek to innovateprocesses?

Engineer: in the past, engineers would keep a hiddenlog of their problems. We would make them public only whenwe knew the answer. To say we were not rewarded forrevealing CRs would be an understatement.

Typically more than one person would be trying tosolve the same problem. We would not know what eachother was doing, because there was no common documentthat tracked the problem. I might be working to solve somethinginvolving sheet metal. The sheet metal people wouldn t knowbecause I might not even have known it affected sheet metal.When I finally wrote up my solution, they might say Wait aminute. We can t do this.

With our new process we were encouraged to getCRs out in the open sooner. Now everyone knew each other sproblems in time to work together on a solution. This meantthat the Program Manager had to empower us to handle ourown problems.

Senior manager: in manufacturing operations we havea metric that starts with green and goes to yellow and goes tored. The Epsilon program was purple, I said that s worse thanred! I ve had a unique ability to say what s ready or not, and beright 95% of the time. The Epsilon wasn t ready. The patientwas terminal. I recommended postponing the launch date.

From other perspectives,however, this new CR systemcreated worrisome inconsistencies.Here a manager outside the Epsilonteam expresses his dismay overthis. Visible signs of stress.

Epsilon team manager: initially I felt really good aboutour CR count. it was fantastic to find out about all these thingsand have them worked on. By encouraging engineers to writeconcerns, I said to my Vice President, We re actually gettingwork done earlier and we ll have a better quality product.This is a change in our system and we want to keep it thatway. We want it to be not punitive for an engineer to writea concern early. (the Vice President nodded and listened.But after the meeting he still said the program was out ofcontrol.

What made it difficultfor Epsilon managers to explaintheir strategy and behaviors inpromoting early reporting ofconcerns?

The learning history isorganized into a series of shortstories each recounting aparticular episode. Segmentsfocus on particular dilemmas,questions, or anecdotes withinthose short stories. This segmentis part of a short story about thetempestuous relationshipbetween the Epsilon Project, anew product launch, and thelarger AutoCo organisation ofwhich it was a part.

The full — columnprologue is derived, in part, froma list of noticeable resultscompiled throughout theproject. These results are factsand events that anyone wouldagree had happened, althoughthey might disagree about theircauses and impacts. Thenoticeable results provide abusiness case that shows whythe segment is significant fororganisational readers. Here,the results include the varyingr e s p o n s e s b y s e n i o rm a n a g e m e n t , a n d t h eunprecedented number of CRs.The prologue sets the stage byproviding the reader with acontext for the

In the right handcolumn narrative, participants(identified only by title orposition) tell their part of thestory. Edited form interviewtranscripts and rigorously quote— checked, the narrative allowsreaders to re — experience notjust the events, but theassumptions and attitudes thatled to key decisions, describedin the voices of people whowere there. These participantvoices create the jointly — told,multiple — perspective tales thatbring the story of organisationallearning to life

The left — hand column provides commentary, insights, questions reflections,and perspectives brought forward by the learning historians. These comments helpprovoke deeper, more reflective conversations as readers gather to talk about theimplications of the story

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Figure 2 - Learning history example

Source: http: / /ccs .mit .edu/ lh/21cwp002.html

H o w e v e r , o p p o n e n t s o f t h eb e n c h m a r k i n g a p p r o a c h s a y t h a tb en chmark i n g s t i f l e s c r e a t i v i t y a ndi nnova t ion and tha t t he p roces s o fbenchmarking can only bring an organisationlevel with the target.

One area that benchmarking may be usefulfor is in the area of performance benchmarking.In the section on measurement, the Accenturemodel makes use of benchmarking to illustraterelative performance in specified areas. This isdiscussed in more detail in that section

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In an effort to promote the collaborationof knowledge management initiatives acrossgovernment organisations, the US Navy s HumanPerformance Centre (HPC) sponsored its firstKnowledge Fair on the 17th November 2004.Representatives from the U.S. Army, the DefenseAcquisition University (DAU), the Department ofthe Navy s Chief Information Officer (DONCIO),Carrier Team One and the U.S. Naval Reserve allparticipated in an effort to share knowledgemanagement successes, lessons learned andprocesses. According to the event organiser, theone-day Knowledge Fair was designed to bringtogether the different agencies and offer a morepersonal learning environment than one wouldreceive at a larger trade show or vendor fair. Atmany of the traditional types of shows or fairs,attendees are often shown presentations and thengiven a sales pitch to purchase a solution or software.

This buyer-free environment wasappreciated by many Knowledge Fair participants,including DONCIO s Cmdr. Barbara Franklin, whofelt that the fair was a great opportunity to shareinformation and collaborate between governmentorganisations. This was different from other events,in that it was specifically designed to share and passon information, not buy and sell information, saidFranklin. Participants were there to pass on usableinformation that the government has already paidfor and proliferate it across the organisation withoutan additional cost.

Stakeholder CapitalTraditional analysis of stakeholder capital

has been most relevant to profit drivenorganisations that have adopted the marketingorientation. In other words, the organisation hasplaced the customer at the centre of the strategicdecision making process and built the internal,production related processes around it. Stakeholdercapital in this case would be in the form of brandequity, customer relationship management andmarketing17. However, in the absence of a profitmotive, this line of research which represents thebulk of the literature is not applicable.

The other aspect of stakeholder capitalrefers to the information and knowledge relatingto the delivery of the organisation s products orservices that is imbedded in the minds of peoplewho are external to the organisation. This is notan area that has garnered much attention fromthe academic fraternity but most certainly is worthyof consideration for the South African PublicSector. Two examples of what can be done todraw on this repository of knowledge weregleamed from the meagre store of literature onthe subject. They are: external communities ofpractice and knowledge fairs.

External Communities of PracticeCommunities of practice were discussed

in much detail in the previous section. Externalcommunities of practice (ECoP) are defined asgroups formed by an organisation s clients andemployees based on common interests,commitment, mutual trust and collaboration whosemembers regularly share knowledge and learning37.In other words, it s a CoP that has been expandedto include individuals from outside the organisation.This could be horizontal (cross departmental),vertical (local, provincial, national departmentsand NGOs) as well as including suppliers from theprivate sector.

The potential benefits of running CoPs havealready been established and those benefits wouldalso be evident in ECoPs. In addition, an increasedpotential for learning exists in an ECoP due to:

¥ The inclusion of individuals from differentorganisational cultures. The differentperspectives offered may be beneficialin a learning environment.

¥ Sharing of information and skills wherecross departmental communication andskills transfer with consultants iscurrently not optimal.

Knowledge FairsKnowledge fairs are organised events with

the specific purpose to create space and theopportunity for staff to share knowledge acrossthe lines of departments and business units17.Although the purpose of the activity is well definedand the event is well organised, the actualinteractions should be unstructured. The fair worksin the same way as any traditional or trade fairexcept instead of each stall holder selling a productor solution, they are sharing their research andexperience in a specific field. Power point and otherstatic presentations for example are discouragedin favour of an open interpersonal dialogue.

Where trade shows and fairs offer learningopportunities for employees, the presentations arenormally done within the bounds of a sales pitch.A knowledge fair on the other hand should notinvolve vendors or contractors presenting solutions,rather a horizontal sharing of information andexperiences. The box below briefly outlines theexperience of the US Navy s knowledge fair.38

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This approach is included under stakeholdercapital as the benefit drawn from it would bemaximised by including participants from differentorganisations and thus may warrant furtherinvestigation for the South African public sector.What often happens is that different departmentshave directorates that deal in the same broadarea of operation. For example skills developmentis the concern of the Department of Labour,

Department of Trade and Industry, Departmentof Education and not to mention the SETAs.Therefore in the absence of some sort ofknowledge sharing platform, knowledge acquisitionis likely to be duplicated. A knowledge fair wherepublic servants working in the same field have anopportunity to interact and share knowledge withtheir cross departmental counterparts has thepotent ia l to overcome this problem.

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There is an old business axiom that says:what is measured in companies is also what is

managed. If an organisation is to become strategicin its HCD investments, it needs to understandwhat the returns on those investments are, thatway human capital is developed in areas whereit is most needed and most effective. Industrialage companies needed to have balance sheetsto show their value to their investors. In theknowledge or intangible economy, the balancesheet is no longer adequate because the bulk ofthe true income generating assets are intangible.However, suitable methods of measurement forintellectual capital have been relatively slow todevelop. The crux of the matter is that timeneeds to be spent on identifying items that willprovide tangible proof that intangible developmentis taking place, thus providing assurance toinvestors or stakeholders.

A number of methodologies have beendeveloped over the years but each one more orless fits into one of the following four broadgroups:39

¥ Direct Intellectual Capital methods(DIC). The financial value of theorganisation s intangible assets isestimated by identifying its componentsand evaluating them directly or bymeans of an aggregated coefficient.

¥ Market Capitalization Methods (MCM).The d i f f e r ence be tween anorganisation s market capitalisation andbook value as the value of its intellectualcapital or intangible assets.

¥ Return on Assets methods (ROA). The

organisation s average pre-tax earningsfor a period of time are divided by theaverage tangible assets of the company.The result is the ROA which iscompared to the industry average. Thedifference is multiplied by the company’saverage tangible assets and then dividedby the organisation s average cost ofcapital which will give an estimate valueof its intangible assets or intellectualcapital.

¥ Scorecard Methods (SC). The variouscomponents of intangible assets orintellectual capital are identified andindicators and indices are generatedand reported in scorecards or asgraphs. SC methods are similar to DISmethods, except that no estimate ismade of the financial value of theIntangible assets. A composite indexmay or may not be produced.

Due to the first three techniques allrequiring financial information that is not relevantto government and not for profit organisations,the methodologies described in this section allfall under the scorecard method. Each technique,while still created for a private sector contextcan be adapted for use in public organisations.

An exception is the more recentlydeveloped Human Capital DevelopmentFramework. It is a more holistic approach tomeasuring Human Capital Development and it,along with the other measurement models, isdiscussed in detail below.

Measuring the return toHuman Capital Development

Human CapitalDevelopment FrameworkWhat it is

The Human Capital DevelopmentFramework, developed by Accenture, is ananalytical measurement and planning tool thatenables an organisation to identify and measurethe human capital factors that directly or indirectlyaffect organisational performance. That way an

organisation is enabled to adopt a more strategicapproach, investing into areas of human capitalthat will have the greatest impact.

Ed Jensen, a partner in Accenture’s humanperformance practice, says the framework isbased upon the idea that linkage between a

40

human resources initiative and businessperformance may not necessarily be direct andinstantaneous.40 Jensen said:

"It’s multi-tiered. We look at the impact,say, of human resources practices on employeeengagement, leadership, things like that, and then,in turn, the impact of those factors on importantbusiness outcomes such as quality or innovation,which affect shareholder value."

The Human Capital DevelopmentFramework is based on data collected byAccenture over a period of four years. Interviewswere conducted with senior HR executives,CFOs and financial analysts from nearly 50companies. The analysis revealed two recurringthemes regarding the measurement of humancapital. First, measures need to be meaningfulfrom an operational perspective. That is, managerswant measures that reflect the way organisationscreate value. They also want a measurementframework sensitive to differences in businessmodels, which is of particular relevance to thepublic sector. Second, measures need to be usefulfrom an investment perspective. Seniormanagement need to know both, what skills arerequired to deliver on their strategic objectivesas well as the kinds of HR capabilities theorganisation will need to ensure the relevantlevels of talent as the most critical performancedrivers are an organisation’s people, theirknowledge and skill, and their ability andwillingness to execute.

How it worksThe above mentioned themes are handled

by using four distinct levels of measurement toreach an assessment of an organisation s humancapital practices and investments, and determinethe resulting benefits. These four levels are:

¥ Tier 1, business results, consists ofmeasures of organisational performance(e.g., traditional financial analysesfeaturing revenue growth, market shareand stock performance).

¥ Tier 2, key performance drivers, consistso f measures o f in termedia teorganisat ional outcomes (e .g . ,productivity, quality, innovation andcustomer satisfaction) often capturedon a balanced scorecard.

¥ Tier 3, human capital capabilities, consistsof the most immediate and visible.41

Business Results

Key Performance Drivers

Human Capital Capabilities

Economic ValueAdded“

Price EarningRatio

Sales GrowthNet OperationsProfit After Taxes

Productivity Quality Innovation Customers

LeadershipWorkforceProficiency

EmploymentEngagement

WorkforcePerformance

WorkforceAdaptability

TalentManagement

Human CapitalEfficiency

CompetencyManagement

CareerDevelopment

PerformanceAppraisal

Succession Planning/Leadership Development

RecruitingWorkforcePlanning

WorkforceDesign

Rewards andRecognition

EmployeeRelations

Human CapitalStrategy

LearningManagement

KnowledgeManagement

Human Capital Infrastructure

Tier 1

Tier 2

Tier 3

Tier 4

Figure 3 - The HCD Framework

Source: Thomas, Cheese & Benton (2003)

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Data is collected at all four tiers of theframework. Business results and financial metrics (tiers1 and 2) are collected through an electronic survey offinance and line executives, supplemented by publiclyavailable reports. Data from tiers 3 and 4 are mostlycollected through online questionnaires from HR andfrontline employees. The result is a human capitaldevelopment scorecard clearly depicting an organisation sability to use human capital to generate value. Thescorecard is represented by numeric values which canbe used to benchmark against previous reports, otherunits or similar organisations.

With the scorecard, an organisation candiagnose its strengths and weaknesses in key humancapital processes and then prioritise investments,track performance and evaluate the overall impactof those investments on the business.

Case study 3 gives a more detailed descriptionon how the framework works in practice.

Relevance to the public sectorThe use of the HCD framework in the public

sector is an attractive option. As with the othermodels, the financial motive (tier 1) can be replacedby service delivery indicators. Once the HCDframework has been completed, the performance

of a South African governmental organisation canbe benchmarked against the performance in othergovernment departments both locally andinternationally. This will highlight the areas whereinterventions are required both in terms of humancapital development and the management processes.

An Accenture team worked with Eskomfor eight weeks to collect data within the fourmajor areas of the Human Capital Developmentframework. Business results were representedas Eskom’s two-year average capital efficiencyrelative to industry peer groups. Thecomprehensive testing procedures included anexamination of actual HR and other corporatedata, employee and HR executive surveyresponses, and interviews with executives.

The results of the analysis seemed toindicate that HR had a large number ofemployees that are generally focused on basicadministrative tasks. Eskom is currentlyincreasing its use of technology to reduce someadministrative tasks, allowing HR professionalsto focus on more strategic issues.

Source: www.accenture.com

What it isDevised by Karl Erik Sveiby, the Intangible

Assets Monitor (IAM) attempts to measureintellectual capital by means of three sets ofindicators reflecting the three dimensions of IC

as discussed in this document. Each dimension isfurther broken down into growth, innovation,efficiency and stability. This enables themeasurement to take into account stock and flowsof intellectual capital.

Intangible Assets Monitor

Intangible Assets Monitor

Intangible AssetsTangibleAssets External

StructureInternal

StructureCompetence

Growth

Innovation

Efficiency

Stability

Figure 4 - Intangible Assets Monitor 42

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How it worksIndicators need to be developed for each

cell in the above table that are relevant to theorganisation s context and strategic direction.Sveiby recommends that the monitor not exceeda page and in so doing limiting the indicatorsto those that are most valuable. The IAMexamines how the intangible assets aredeveloping by designing indicators that correlatewith: the growth of the asset in question, itsrenewal pace (innovation), how efficiently it isbeing used and the risk that it may cease toexist.

Relevance to the public sectorThe IAM is possible to implement in a

public sector context as it has an open endedview of external stakeholders and is not fixatedon customers in a business sense. Implementingthe IAM does however require a redesign ofcerta in processes towards knowledgemanagement and while many view this asbeneficial, it may be difficult to achieve in thepublic sector.

The IAM is used in the previouslymentioned Tango“ simulation, which can betailored to a particular department and aid inthe redefinition of how the state views itsemployees. Below is an example of a publicsector IAM from the Local Home CareDepartment in Australia.43

Stability Debtor days inprivate work

Satisfaction SurveyIndex# of Complaints

Support staff turnoverSupport staff attitudes

Prof. staff turnoverProf. staff attitude survey

Efficiency Gross Margin

Market share- Local- Regional Hours/total hours

Admin hours /Total paid hours

Hours sold/Total hours paid

Renewal Revenue fromnew services

Growth in PrivateWork hours

New service hours/total hours

Prof. developmentdays per person

Growth Revenue$ growth

Growth inhours of care

$ Spent on:- Quality Assurance- Software dvlpment$ spent / Total revenues

Average years ofexperienceProportion ofHACC accredited

Indicatorsfor:

FinancialValue

ExternalStructure

Internal Structure

IndividualCompetence

Intangible Assets

Local Government Home Care Monitor

Table 1 - Example of Public Sector IAM

Source: www.sveiby.com

What it isDefining what constitutes a balanced

scorecard (BSC) is not a simple task. Since itsintroduction in 1992, researchers and organisationshave been adapting and building on it, tailoring itfor specific contexts and overcoming shortfalls.In essence, the BSC is not very different from theIAM but focuses more on implementing theorganisation-wide strategy. It was not designed

specifically to measure and publish intangible assets,rather its intention was to take a more "balancedview" on internal performance measurement. Aswith the IAM, it includes a financial perspectiverepresenting the tangible assets and threedimensions representing the intangible namely:the customer perspective, the internal businessperspective and the learning and growthperspective.

Balanced Scorecard

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How it worksThe BSC valuation methodology converts

an organisation’s value drivers, such as customerservice, innovation, operational efficiency andfinancial performance, to a series of definedmetrics. Companies record and analyse thesemetrics to help determine if they’re achievingstrategic goals. A fully implemented Scorecardcascades from the top levels of a company all theway down. Ultimately, each member of theorganisation works off a personal Scorecard,striving to achieve personal objectives based onmeasurements directly linked to the corporatestrategy.45

Relevance to public sectorOriginally introduced as a tool for

commercial organisations (which typically focuson financial performance), the Balanced Scorecardhas found considerable support and is widely usedin the public sector. It is particularly popular asa public sector performance management tool inthe United States, the United Kingdom, Australiaand Scandinavia.46 For the public sector, theorganisation s mandate moves to the top of thebalanced scorecard as opposed to the financialbottom line.47

Government departments are accountablefor the efficient allocation of funds but it is nottheir ultimate aspiration. They exist to serve ahigher purpose, for example: reducing theincidence of HIV or increasing public safety.Strategy remains at the core of the Scorecardsystem, regardless of whether it is public or private.

Learning & growth perspective

Internal business perspective

Customer perspective

Financial perspective

Figure 5 - Balanced scorecard44

Mission

Customer

Who do we define as ourcustomer? How do we create

value for our customer?

Financial

How do we add value forcustomers while controlling

costs?

Internal Process

To satisfy customers whilemeeting budgetary

constraints, at what businessprocesses must we excel?

How do we enable ourselvesto grow and change, meeting

ongoing demands?

Employee learning& growth

Strategy

Figure 6 - Public Sector Balanced Scorecard

Source: www.balancedscorecard.biz

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There are some similarities between the IAMand the BSC. Both theories suggest that non-financialmeasures must complement the financial indicators.Both concepts categorise the non-financial, the"intangible" areas into three. Both also argue thatthe non-financial ratios and indicators must be liftedfrom the operational to the strategic level of thefirm. Both also agree that this approach to measuringis not a new control instrument; it should be usedfor improving learning and dialogue.48

However, there are a few theoreticaldifferences namely:

1. The IAM does not see people as a costbut as the only profit generators in an

organisation and the source of wealthcreation.

2. The IAM acknowledges that intangiblestructures are created as a result of

human actions.3. The IAM is based on the stock-flow theory

which is the basis for traditional accountingtheory.

4. The stakeholder section of the IAM ismore relevant for the public sector thanthe equivalent section in the BSC.

5. The IAM requires a redesign process thatfocuses on knowledge management, thusthe monitoring tool serves to improvestrategy not just roll it out.17

Comparing IAM and BSC

Skandia Navigator“andIC Index“What it is

Representing one of the greatestmilestones in intellectual capital development,Skandia was the first organisation to reporton their intellectual capital making use of theNavigator“ methodology.49 Similar to theother models already discussed, measurementof the intangible assets is done by means ofexamining metrics. The indicators are dividedinto five subsets of intellectual capital namely:financial, human, customer, innovation andprocess (innovation and process combine tocreate organisational capital).50

How it worksInitially Skandia identified 164 indicators to

measure their five areas of focus. This was later reducedto 112 in order to remove redundancies. The indicatorsmake use of direct counts, financial valuations, ratiosand survey results. Monetary measures are combinedusing a pre-determined weighting to form an overallIC value for the organisation. Ratios can be used asa measure of incompleteness and normally combinedto form a coefficient for the IC efficiency that capturesthe organisation s velocity, position and direction. Thetable below gives a few examples of what the indicatorsin each section could be.

Financial Focus ¥ Revenue / employee costs¥ Revenue from new customers / total revenue¥ Profits resulting from new business operations

Customer Focus ¥ no. of days visiting customers¥ Ratio of sales contacts to sales closed¥ Number of customers gained versus lost

Process Focus ¥ PCs / employees¥ Processing time

Innovation Focus ¥ Satisfied employee index(Renewal and ¥ Training expense / administrative expensedevelopment) ¥ Average age of patentsHuman Focus ¥ Management with advanced degrees

¥ Annual turnover of staff

Table 2 - Sample of Navigator indicators

Source: Bontis (2000

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The IC Index“ is a second generationIC measurement that attempts to consolidatethe different individual indicators into a singleindex. This synthesis allows managers toview the IC of the organisation holisticallyr a t he r t h an on l y on t he i nd i v i du a lcomponents.

Relevance to the public sectorAs with the other models, it is possible to

adapt it to make it relevant to the non profit centredgovernment organisations. Dr Nick Bontis waseven able to calculate the IC Index of whole nations,thus creating a way to compare the intellectualcapital in a country with that of its peers.51

In effect, Human Capital Development requiresa holistic approach that includes robust HRM processesand a blended approach to the learning approachesthat have been adopted. Thus the innovative conceptssuggested in Chapter 3, can be reinforced with themore traditional forms of intervention including jobaids, decentralized instruction, induction, coachingand mentoring.

It is important to note that HCD strategiescan be undermined if other HR processes within thePublic Service are not improved. Technology in thisregard plays an important role as robust humanresource management processes should beunderpinned by employing suitable HR softwaretechnology to make them more effective.

Automation of HR business processes enablesorganisations to free up their HR teams to performvalue-added services while reducing operational costs.HR software with comprehensive HR capabilities canoffer workforce management to compensation andtalent management solutions. They can also incorporatefunctionality to support the entire request-to-resolveprocess by giving HR specialists a view of everyemployee’s case history and HR data, enabling themto quickly manage and resolve all employee HR issuesin real time.

The induction process is also especiallyimportant as not only does it help to portraya positive image of the Public Service but alsoreinforces the value placed on a new staffmembers. Consequently, there needs to be inplace a structured, focused induct ionprogramme which introduces new recruits tothe organisation, career possibilities within itand staff support systems. Proper inductionenables new staff to quickly become assimilatedinto the organisation and to have the necessaryunderstanding of the general environment ofthe organisation as well as an appreciation ofthe values and ethics, which reflect its uniqueethos.52

Coaching and mentoring become centralin the context of the South African publicservice, as they offer an avenue through whichsuccession planning can be dealt with. Instabilitycaused by the frequent movement of staffwithin the Pubic Service and exacerbated skillsshortages can be better managed througheffective mentoring programmes. Mentoringallows for the transfer of tacit knowledgewithin the organisation, from the moreexperienced to less experienced staff members.

Conclusion

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The South African public service invests asignificant proportion of its personnel budget ontraining and skills development. A number of innovativeapproaches have been introduced by variousdepartments, with a view to improving access toopportunities, mitigating the impact on productivity,and improving the effectiveness of the outcomes forthe benefit of the particular department. However,inadequate human resources development systemshave often led to fragmented implementation, andlack of follow-through. Those non-traditionalmethodologies that require sustained follow-up (thatis, those that are not once-off training blocks) suchas modular delivery, self-study, and mentoring andcoaching often suffer the highest attrition rates.

The approaches to HCD presented here canclearly also be usefully applied in different contextswithin the public service. As with any other new idea,an organisation s experience of implementation maydiffer, sometimes significantly, from the theory, andfrom the experience of those that have tried itbeforehand. Organisations that are already in a stateof transition may experience some challenges inintroducing new technologies and approaches, astheir value may be difficult to assess, amidst all theother uncertainties.

With that in mind, some key principles shouldgovern the introduction of any of the methodologiespresented here.

Uncertainty and unknowns are to beexpected

Even though many of the techniques thatwere mentioned in this report are not entirely new,they still represent a shift in the manner in whichemployees and training are treated in South Africaand especially within the public service. As a result,there are the unknowns and uncertainties that comestandard with any new initiative. Despite evidence ofsuccessful implementation elsewhere, there will stillbe uncertainties as to whether or not the programmeswill work in the South African context. However,the importance of the subject and the potentialbenefits to service delivery at least warrant furtherinvestigation into the area.

Stakeholder buy-in is integral to successfulimplementation

Implementing a new organisational system ofany kind requires commitment at a number of levels.Principally, all stakeholders to the strategy need tohave full buy-in. The nature of the approach is thatit is cooperative and a lack of commitment from anyof the parties involved would cause the initiative tofail. Consider a community of practice implementedin a department. If top management is not fullycommitted to the idea, support will not be forthcomingand the communities will fade away. Similarly, if topmanagement is committed to something that theemployees are not interested in, the effort will bewasted as no learning will take place. Once the strategyhas been completed, the vision, motivation andobjectives behind it need to be clearly communicatedto everyone involved so that all stakeholders arepointing in the same direction having gained a fullunderstanding of how it is to benefit them personallyas well as the organisation.

Commitment and follow throughDuring the rolling out of an innovative

knowledge management strategy, stumbling blockswill appear in the road where nothing but a clearpath may have been expected. These setbacks shouldnot be seen as insurmountable, but rather theorganisation should stay committed to achieving itsstated goals. Perseverance in this will not only seethe organisation through the process but by sharingthe information with other departments, help smooththe road for the state to move towards being alearning government.

Furthermore, the commitment needs to bewhole-hearted. Implementing a single element suchas SML groups but keeping everything else the same,is not likely to have a great impact. Commitmentneeds to come from all stakeholders. This implies achange in the organisational culture towards that oflearning and knowledge management. Thereforeimplementing a half-hearted strategy in order to testthe water is probably not going to yield promisingresults. Rather, implementing a comprehensive strategyin a smaller environment as a learning exercise wouldbe much more beneficial.

Implementing HCD strategiesin organisations undergoingchange

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The SA Public service has undergonesignificant changes over the last ten years. Duringthat period, a variety of HRD, management andplanning tools have been introduced that aimedto facilitate the transition into a more clientoriented service, and to improve efficiency andservice delivery performance. The success ofthose initiatives has been patchy, at best. The

introduction of any new methodologies must takeinto cognisance previous experiences, the lessonsthat were learned from them, and the expectedvalue that the new approach will contribute.Realistic expectations, coupled with adequateresources and buy-in should result in much greatervalue derived from the implementation of themethodologies presented here.

Conclusion

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Recommendation1Utilise E-learning for selected programmes

E-learning can create efficiencies in learningin areas where traditional learning techniqueshave not been optimal for whatever reason. Anexample of programmes that would benefit greatlyfrom an e-learning orientation is the PresidentialStrategic Leadership and Development Programme(PSLDP) and the Senior Executive Program (SEP).The PSLDP is a programme that is aligned to theSMS framework, its purpose being to improveservice delivery by improving the capacity of publicsector leadership and the SEP aims to strengthenstrategic capability, enhance leadership skills oftop managers while stimulating the regions plansfor capacity building. In a study of the SMS53, over75% of those that attended one or both of theprogrammes believed that the programme(s)positively affected their ability to do their jobs.However, 47% of the sample had not attendedthe course citing a lack of time as the primaryreason. In such a case, e-learning will enable themanagers to work through the course materialwithout having to leave their respective offices.SAMDI as the providers of the course would needto investigate the most appropriate level and mixof technologies that would be required in orderto maximise the programmes effectiveness.

Recommendation 2Create Self Managed Learning groups inthe HRM function to facilitate strategicrepositioning

The public service HRM function and itsrole in supporting the ideal of the developmentalstate is under review. This provides an opportunityto integrate constructive learning and innovationinto the process of transition in an organic manner.It is recommended that participation andcompletion of SLC form part of employeesperformance assessments. The SML should bestrongly supported by top management and asuitable budget provided. Case study 1 gives anexample of SML implementation in a public sectorenvironment.

SML groups are most effective when themembers share a common function but cut acrosstraditional organisational lines. This breedsinnovation and the sharing of ideas as well as acommon understanding of technical requirements

and constraints. SML groups are recommendedfor the following reasons:

1. SML groups have many of the benefitsof communities of practice in terms ofthe interactivity and mutual supportbetween members. This group dynamicwill more effectively identify technicalskills that require attention.

2. Learning synergies are also created asa result of the above due to theidentification of common skills needs.

3. People have an understanding of theirown competency gaps and thus caneffectively set their own learningobjectives.

4. SML groups are more formal and thuscan be better controlled and managed.

5. Employees can be held accountable totheir learning objectives as set out intheir Strategic Learning Contract (SLC).

The HRM function has been identified asthe subject of the initiative for the followingreasons:

1. The competency of HRM has aninfluence on the performance of thepublic sector as a whole due to thepivotal role of employees.

2. Traditionally the function HRM has beenlargely administrative. Under the newdispensation HRM is required to fulfil amore strategic role and in addition, theDPSA is driving a Repositioning of HR .The combination of these changes meansthat there is a growing need for skillsdevelopment within the HRM functionacross the public sector.

3. HRM will drive the role out of any ofthe knowledge management strategiesdiscussed in this document and thusneed to be in a position to do so.

Recommendation 3Implement a comprehensive knowledgemanagement strategy in a singledepartment through the establishmentof a PPP

As mentioned in the report, theeffectiveness of any of the programmes discussedis enhanced when they form part of an overall

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strategy rather than an initiative implemented inisolation. Thus it is recommended that a suitabledepartment is identified and a comprehensiveknowledge management approach is implemented.This should include a number of elements namely:

1. Measurement. An assessment shouldbe done up front to establish the stateof knowledge and KM processes in thedepartment. This will also be used as abaseline to determine the effectivenessof the development initiatives with futuremeasurements.

2. Human Capital Development. A strategyto develop the capacity of the staffshould be developed and can includeany number/combination of programmesas the department sees fit (based onthe results of the initial measurement).This could be usefully focused as partof a scarce skills recruitment andretention strategy of a department.

3. Structural and Stakeholder Capital. Astrategy should also be developed toenable the department in improveorganisational memory. Developinghuman capital without also developinga means to retain (and make accessible)the resulting knowledge is not optimal.

One of the major difficulties of an initiativesuch as this is ownership of the process. Who isthe custodian and do they have the relevant skills?For this reason a PPP is recommended. A serviceprovider should be selected that will help thedepartment to develop the appropriate strategies,walk them through the implementation phase andfinally phase themselves out, transferring therequired skills to the department.

Recommendation 4Development of a KnowledgeManagement Hub

Part of supporting a learning communityis ensuring that well structured, managed, andupdated repositories exist for storing informationin a manner that will enable others to use it andlearn from it. A major problem in the publicservice is that the silo structure createsinefficiencies where functions and research areduplicated across different departments, and thereis limited sharing of research and training products.If all such could be readily available to alldepartments, then much of the above-mentionedwaste will be eliminated.

The recommendation is therefore that acentral repository be created where alldepartments will be required to upload theirresearch and training information. The structureand content of this repository should be guidedby the areas of common interest acrossdepartments. Effectively, this would be an electroniclibrary, wherein information would be indexed,and public servants would be able to search onkey words that are relevant to them. The keywords can be generic (e.g. as monitoring andevaluation) or sector and content specific. Thiscross-silo sharing of information will enabledepartments to:

¥ Know what work has already beenundertaken in areas of common interest,and what needs to be taken further;

¥ Identify areas of cooperation with otherdepartments,

¥ Identify lessons learned by others thatcan be usefully applied in owndepartment

¥ Identify opportunities for shared learning,or even cases of best practice

The system should be developedincrementally, initially focusing on researchproducts and other information that can besubmitted easily. Ultimately, this system can beexpanded to include technical guides on usefulmethodologies that are relevant to the HRD needsof the public service; case studies; learning historiesetc, which departments can use as referencematerial for their own human capital developmentprogrammes.

The success of such an initiative will reston two important pillars:

1. There must be a specific Owner of theHub, whose responsibilities includemanaging and updating the Hub as aplatform for information exchange, anddissemination of information to ensurethat users and potential users are awareof its capabilities.

2. Departments must be required to lodgeall appropriate information with theHub. This necessarily requires thatguidelines must be developed on whatconstitutes appropriate material thatshould be lodged on the Hub. Giventhat the purpose is to support learning,SAMDI and DPSA are possibly the mostsuitable partners to guide and drive theprocess.

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Purpose of the Case StudiesThe purpose of the case studies is to

demonstrate application of some of the conceptsof intellectual capital development discussed inthe report and take lessons from the cases forapplication in the South African perspective.

Seven case studies were selected, basedon the following:

¥ Demonstration of one or all of thecomponents of intellectual capitaldevelopment stakeholder, organisationalor individual capital development

¥ Broad relevance across the public,private and societal /community sectors.

Each case study explores key lessons thatare applicable to the South African situation,focusing on the factors and practices thatcontributed to success, as well as highlightingenabling and limiting factors within the SouthAfrican public service.

Case study 1:West SussexCountyCouncilType of case:

Self-Managed Learning

Overview:Taken from a county council setting, this

case study illustrates an approach to self-managedlearning, the conditions for success and the benefitsderiving from this approach. It demonstrates howself-managed learning contributes to organisationaland human capital development.

Source:Anne Davies, Management development

through self managed learning: the case of WestSussex County Council, Development and Learningin Organisations, Vol. 20 No. 4 2006, pp. 16-18.

Description:The West Sussex County Council, United

Kingdom introduced the Advanced ManagementDevelopment Programme (AMPD) in 1999. Theprogramme runs in partnership with the Universityof Chichester, which offer a Post GraduateDiploma in Strategic Management on completionof the programme.

AMPD is a County Council initiative ledby the Chief executive and provides a frameworkfor individual participants to design and achievetheir own individual learning plan and by doing socontribute to continuing organisationaldevelopment. The programme operates over an18-month period but unlike other Post GraduateAward Schemes delivered at a university, doesnot consist of taught modules and is not descriptivein its curriculum. The way the programme isstructured ensures that each student forms atailor made plan of learning that fits with his orher individual needs and matches the requirementsof their role at work. It is designed toaccommodate the different needs and learningstyles of each student, working within a disciplinedframework.

Phase one of the programme which coversa period of six months requires that the studentsform learning sets of approximately five studentsand a coach. These learning sets meet once amonth and should aid in the early production ofa full strategic learning contract (SLC). The SLCis a learning contract agreed by student, coachand learning set and emphasizes the responsibilityof each student to deliver his or her learning goals.It also ratifies the content of the programme andensures that common standards are beingmaintained. Each SLC is reviewed and critiquedat meetings of the learning set and at the end ofthe six month period, a panel includingrepresentation from Chichester University andthe external examiner formally assess the SLCs.

On completion of phase one, students thenprogress to phase two which covers approximatelytwelve months where students work on andachieve their SLC. Learning sets continue to meeton a monthly basis and students are required toundertake a corporate project that matches thestudents individual learning aims. Final completion

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of phase two involves a presentation to thelearning set and an overview of their projectwork. All work is assessed at a final panel bringingtogether all the coaches, representation fromChichester University and the external examiner.

Lessons Learned:SML is carried out in the context that

organisational needs cannot be met withoutindividuals feel ing a personal sense ofcommitment to what is required by theorganisation. Learning sets provide unique, cost-effective forums to push individuals to learn indepth and to solve real organisational problemsat the same time.

The design and delivery of the programmeis proven to bring about significant learning andencourages planning, reflection, review andaction. The learning set approach provides apowerful stimulus, aids confidence building andimproves willingness and the ability to conductcritical and realistic self-appraisal. It encouragesstudents to determine and therefore own hisor her own SLC and development.

The use of self-managed learning hasproved an invaluable technique for gettingindividuals to think and learn about their ownpersonal development as well as committing tothe development of their organisation. It hasheightened managers’ ability to think morestrategically and use their learning in practicalapplications within the workplace

Applicability:The process begins through job profiling

where the knowledge and skills to produceoutputs / deliver services (i.e., competencies)are identified. Developmental gaps withinemployees are then identified. The requiredskills are assessed based on the impact it willhave on learning and what level of competencywill be achieved when the employee hascompleted specific learning activities. Employeesuse this information to develop a plan that willbridge the gaps in their set of skills and targettheir required development.

The programme ensures that delegatesnot only get a huge amount of relevant learningand development from but also succeed inachieving a recognised qualification which canlead to a formal or accredited qualification (inthe above scenario a Masters in strategicmanagement). Attending a learning set is not

like going off on a course: meetings only workon practical issues that have a bearing on theorganisation and the needs of individuals in thegroup. This not only enhances their performancebut can reduce training costs.

Self managed learning can be applied tomanagement development within the publicservice especially if undertaken in partnershipwith educational institutions, for instance, localuniversities, SAMDI and SETAs.

Case study 2:EnhancingknowledgeexchangethroughCommunitiesof Practice atthe Inter-AmericanDevelopmentBankType of case:

Communit ies o f Pract ice (CoP)

Overview:This case study shows how Communities

of Practice (CoPs) - informal groups ofprofessional workers who share similar interestsand goals - have emerged in the past few yearsat the Inter-American Development Bank (IDB).These CoPs are complementing the existingstructures and enhancing knowledge exchangeand organisational learning. These BankNetworks position the Institution in an optimalsituation to explore to a greater extent thebenefits of knowledge exchange and leveragingof institutional knowledge.

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Source:Alfredo Moreno, Enhancing knowledge

exchange through Communities of Practice at theInter-American Development Bank, Aslib ProceedingsVol 53, No. 8, September 2001

Description:There is a growing acknowledgement that

the operational success of any organisation orinstitution will increasingly rely on their ability toleverage institutional knowledge. When the Inter-American Development Bank s (IDB) Managementapproved the establishment of an inter-departmentalcoordinating group, KENSTEER (Knowledge ExchangeNetwork Steering Committee) in 1999, it recognisedthe importance of institutional knowledge and theintellectual assets of the Bank. Since its inception,KENSTEER has been exploring the potential ofknowledge exchange and leveraging institutionalknowledge principles.

KENSTEER observed and showed interest inthe knowledge exchange activities that were takingplace within informal groups at the Bank. It wasapparent from the outset that informal BankCommunities of Practice, often referred as to BankNetworks, had been emerging spontaneously at theIDB. The IDB Networks, often referred to as thematicgroups in other institutions or corporations, aremainly sector/thematic oriented and demand driven.They seem unconsciously to complement the existingstructures, enhancing knowledge exchange, andenabling powerful new forms of social organisationand learning, which reflect the participation of members.

The aim of the IDB Networks could besummarised as follows:

...to serve as a [virtual] forum for professionalStaff to promote knowledge generation anddissemination, and as a way to connect staff fromvarious departments in the Bank that are working orinterested in similar issues.

Network leaders, commonly referred to asco-coordinators or facilitators, seem to have emergedspontaneously. They provide intellectual leadershipand have a talent to facilitate and draw people. Theirmain role is facilitating and coaching knowledgeprocesses and activities.

While most of the Bank Networks could beregarded as continuous or semi-permanent ,Networks are also somewhat fragile , often dependenton the presence of one or more exceptional individualswho have emerged spontaneously and who devotetime to the Network. The size of the Networks, as

determined by the number of participants or members,varies greatly. Membership, which is fairly representativeof most departments and units, ranges from littlemore than a dozen to nearly 180 and is open to theentire Bank. Member s participation is by and largeunregulated and discretionary.

Most Networks have met on several occasionsand sponsor activities at periodic intervals. Resourcesand basic needs seem to be a critical issue for theIDB Networks. Although some of the Bank sNetworks are largely self sufficient and do not havea proper budget, they have stated explicitly that theywould benefit from some funding and resources tocarry out and cover the expenses of related activities.However, Networks do not want to be treated likeanother unit or working group in the requirementto establish output accountabilities, even though someindicators of their performance would be very valuableto illustrate their benefits to Management.

Apart from the face-to-face interactions, thatare considered very important, other tools like e-mail, distribution lists, and the use of Electronic PublicFolders are most commonly used to function as avirtual forum space for professional staff in the Bankand as aids to discussion and member s communication.

Specific co-ordination and co-operationbetween some Networks is already taking place, butit seems to be limited. Many efforts and initiativesfrom different Networks are underway, but it seemsthat further collaboration among them could be higherfor mutual synergy purposes and in order to takeadvantage of the benefits of sharing best practicesand lessons learned between the more mature andnewer Networks. A Knowledge Exchange Fair in May2001 promoted greater interaction between theNetworks and staff.

Lessons Learned:The Networks that are established often

unconsciously address the issue of professional isolationof technical staff and bridge the gap between technicalfamilies across the Operational Regional DepartmentsDivisions and Country Offices within the same or adifferent Department. This is accomplished byexchanging information/knowledge within the membersof a community with similar interests and needs.

The Bank s Communities of Practice thus offera space for dialogue among those working on similarissues. These groups are self-organised, setting theirown basic objectives, often implicitly, and establishingtheir own leadership. Membership is largely voluntaryand self-selected.

There is a general belief among Networkparticipants and members alike, that fosteringthese Communities when necessary will result inmore rapid organisational learning, more effectivedecision-making using lessons learned, and morerapid and effective problem solving. Circumstantialevidence shows that the Bank s Networks providethe opportunity to add value to the participantsand the Institution alike.

Applicability:The public service would benefit greatly

especially in the area of project implementation,if communities were formed between national,provincial and local government and between thepolicy makers and those who implement policy.That way, civil servants at different levels will beable to learn together and move forward in servicedelivery. As was shown in the case, the logisticalconstraints of this can be overcome through acombination of face to face and electronicinteractions. As a result interventions can beimplemented efficiently; stakeholders can identifyand respond to obstacles more quickly, and criticalstakeholders can be kept clued-up throughoutthe transformation period.

Case study 3:Measuring thevalue ofhuman capitalinvestments:the SAP caseType of case:

Measuring Intellectual Capital

Overview:This case study illustrates how a new tool

can help executives learn whether they are gettingsignificant return on their investment on humancapital and whether the expenditure is financiallyjustifiable.

Source:Susan Cantrell, James M. Benton, Terry

Laudal and Robert J. Thomas, Measuring the valueof human capital investments: the SAP case,Strategy and Leadership, Vol. 34 No. 2 2006,pp.43-52

Description:In 2002, SAP America, Inc., the North

American division of the global softwarecorporation, was in the doldrums. It hadconsistently missed financial targets for five years,sometimes by as much as 50 percent. It had lostmarket share and revenues were declining. Toget the business back on track, executivesenvisioned a change in strategy. This shift wouldrequire a change in the division s culture, to onethat brought more accountability and disciplineinto critical process execution, while preservingsome of its entrepreneurialism.

To implement the new strategy, thecompany would also have to rethink and re-engineer some of its core human capital processes.In the software industry, up to 75 percent of acompany s market value is related to intangibleassets such as people and their knowledge, andpeople costs represent nearly 40 percent of totalcosts in the average software company.

Like many companies, however, SAPAmerica had been making investment decisionsin their people largely on the basis of faith ratherthan empirical, quantifiable data. But as the firmmoved to instil a more disciplined culture,executives knew that facts supported by datawould be more valuable than intuition in manyinstances. They found that metrics that trackbusiness performance, such as economic value-added (EVA) and return on invested capital didn treflect the increasing importance of people assets.And the few people-oriented metrics that SAPtracked, such as training budget per employee,were not deemed as helpful for making investmentdecisions. Senior vice president of humanresources Terry Laudal explained the problem:

These numbers tell us nothing about theeffectiveness of our people programs. If you arespending a lot on human capital investments, forexample, you may be wasting money on inefficientexecution of transactional processes, or you maybe using resources that are not aligned withcritical business priorities.

In addition, survey data collected fromemployees was seen as helpful, but limited inutility. The company regularly held employee andmanagement advisory council meetings and60

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surveyed its employees to obtain information ontheir satisfaction with people programs and toget a pulse on the level of engagement. First,executives were wary of equating employeesatisfaction with business results; just becausesatisfaction with a particular people program hadgone up, for example, didn t necessarily mean itwould yield better business results. Second,although executives had some idea of theengagement level of their employees — or howemotionally involved, aligned, and committedtheir employees were to their work and theorganisation — they had no way of knowing howtheir engagement levels compared with those ofother companies. Nor did the company knowwhat specific actions would empirically lead toimproved engagement, or how engagement wasassociated with operating and financial outcomes.

A new framework for human capital

SAP decided to adopt the Human CapitalDevelopment Framework and followed theprocedures outlined in chapter 4. When theywere presented with the results of the firstimplementation of the framework, SAP sexecutives were pleased to see that one yearinto their turnaround efforts, many initiativesseemed to be paying off in relatively high processand capability scores. More than half of theorganisation s human capital processes were inthe top quartile of benchmarking results (i.e.better than 75 percent of the other organisationsin the study); nearly all the rest were in thesecond quartile of benchmarking results. In orderto gain the greatest return from the HCDinterventions, effort needs to be invested intothe areas that are weak, indicated by a lowbenchmark ranking as well as being related to akey business driver.

Following this principle, SAP Americafocused on three things:

¥ learning management¥ human capital infrastructure (that is,

the firm s transactional HR processes)¥ the succession planning process

Suitable interventions were rolled out willthe following impact on SAP performance.

¥ SAP America has reduced the cost ofthe ir HR serv ice del ivery byapproximately 50%

¥ There has been a significant reductionin external hiring for managementpositions and overall internal promotion

rates within the organisation haveincreased from 5% to more than 12%and

¥ The learning management process hasimproved by 11%

These improvements are significant asevidenced by the fact that two processes — humancapital infrastructure and learning management— moved from the second to the first quartile ofbenchmarking results.

Lessons Learnt:The framework was able to measure the

improvement of leadership capability (or theability of those who direct, plan and coordinatethe work of the company, function or businessunit to effectively guide the organisation inaccomplishing its goals) within the organisation,specifically by 16%. Organisations with strongleadership capabilities also have more maturelearning management processes.

Other human capital capabilities improvedas well and have been quantified. Human capitalefficiency (the ability of the organisation toefficiently and cost effectively manage its humanresources) improved by 14% and workforceadaptability (the ability of the workforce to flexiblyrespond to changing business conditions) improvedby 13%.

Overal l , customer and employeesatisfaction have improved and total turnoverdropped by between 5 — 10%. Human capitalprocesses were an important factor in theorganisation s ability to effectively execute thenew strategy and ultimately improve performanceincluding financial results.

Applicability:The HCD framework adds value in that

it identifies specific areas that need some formof development as well as acknowledging theindirect link between traditional HR processesand service delivery. Departments and SAMDIspend millions every year on training and theseinvestments are by no means blind but thequestion of whether or not these investmentsare impacting service delivery remain largelyunanswered. The SAP case showed how examiningand measuring the linkages from people and HRprocesses to the bottom line (service delivery)enables the organisation to invest strategically inits people, having the desired impact on the overallperformance of the organisation.

Case study 4:SouthGippslandShire Council(SGSC)Type of case:

Simulation, Intangible Assets Monitor

Overview:TANGO is a unique business simulation

that demonstrates how managing the organisation sintangible assets are critical to the delivery of highquality outcomes and to organisational health.During the simulation participants learn valuablelessons about strategy setting, valuing and managingintangible assets such as knowledge, reputationand image, and the importance of trust andcommunication in effectively functioningorganisations. Over two intensive days of simulatedoperations and facilitated discussion of lessonslearned, participants gain valuable insights into thecontribution that knowledge management canmake to organisational outcomes

Source:Peter Dyson, Business through Knowledge,

LGPro Article

Description:South Gippsland Shire Council (SGSC) is

the first local government group to implement anIntangible Assets Monitor (IAM) to manage theirbusiness. The IAM is a framework that helpsorganisations explicitly manage and develop theirintangible assets. SGSC s Community Servicesbusiness unit used the framework to developinnovative, leading edge, business solutions thathave supported their entry into competitivemarkets.

While completing their business planCommunity Services found that their intangibleassets were their key resource in the knowledgeera. Intangible assets are not always easy tounderstand and often even more difficult tomanage. For example, SGSC s intangible assetsincluded the value of their people and the expertise

and experience they brought to work with themeach day, their relationships with otherorganisations, customers and the community atlarge and the value of the processes and structuresthat they had developed.

Recognising the importance of these assets,SGSC business units participated in a Tangosimulation that helped them build a commonunderstanding of their business, its context andfuture directions. In particular they focussed uponthe flows of intangible assets around theorganisation. In the process of working throughthe seven years of operations, participantslearned valuable lessons about strategy setting,valuing and managing intangible assets such asknowledge, reputation and image, and theimportance of trust and communication ineffectively functioning organisations.

The Tango experience gave the businessunits the opportunity to see the organisationthrough their customers eyes and to understandhow their business might operate successfully inthe long term.

Lessons Learned:The Community Services team identified

key factors for the successful leverage of theirintangible assets in accordance with their businessstrategy. They developed indicators to measuretheir progress towards their goals and broughtthese together in the Intangible Assets Monitor(IAM).

Community Services have found the IAMto be a valuable business decision making andstrategic planning tool. It is now a core elementof their management strategy. It has supportedthe development of strategies for their renewal,growth, stability and efficiency.

Their focus on intangible assets has realisedefficiency and effectiveness improvements. Financialperformance has consistently exceeded the tenderassumptions and annual budget expectations. Theyhave demonstrated that financial and non-financialassets can be managed simultaneously to buildbusiness through knowledge.

The IAM has helped focus on the value,rather than the cost, of their intangible assets.Staff now see themselves as revenue creatorsrather than costs and that their contribution hasbusiness value . IAM has enabled them to

articulately communicate the value and capability62

of their organisation both publicly and privately.The approach to innovation and their IAM willhelp them create a distinct business advantage.

ApplicabilityProject teams within the public service

would find the Tango simulations useful. Asmentioned previously there are manyuncertainties and unknowns in terms of how toimplement a suitable knowledge managementstrategy. A shift to a greater focus on intangibleassets such as HC requires the assimilation notonly of new concepts but also new ways ofthinking. A simulation provides a safe yet realisticenvironment to get more familiar with theconcepts. As participants work with Tango shighly experiential business model, they are ableto immediately identify, test, and evaluate theconsequences of their decisions.

Case study 5:EnhancingSkillsDevelopmentthroughe - LearningType of case:

E — Learning

Overview:This is a pioneering e-learning project

called the Interactive Learning, Communicationand Management (ICAM) project initiated bythe Free State Department of Health anddemonstrates how an e-learning initiative isbeing implemented in the Public Service.

Source:Tamasane, T., Mamogale, M. and Patel, I.

(2004) Enhancing Skills Development ThroughE- Learning (Part of the innovation case studyprogramme of the CPSI).54

Description:Prior to 2001, the Free State s

Department of Health was faced with a challengeof providing medical training and educationalinformation to its all employees across theprovince such as doctors, nurses, clinical staffand other healthcare workers. A largeproportion of employees of the departmentwere unskilled or semi-skilled.

At the time, the department used acombination of face-to-face instruction methods,either through workshops, seminars or blocksessions lasting several days or weeks, to closea skills gap that existed between urban basedand rural based health workers in the province.However, this approach posed significantchallenges for the department. Not only wereblock sessions very costly, they also attracteda small number of participants. The costs includedloss of productivity due to time spent on training,and costs related to travel and accommodation.

In 2001, the Department of Health smanagement team began researching optionsfor increasing the number of people they couldcycle through their training programmes, whileat the same time reduce the costs associatedwith a face-to-face instruction method.

The department benchmarked againstother companies such as BMW SA, StandardBank SA and Telkom SA that develop theirworkers skills through distance learningprogrammes. It has been argued that this methodoffers high-level of interactivity, scalability andreliability. To drive this process further, theDepartment of Health formed the InteractiveLearning, Communication and Management Unitto manage the new learning network.

ICAM is a technology driven system basedon one-touch solution, which provides thedepartment with 40 interactive video-basedclassrooms for learning and teaching. It allowsfor interactive two-way communication and thusencourages viewer participation and enhancescomprehension, and information retention thusmaking distance learning more effective.

Subject matter experts can reach, train,communicate and collaborate with any numberof employees of the department, based anywherein the province. Using audio and datacommunication, the presenter server allows thepresenter or subject matter experts to teachand communicate with each participant duringlearning sessions. Audio communication between64

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the presenter and students encouragesparticipation from everyone. ICAM is enabledwith software applications that make it easierfor the presenter to track participation andactivities taking place at all remote sites duringthe training programmes. This feature allowsthe presenter to effectively monitor and interactwith classroom participants. Post class tabulational lows presenters to determine theiref fect iveness in reaching part ic ipants .Additionally, all participant results can beexported to the department s enterprise learningor resource management system.

From the top management and HumanResource Development to HIV/AIDS andCommunicable Diseases, ICAM serves 14departmental directorates within the Free StateDepartment of Health.

Lessons Learned:ICAM has helped and continues to help

the Department of Health in the Free State toachieve its objectives of providing training andeducation to its entire healthcare workers. Itprovides training to a variety of constituenciessuch as government employees , non-governmental organisations employees, membersof the community-based organisations, andcommunity volunteers such as peer educators,lay counselors and home-based caregivers.

The new training system is cost-effective.The ICAM model has helped the departmentto reduce its costs associated with a face-to-face training method such as traveling to andfrom, and accommodation for people attendingtraining.

It has also helped to reduce or limit lossof productivity. A cost assessment performedby the suppliers of the ICAM system indicatesthat the system cost less than $1 per hour foreach learner attending in 2001.

Applicability:The ICAM project has been celebrated

locally and internationally as an innovative andpioneering effort aimed at building human capitalwithin the public service using the latesttechnology. It has successfully demonstratedand confirmed the possibilities and opportunitiesfor e-learning within the Public Service andgovernment departments should explore thepotential options that e-learning approaches cangenerate.

Case study 6:Toyota SouthAfrica Motors(Pty) Ltd.Type of case:

E — Learning

Overview:Toyota South Africa Motors (Pty) Ltd. have

been in South Africa since 1961 and boasts thelargest network of vehicle dealers in Southern Africa,each committed to excellent sales and after-salesservice. Toyota SA aims to increase its vehicleproduction volume to 220 000 units a year by 2008.Toyota counts on its team members being competent,motivated and committed to the objectives of thecompany — and makes every effort to provideopportunities for growth. To this end the companyrecently opened a state-of-the art training facility,the Toyota Academy in Sandton to address the needfor more skilled personnel. The Academy hassuccessfully used E — Learning as a medium ofinstruction in training its sales force.

Source:Rene Wilson, Toyota South Africa eLearning

for Corporate Sales Training — A Success Storypresented at the e — Learning in the CorporateSector workshop hosted by Active Touch at theInnovation Hub, October 2005.

Description:The Motor Industry Development

Programme (MIDP) was implemented in South Africain 1995 and its core objectives were to improvecompetitiveness, increase vehicle affordability andcontribute to economic growth and job creationthrough increased local production and exports ofvehicles and components.

Toyota Academy was faced with the challengeof ensuring that the Toyota SA sales force was ableto able to confront the challenges of increasedcompetition and increased opportunities for exportsales as a result of the implementation of the MIDP.Within the Toyota Academy it is the responsibilityof the Product Training Centre to ensure that salesforce is skilled and equipped to perform and meetthe industry demands.

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The Product Training Centre was facedseveral challenges:

¥ Ensure the sales force is equipped withskills and knowledge to meet the increasingindustry and customer demands and thusimprove competitiveness and cater forthe expected increase in market sizeprojected to escalate to +/- 770 000 unitsby 2010.

¥ There has been huge growth in exportdemand and when Toyota SA exports toother African countries, the ProductTraining Centre is responsible forconducting train the trainer sessions, aswell as supplying e-Learning material tothe Africa distributors.

¥ A critical element of product knowledgeis understanding the competitorsproducts. As the number of competingbrands increase so does the responsibilityof the Product training centre in terms ofcompetitor comparison training.Competing vehicle brands in South Africahave increased from 15 in 1995 to 36 in2005.

¥ Sales force needed to understand the newtypes of customers that are emerging inthe market

These challenges revolve around both theproduct and the dealers. In terms of the productthe challenges for the sales force were:

¥ Aggressive competition and market growth— manufacturers constantly introducingnew models and products to compete inthe various segments. The sales forceneeded to understand competitorproducts.

¥ Advancement of technology - todayproducts are boasting technological keyselling features thus sales staff need tounderstand and comprehend the technicalaspects of their products.

¥ Due to tough competition and the needfor confidentiality there are shorter periodsfrom release of information, arrival ofunits and the respective launch of a newmodel. This does not leave much time fortraining development and delivery. In thepast it was 3 months, now Toyota SAplans around 2 months.

For the Dealers, despite being aware of theimportance of training it is vital for them to workthe floor in order to meet critical sales targets. Theyalso have to deal with customers who are increasingly

well informed on products. Customers constantlyconduct competitor comparisons in order to identifythe best value for money package. In many instancescustomers are better informed on a specific productthan the sales person. In addition the motor industryexperiences a high staff turnover and dealers haveto continually coach new staff.

The Product Training Centre employs minimalstaff who perform a project management role andassist in training delivery. The Centre s function istwofold (1) Ensure Toyota Sales force has knowledgeand skills to sell Toyota s product and meet salestargets and (2) Monitoring and assessment — toassess sales person s ability to sell product and ensurethe dealership has the capacity to sell the product.Toyota Academy has to ensure that Product trainingcentre staff are knowledgeable regarding the industrychallenges and assist staff in finding ways of doingtheir job smarter and quicker.

Given these challenges the Toyota Academyadopted e — Learning as a business solution. Theyadopted a Blended approach to the e — Learningprocess. Product training has 3 components —knowledge, skills and assessment and the blend variesfrom product to product. Hence e — Learningaddresses knowledge and knowledge assessmentand workshops focus primarily on skills development.The advantage of e — Learning and its embeddedassessment tool is that it offers quick performancereporting, requires a minimal administrativecomponent, is non labour intensive for trainers andit s standardized.

The delivery platform employed for e —Learning was the CD — ROM. It was selected dueto the technical limitation in South Africa of theInternet bandwidth which did not allow for richmedia e.g. videos and animations. Also training hasthe lowest priority on the intranet which wouldhave affected the efficiency and quality of the e-learning experience. The other consideration wasthat given that the audience needed to be workingthe floor the need was to provide portable learningthat allowed the audience to do their learning athome and after hours.

Monitoring is achieved through software. Oncompletion of learning, the software allows learnersto print an electronic certificate as proof ofcompetence which they can fax to the administrativeco-ordinator. In future it is envisaged that additionaltracking will be achieved through the internet andintranet. By 2005, the Product Training Centreoffered 10 e — Learning products.

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Lessons Learned:The adoption of e — Learning has lead to

the reduction of training days and workshop costswhile delivering a rapid deployment of standardizedlearning content. The process includes assessmentand certification of competence which means awell educated and able sales force for Toyota SA.

The dealer network has also benefited

from the accessibility to product training by anyonein the dealership. The material in CD — ROMformat can be used for both refresher trainingfor current staff and as part of an induction toolfor new staff. It offers a unique learning experiencefor each product and creates excitement with ahigh level of interactivity and fun during learning.It caters for various learning styles e.g. assessmentquestions, activities, use of diagrams and labelingetc. It has resulted in less days off the floor thatcould have resulted in loss of income.

Applicability:E- Learning via CD — ROM can be a useful

tool for human capital development within thePublic Service. It can be used deliver coursematerial for courses offered by, for instanceSAMDI. In addition it could be used during theinduction process for new public servants but ifused for the induction process it would need tobe closely monitored, with clear stipulations thatthere is a specific time frame within which the e— certificate has to be presented to SAMDI, theHR unit or HOD failure to which there will be aheavy penalty.

Case study 7:State ofVirginiaDepartment ofEducationType of case:

Virtual / Online Communities of Practice

Overview:An online community of practice is a group

of people who come together to do a piece ofwork. Face-to-face meetings and conference callsare almost always components of the workprocess, but virtual work, or rather work that isdone in a virtual environment, dominates. Thiscase study demonstrates the use of VirtualCommunities of Practice in the implementationof a challenging programmatic response — Doublingthe number of annual General EducationalDevelopment (GED) recipients in the State ofVirginia — within 18 months.

Success story - Toyota PriusToyota Prius uses hybrid technology -

Hybrid Synergy Drive (HSD) - which offers aseamless integration of its gasoline engine andan emissions - free electric motor. HSDcombines the characteristics of an electric driveand a continuously variable transmission, usingelectricity and transistors in place of toothedgears. Before it was introduced into the SouthAfrican market the sales force was not asinformed or educated on environmental issuesas the typical Prius customer would have been.The sales force had to be on the same standardof environmental awareness as the Priuscustomer.

To achieve this, a workshop was heldthat addressed the following: (1) Sales skills —how to sell a hybrid vehicle (2) Technicalknowledge — selling technical features of Prius(3) Marketing Toyota s contribution to theenvironment and (4) How to drive a hybridvehicle

In addition the sales staff were providedwith a CD that offered Product knowledgewith a huge focus on Hybrid technology andenvironmenta l i ssues . I t presenteduncomplicated and simple training informationon the new technology in respect to HybridSynergy Drive (HSD). It also provided holisticinformation about global eco issues e.g. globalwarming as well as health and natural habitatdestruction issues. Each element of HSD wasexplained as well as their interconnectivitywithin the Hybrid System. Also covered wasHSD operation during various driving conditions.

The CD — ROM assessed the learnerson all aspects of hybrid technology andenvironmental challenges. The result was thatthis kick started a new culture of environmentalawareness throughout Toyota and 83% of thetarget audience were declared competent (wherethe minimum result to achieve was 80%).

Source:Susan G. Restler (2005) The Revolution is

Online: Leading Social Change. (Knowledge in thePublic Interest, white paper series: KnowledgeManagement for Soc i a l I nnova t ion , )http://www.kpublic.com/docs/kpi_polilogue_studies.pdf

Description:In 2003 the Governor of Virginia Mark

Warner set an 18-month public goal to doublethe number of annual General EducationalDevelopment (GED) recipients in the State. TheGED Test is designed for people who, for variousreasons, did not graduate from high school butwant a certificate equivalent to the traditionalhigh school diploma. The examination testsknowledge in five subject areas: Language Arts,Writing; Language Arts, Reading; Mathematics;Science; Social Studies.

On average 10,000 Virginians passed theGED tests each year. The Governor challengedthe State Department of Education to take thisnumber to 20,000 per annum by 2005. Dr. YvonneThayer, Director, Adult Education and Literacy,saw the daunting mandate as an opportunity. Sherecognized that this crisis could serve to facilitateimplementation of a radically new model of GEDprogramming, one that incor-porated activestudent recruitment, new teaching techniques,and critically, one that could drive a mindset orcultural shift away from the traditional adulteducation worldview of literacy as empowermentto a trans-formative self-image that of providerof practical skills for workplace advancement.Most importantly, Dr. Thayer saw that if she couldboth develop and implement this new GED modelwith some in the field and have it be successful,she would have a lever to bring both a changedprogrammatic approach and a changed mindsetto the field as a whole.

November 2003 -Dr. Thayer convenes a small team within

the Department of Education to set out the keydimensions of the new program. They mandatea 6-week program and suggest eligibility criteriafor prospective students.

January 2004 -Dr. Thayer convenes 5 program managers

from sites across the State. Selection is based onthe diversity of their populations (urban/rural),their openness to change, and willingness to work

collaboratively. The group begins to develop aFast Track program built around the parametersset out by the State. At Dr. Thayer s urging theymove rapidly to launch pilot programs to learnby doing. The first Fast Track class enters programsin February.

March 2004 -Dr. Thayer invites Knowledge in the Public

Interest (KPI) to meet with the 5 pilot programmanagers. KPI is an organisation that offersexpertise and technology on planning and buildingsuccessful online communities of practice. Dr.Thayer asks them to form an online communityof practice or Polilogue, to share theirimplementation experi-ences and accelerate theadoption of emerging better practices. A strategymeeting with KPI leads to the establishment ofthe Fast Track Online Community. Its focus reflectsthe interests and needs of the program managers:marketing and recruitment, curriculum and staffdevelopment, budgeting, funding and partnershipswith State workforce organisations and thebusiness sector, and reporting.

April to July 2004 -Pilot program managers participate in

several jams or asynchronous discussions in thePolilogue during which experiences and ideas areexchanged and materials are shared. These earlyJams are facilitated by KPI and Dr. Thayer followsthe discussions closely, leading off each one witha posting on her ambitions for the work.

The pilot program managers had focusedintensely at the start on marketing to supportrecruitment because they had to fill classes to getthe new program off the ground. They haddeveloped radio ads, bus posters and the like. Animportant first Jam on marketing addressed theprinciple of market segmentation. The expe-riencein the field had allowed some initial thinking toemerge on the profiles of people most likely bothto be interested in the idea of an accelerated GEDprogram and capable of passing the tests afteronly 6 weeks of preparation. The community wasable, through discussion, to link these findings tobasic marketing con-cepts of message and medium.As a result they were each able to rapidly adapttheir pitch and refine their expenditures totarget more narrowly their best prospects.

Knowledge in the Public Interest organized,summarized, and analyzed the work of each Jam,as an easy reference for the participants, as asource of knowledge for the future, and as an68

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input for Dr. Thayer as she guided the pilots.Market segmentation became an important insightfor the Dept of Education as it pre-pared forrollout beyond the pilots.

August 2004 -The basic efficacy of the program model is

established by the 5 pilot sites. At the annualstatewide GED conference Dr. Thayer asks thepilot program managers to share their experienceswith the full group. Each covers a differentdimension of the pilot program, basically each ofthe Polilogue topic areas, rather than speaking onlyto her own program experience.

Dr. Thayer then invites 10 additionalprogram managers to join Fast Track and insiststhat everyone use the community to get up tospeed. The advantages of relying primarily on theonline community of practice are several: the newprogram managers can learn together from all fiveof the pilot managers and their staffs, withoutleaving their sites and effectively on an as-neededbasis. The result is rapid build-up to launch. Andthe peer-to-peer collaborative nature of thecommunity helps the new program managers tosee themselves as fellow program builders andadapters, rather than as recipients of a fixed model.This obviates resistance so com-mon when a funderinsists on a challenging goal.

One Jam held among the 15 participatingprogram managers concerns funding andrelationships with local Workforce InvestmentBoards (WIBS). Relationships are constructive andsupportive in some regions and antagonistic andfruitless in others. Tactics, presentations, and dataare shared. In analyzing the exchange, Knowledgein the Public Interest highlights the apparentconfusion among program managers over theWIB s funding obligation for adult education. Dr.Thayer acknowledges the confusion and enliststhe State Department of Labor in clarifying itsmandate in this regard. While there is no provisionfor WIB funding of adult education, Dr. Thayersecures an expression of support from theDepartment and paves the way for Adult Educationcooperation in the field. She models the approachfor the program managers who begin to emulateit on the ground.

October 2004 -Dr. Thayer feels that the model has been

sufficiently developed and vetted and is indeedproducing strong GED pass rates in the 6-weektime frame. She takes the program to scale, bringing

in all 50 adult education GED sites across Virginia.The entire program rollout takes place via thePolilogue. Launch occurs over two days with asuccession of Jams held on each major programelement and moderated by the group of 15 expe-rienced program managers. Once again the Polilogueprovides a twofold benefit. The first is in cost andtime savings, as program managers are introducedto the program elements from their work desks.The second could be characterized as psychological.The inculcation is peer-to-peer and the explicitmessaging is that a new program manager is beingoffered the benefit of the experience of others,which s/he as a professional can consider and adaptto the environment in which s/he operates.

In the period June 2004 to July 2005, 20,000people received their GED certification and 90%of those enrolled in a GED Fast Track preparationprogram received GED certification. All GEDpreparation courses in Virginia are adopting thebasic elements of Fast Track. They are workingto both accelerate the time involved in preparingfor the test by adopting and adapting Fast Trackpedagogical and motivational techniques, and bybuilding substantive and wide ranging relationshipswith local employ-ers to establish a tight linkbetween training and work.

Lessons Learned:The critical success factors for a high-

performing online community of practice haveabsolutely nothing to do with technological aptitude.The basic skills required for community partici-pation are: signing on and setting a password,sending and receiving email with attachments, andgoogling i.e. using search. The two key

determinants of community success are (1) thestrategic clarity and capacity for collaborativeleadership in the organisation, and (2) the specificityand practicality of the community mission.

The online community of practice was onlyone element in the development and statewiderollout process, but it was a critical one for tworeasons. Firstly, it facilitated and indeed encouragedthe development of a robust and ultimatelysuccessful program model, by supporting rapidlearning and adaptation allowing many to takeon that which some had found to work and toabandon that which some found unproductive.And, through after-the-fact analysis of groupwork, examining the digital paper trail touncover issues that were inhibitors to progressbut not explicitly apparent and raise them formanagement action.

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Secondly, it maximized the practicality ofthe program elements by having the field drivethe details, and it minimized the inevitableresistance to change that is perceived to beimposed from outside (i.e. the Department ofEducation or headquarters in private sectorparlance). The Governor s mandate was the non-negotiable impetus for change and the hand ofthe Department of Education was an ever-presentguide as well as a source of pressure. Nonetheless,the field determined the nature of the responseand really became responsible for the program ssuccess.

However, there was an intangible benefitto engaging the field in an online community ofpractice that may actually prove to be its greatestadvantage. The very act of working virtually, fora group of relatively techno-phobic people, servedto open them up to new ideas and approaches.Given their age and professional expe-rience,many went where they had never expected toventure. The experience built confidence andseemed to counter the resistance to change sowell-embedded in human nature.

Applicability:Virtual Communities of Practice would be

useful in the South African context where servicedelivery needs to be accelerated, for instance theprovision of housing. Communities can be formedvertically between the three tiers of governmentand horizontally between geographically dispersedareas. Lessons can be learnt and ideas exchangedbetween policy makers in national governmentand implementers in provincial and localgovernment and also between implementers indiverse geographical regions.

The drawback of virtual communities isthat it can be a double-edged sword in that itboth amplifies able leadership and magnifiesdysfunction. In other words, online communitiesof practice are a potent tool for the strong(enlightened) manager who is not only comfortablewith setting a general course and allowing theteam or the field to develop the road map,

but who sees the advantage of achievingorganisational and cultural change by engagingpeople rather than mandating or dictating. Needlessto say a tool and process that fosters collaborationand inclusion an easy widening of the circleand makes precise outcomes inevitablyunpredictable, is problematic in the hands of atraditional hierarchical manager, a micro-manageror narrow tactician.

F U T U R E W A T C HThe Learning Government

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