In This edition:

1. Corporate Universities: What Works And What Doesn’t
2. Study: Effective Leadership Development Critical To Corporate Performance
3. Making Merit Matter: Putting The Merit Back In Merit Pay
4. Book Review: Talent Management Systems: Best Practices In Technology Solutions For Recruitment, Retention And Workforce Planning
5. Case-Law & Legislation Review: Management Of Incapacity Due To Ill Health
6. Downloads: Executive Briefing: Teams, Technology And Data: The Basic Elements Of Workforce Planning
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1. Corporate Universities: What Works And What Doesn’t*

By Jeanne C. Meister who can be contacted at jmeister@clomedia.com

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Strengthening their human capital is one of the top issues facing chief executive officers, according to a recent survey of 500 CEOs conducted by The Economist Intelligence unit. In fact, as one senior executive from a large financial services firm said, “We need to out-learn our competition in order to attract, retain and excite the best talent in the industry.” Why has human capital management become such a central issue for senior executives?

One potential driver for this increased emphasis on human capital management is the aging workforce. According to consultancy RHR International, the country’s 500 biggest companies anticipate losing half of their senior executives in the next five to six years. What’s more, there are simply too few workers to replace them. As the 77 million U.S. baby boomers begin to retire, there are only 46 million Generation Xers, now 24 to 40 years old, to replace them. This demographic bubble is compounded by the efficiency purges of the early 1990s, which wiped out several layers of middle management. The result: a looming talent management crisis, where an enterprise-wide view of human capital management is more important than ever. But more than anything else, CEOs are starting to see a connection between human capital management and improved workforce performance and productivity. This expanded mission of human capital management is now part of the agenda for corporate universities, and many are reinventing themselves in order to deliver the necessary business outcomes.

Growth in Number vs. Growth in Stature

The oldest corporate university dates back to 1956 when General Electric opened its first “management school.” In fact, the Jack Welch Management Development Institute is now a top leadership academy supplying numerous CEOs for Boeing, Home Depot and elsewhere. In the past 50 years, scores of corporate universities have been launched. By 2010, the number of global corporate universities could surpass the number of accredited for-profit and non-profit universities in United States, now totaling more than 4,200.

However, as corporate universities grow in numbers, one question looms: Are they also providing the types of business results senior executives demand? Today’s business leaders are no longer content to fund the learning budget passively. Instead, they demand that learning investments drive business improvements such as increased revenue, increased speed of new product rollouts and faster time to competency.

A Tale of Transformation

IKON, a provider of integrated document solutions, launched IKON University in 1999 and is an example of how one corporate university evolved to meet business needs. The 1999 IKON Annual Report to shareholders states, “IKON University is a comprehensive training program offering a diverse curriculum in sales, leadership, customer service and technical skills structured to optimize the IKON employee’s talents and experience in ways that enhance IKON’s competitive position.”

IKON hired a seasoned sales and marketing executive from IBM to lead this effort and develop a world-class training program. By all measures, IKON University became the preferred branding tool to unify the IKON culture and provide world-class training for IKON employees and partners. The design, development and delivery of all training for IKON employees and partners was centralized under the IKON University umbrella. IKON University went on to win numerous awards and grew to 200 full-time employees.

Over time, as IKON continued to professionalize key areas of its business, including sales, operations and services, IKON University needed to align to each of these areas. “While our centralized model had worked well for IKON in the past, we began to realize that we could have an even greater impact on the organization by aligning our learning resources functionally,” said Kim Castagnetta, former head of IKON University and now vice president of outsourcing solutions.

The Evolving Corporate University Model

A growing number of corporate universities have strategically outsourced all or select parts of their operation into a shared services model to drive greater value while reducing costs. International Truck and Engine University (ITEU), launched in 1999, realized after six years of operation that in order to expand its services to meet the needs of a global workforce and ultimately the dealer chain, outsourcing was the next step in its evolution. “The corporate university did a fabulous job of designing a catalog of courses, but it never really designed a process to align the learning investment to what was needed for the business to be successful,” said Ken Driscoll, director of ITEU.

Against this backdrop, ITEU management realized it needed a partner to create a tighter linkage of learning to business goals, while providing faster, more effective learning solutions to the business. In addition, it was becoming apparent that ITEU needed to have access to a broader range of products and services beyond the scope of the current corporate university, especially since it anticipated expanding its operation into dealer education, product training and skills assessment.

With this broader vision, ITEU decided to outsource its operation to Accenture Learning. Under this partnership, ITEU would focus on developing deeper relationships with the business units and Accenture Learning would transform the learning operation by creating a business alignment model and a shared services model of operation. The goal was to better align learning to business goals while efficiently managing the infrastructure of ITEU, including LMS, call center operation and vendor management. The outsourcing partnership also forced ITEU management to identify specific metrics for success, such as the design, development and delivery of “quick win” business-relevant learning programs, access to expertise in learning innovations provided by the partner and a business alignment process to link learning to business goals continuously. “The goal of the outsourcing partnership is to increase the business impact and relevance of ITEU while leveraging the economies of scale,” Driscoll said.

The Emerging Corporate University Model

At its core, the emerging corporate university model assumes that CLOs and their teams have a deep understanding of the business issues with which the organization is grappling. (See Figure 1.) This emerging shared services model of corporate university operation encompasses four areas: learning transformation to drive business results, strategic alignment to business priorities, shared services infrastructure and innovation in learning services and delivery.

Learning Transformation to Drive Business Results

Transforming the learning organization starts with an annual learning plan that summarizes the key business strategies. This provides input to the development of a detailed learning blueprint identifying how learning can be used to drive business outcomes. The elements of this annual learning plan can include:

>> Vision or charter for the learning organization.

>> Strategic outsourcing recommendation.

>> Business alignment methodology.

>> Scope of workflow learning.

>> Technology plan to offer 24x7 accessibility.

>> Competency plans for key strategic workforces.

>> Processes to engage learners and faculty.

>> Strategy for extending learning throughout the value chain.

>> Branding the learning function.

>> Partnerships with higher educational institutions to add value.

>> Partnerships with key C-level stakeholders inside and outside organization.

When the learning transformation is “working,” business units pull their requirements to the learning function, as opposed to learning pushing its wares to the business units, and the blueprint identifies learning solutions and their corresponding business results.

Strategic Alignment to Business Priorities

Close collaboration between those who develop and deliver learning and the company’s senior management who establish the business strategy is too important to be left to chance or to be confined to quarterly governance meetings, as is often the case. Instead, what is needed is a formal system of alignment to ensure that business strategy and workforce development are created in lockstep. This means the corporate learning function must understand the business dynamics and propose how learning can drive significant improvements in revenue, share and speed to market. This is often the role of the learning account manager who proactively partners with the business unit presidents to prioritize learning requests against capacity and affordability and identifies opportunities for learning investments to drive hard business outcomes.

Shared Services Infrastructure

Creating a shared services infrastructure is the key to realizing economies of scale across the business. The shared services model leverages a third party’s learning services infrastructure to achieve economies of scale and speed of operation to meet the fast-changing demands of the business units. Key capabilities include:

>> Enterprise-wide LMS and LCMS infrastructure.

>> Curriculum definition and instructional design.

>> Content development across all media.

>> Documentation fulfillment.

>> Instructor training and delivery (both face-to-face and virtual).

>> Learning administration and 24x7 help desk.

>> Sourcing and vendor management.

The shared services model transfers the responsibility for designing, developing and delivering learning to a third party governed by a tight set of business impact measures. These measures evaluate the performance of the partner, report where improvements to service can be made with the goal of operating the learning organization in the most efficient and effective manner and more importantly, identify the business outcomes of learning solutions. Managing the corporate university according to “business impact measures” is really what separates a high-performing learning organization from one focusing on providing a catalog of courses “pushed” to businesses.

Innovation in Learning Services and Delivery

Finally, the corporate university must establish a process to drive innovation in learning design, development and delivery that meets strategic business priorities. The Economist Intelligence Unit survey found that fostering innovation in all parts of the organization will be the key to growth over the next two to three years. In the words of the CEO of Enovia Corp., a division of French industrial conglomerate Dassault Systemes, “Cutting costs is important in all parts of the organization, but if you do a really good job managing innovation this is what gives you an order of magnitude increase over cost savings.” Establishing this mindset is critical to running a corporate university. In “Blue Ocean Strategy,” authors W. Chan Kim and Renee Mauborgne challenge businesses to ask themselves four questions to create a new value model for the organization. These same questions can be a starting point to think about transforming a corporate university:

>> What can be created that the industry has never offered before?

>> Which factors or services should be raised above industry standards?

>> Which factors does the industry take for granted and should be eliminated?

>> Which factors should be reduced below industry standards?

What’s Next?

What can we look forward to in the next two years as corporate universities evolve?

Greater use of learning outsourcing: A recent study from IDC estimated the U.S. learning outsourcing marketplace was approximately $1.3 billion in 2005, representing roughly 7 percent of the entire learning marketplace. This number is expected to increase over the next four years to $3.3 billion or about 13 percent of the total learning marketplace. Increasing the efficiency and effectiveness of learning across the enterprise will be a prime focus.

Professionalizing the chief learning officer role: CLOs will be asked to tackle the tough issues surrounding human capital management, such as increasing the scale and reach of the learning function globally to meet the needs of a far-flung operation; increasing the speed to market for new products, decreasing the time to competency for new hires and using learning as a strategic weapon to enter new markets and geographies; and improving the productivity and performance level of the most strategic workforces.

Innovation in managing the business of learning: The learning organization will increasingly be challenged to engage learners and weave learning into their personal and professional lives. The lines will blur between learning, working, communicating and entertaining, with learning being creatively embedded into all the devices we now use in our daily lives.

* Reprinted by permission of CLO

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2. Study: Effective Leadership Development Critical To Corporate Performance*

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A majority of global business executives believe that leadership shortages, specifically in their ability to adapt and respond to business risks, are threatening corporate performance, according to the results of first annual Global Leadership Imperative. The Global Leadership Imperative was launched by Mercer Delta Executive Learning Center, a global provider of senior executive programs, at a luncheon coinciding with the World Economic Forum in Davos, Switzerland.

Mercer Delta Executive Learning Center in cooperation with the Economist Intelligence Unit surveyed 223 senior executives in large corporations across 17 industrial sectors worldwide. The survey data was supplemented with a number of in-depth senior executive interviews. The study revealed that organizations that implement effective processes aligning leadership development with business challenges typically realize stronger corporate performance than those that do not have such processes in place. In fact, companies with effective processes for assessing individual leadership development needs were significantly more likely to have recorded an increase in sales and net income between 2003 and 2004. Additionally, interviews revealed that employing processes that continually refine and align leadership development activities to meet business challenges results in other tangible long-term benefits, including the ability to seamlessly fill key executive positions with fully-qualified leaders from the internal leadership pipeline. Despite these benefits, the research also indicates that a majority of companies still do not have quantitative processes in place to link leadership development initiatives to a company’s business challenges.

“Implementing processes that foster the competencies of multi-dimensional leaders has clearly become a critical factor in a company’s ability to manage risk and successfully execute global business strategies,” said Dr. David Dotlich, president of the Mercer Delta Executive Learning Center. “What was once largely considered a function of human resources, measurable leadership development and its impact on corporate performance is now viewed as a business imperative by enterprise leaders and the entire organization. Now that the challenge is recognized, the next step is to address it.”

The study uncovered the top four business risks facing business leaders and their ability to achieve business results over the next 24 months. According to 83% of senior executives, “increased competitive pressures” poses the greatest challenge to large businesses and requires the broadest leadership skill set, followed by, “responding to rapidly changing market conditions” (67%), “failure to innovate” (60%), and “satisfying customer expectations” (52%). More than three-quarters of respondents said these challenges had uncovered weaknesses within the organization’s leadership pipeline, and competitive pressures alone revealed deficiencies in more than 90%. Moreover, approximately 30% acknowledged that their companies did not have a good understanding of the leadership capabilities required to overcome these risks, specifically related to driving innovation. Approximately 72% said their companies were planning to take action to close these leadership gaps, yet only half of companies surveyed have made sufficient investments to do so.

“While creating cost efficiencies and streamlining operations remains a top priority for senior executives, those measures will only help companies to cut costs, not drive growth,” stated Dr. Stephen Rhinesmith, partner, Mercer Delta Executive Learning Center. “In order to overcome current deficiencies in the skills needed to drive innovation and growth, organizations need to invest the necessary resources in cultivating a healthy leadership pipeline that can effectively adapt to change brought about by globalization and increased competitive pressures.”

Leadership development programs were found to be most effective when they identify appropriate leadership performance measures. Executives from a wide range of companies have found success by aligning leadership competencies with the organization’s business strategies and corporate culture. Subsequent executive interviews indicate that no matter what leadership training tools are utilized, in order to effectively measure leadership competencies, they must be periodically evaluated to shift with dynamic business conditions.

The study found North American companies (63%) are more likely than their counterparts in Western Europe (47%) and Asia-Pacific (57%) to have identified the next generation of senior leaders and targeted specific individuals for development within their organizations; however they are substantially less likely to have established an effective process for assessing individual leader performance.

Senior executives identified the profile of today’s successful business leader as multi-dimensional, possessing a combination of three core competencies in order to rise above the top four business challenges. Mercer Delta Executive Learning Center categorizes these competencies as:

Head: Cognitive skills; providing strategy, direction and purpose

Heart: Emotional intelligence; understanding, working with, and developing others

Guts: Values; doing the right thing based on clear values

“Traditionally, cognitive skills were seen as the most important element of leadership,” added Dr. Dotlich. “‘Head’ leaders - often being “the smartest people in the room” - operate under the assumption that if they analyze the situation, absorb the data, and decide among rational alternatives, they are strong leaders. On the other hand, the Global Leadership Imperative supports that while the one-dimensional leadership approach may have worked in simpler times, partial leaders struggle during an era of paradox, ambiguity, and unpredictability. Our experience is that companies have a great supply of leaders who are strategic, analytical and purposeful (head) and a shortage of leaders who can develop talent (heart) and have the courage to do the right thing (guts).”

Survey results further show that the competencies needed to lead successful organizations in the changing business landscape are not fixed; rather they differ and are associated with varying levels of leadership within an organization. In order to manage all four categories of risk within the next two years, executives identified the capacity to “think like a customer” as the most important leadership capability for their organizations. In addition, they expressed the importance of requiring leaders to possess highly developed skills across all three characteristics. Survey findings illustrated that executives did not find competencies such as “creating trust” and “ethical leadership/values-based decision-making” a priority for helping to overcome business risks. In subsequent interviews, however, executives explained these are underlying measures of more action-oriented leadership competencies that directly link to business results.

*Reprinted by permission

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3. Making Merit Matter: Putting The Merit Back In Merit Pay*

By Jim Kochanski and Christian M. Ellis who can be contacted at

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The 3 or 4 percent “merit” or base pay increase budget has been the norm for so long now that many employees, managers and HR professionals have never experienced anything else. According to the World At Work 2005/06 Salary Budget Survey, the average salary increase budget for any employee group (nonexempt, exempt, and executive) has been less than 5 percent since 1991. Sibson's projections indicate that this trend is likely to continue (see Compensation Projections in this issue of Perspectives) and therefore organizations need to figure out how to make merit matter rather than simply hoping for more money to work with or a “system says” solution that alleviates the responsibility of the manager for applying discretion in making important pay decisions.

Though merit budgets are relatively small, they still represent a large sum of money, even before annual compounding. A company with 5,000 employees with average pay of $50,000 per year and a 3.5 percent merit budget adds almost $9 million to its cost base each year. Although the merit pay increase keeps the organization as a whole competitive with the labor market, it may be doing little to support the execution of business strategy or reward the achievement of key business results.

In some organizations, managers have learned to "game" the system to provide their employees with more money. They flood the system with job re-evaluations and promotions, inflate performance evaluations, or similarly back into desired pay increases by gaming the performance assessment process. The ideal situation is not for managers to have to game the system or to increase costs without a clear benefit. The key is to make merit matter. In the case of the 5,000-person company above, the goal is to earn a larger return on the $9 million investment.

Based on recent experiences and research, we have learned several strategies for making merit matter:

1. SET ASIDE A SPECIAL POOL OF MONEY FOR THE HIGHEST PERFORMERS. When budgeting, the word usually gets out that “there is a 3.5 percent merit budget,” and then employees feel slighted if they get anything less. Managers anticipate employees' reactions and avoid telling a good performer that they are getting anything less than the overall budgeted amount. Rather than budget for one overall base pay increase, it is sometimes helpful to budget in pieces: (i.e., 3 percent for merit, .5 percent additional for top performers, and 1 percent for promotions.) This stratification ensures that high performers really do receive more money in absolute dollars per person and also more proportionally as a key talent segment. If .5 percent of total salary is budgeted for high performers and 20 percent of employees are designated high performers, then each high performer will receive an additional 2.5 percent increase. This approach of designating a special pool just for high performers is a good way for organizations to ease back into more pay differentiation. The high-performance award also can be paid in a lump sum “merit cash” award as an alternative approach.

2. CALIBRATE PERFORMANCE RATINGS AND MERIT INCREASES AMONG MANAGERS AND UNITS. Some organizations have gone to forced ranking or distribution as a way of ensuring a fixed number of high and low performers. However, many other organizations prefer not to drive a forced distribution but still want to differentiate in a formal manner. For them, an approach that works is to calibrate performance ratings and merit increases across peer managers prior to finalizing. This process involves each manager in a unit submitting draft ratings and merit recommendations and then reviewing them with peer managers within their work unit, usually in a meeting. Managers who tend to rate high will usually be encouraged to differentiate more, and managers who are hard raters will be encouraged to make their ratings and merit increases better align with the unit's performance. Calibration meetings create stronger and healthier norms about what performance really justifies the highest rating and what performance justifies the lowest ratings, and in almost every case leads to stronger linkages between pay and performance. Another good reason to calibrate performance reviews and merit increases is to ensure that every manager must complete performance evaluations so they can support their recommendations.

3. CALCULATE MERIT PERCENTAGES AFTER THE DISTRIBUTION OF PERFORMANCE RATINGS IS DETERMINED. It is no secret that some managers in some organizations back into desired merit awards through the manipulation of performance distributions. This can be avoided using very simple techniques. A large entertainment company, for example, does not complete the “merit matrix” until the distribution of performance ratings is known. Some organizations take this step following the calibration meetings. Others ask managers to submit all their performance ratings in advance and then create the merit distribution matrix according to the distribution of performance ratings. For example, the highest merit increase will be a greater percentage if only 15 percent of employees receive the highest rating and a lesser percent if 30 percent of employees receive the highest ratings. This approach teaches managers not to flood the system with inflated ratings because it only serves to lower the rewards for top performers. Conversely, it also teaches managers that if they differentiate, they will have more money for top performers. The entertainment company targets the highest merit increase to be two-to-three times the average, depending on how many employees receive the top performance rating.

4. MAKE LEADERS ACCOUNTABLE FOR MERIT BUDGETS. This idea is so simple that many organizations seem to have forgotten about it. Some companies moved away from managerial accountability for merit increase budgets because of the concern that small departments cannot really differentiate pay when there are only three or four employees in the department. This concern is legitimate, but with a simple solution: aggregate departments up to the next higher level so that a merit budget covers units of at least 30 employees, usually under three or more managers. This approach also tends to force a form of calibration, so that one manager does not give everyone the top merit increase, forcing other managers to give smaller increases. Usually if groups of managers are required to meet an overall merit budget of, for example, 3 or 4 percent, they will find a way to award more money to some employees and less to others, either based on position in market, range, or performance evaluations, even if not provided a formal merit matrix by HR.

5. LINK THE MERIT MATRIX OR BUDGET TO THE PERFORMANCE OF THE UNITS. One retailer had a business unit seriously underperforming, thus pulling down the performance of the overall corporation. In this case, it could be argued that the company could expect to have fewer “exceeds ratings” than other units and that the overall merit spend should be less. In most organizations, the norm is to have the same merit budget and merit matrix in all business units, and then it should be no surprise that merit has become more like a cost of living increase. One way to break this mentality and put the merit back in merit is to give outperforming units more and underperforming units less merit dollars, or at least skew the merit matrix so that the expected distribution of ratings would be lower in the lowest performing units. This approach should not be confused with “forced ranking,” and is instead is a form of “forced distribution.” Forced ranking usually requires that every year, regardless of performance, some percentage of employees are identified as low performing and high performing. Forced distribution is a way of shifting the expected distribution according to an overall unit's performance.

In most organizations, merit was once synonymous with performance, and the intent of merit pay was to create a stronger link between pay and performance, a still-worthwhile endeavor. As organizations are going back to the future, and attempting to put more merit into merit pay, some are broadening the concept of performance to be more along the lines of contribution, where the degree of impact is used as a second factor along with performance to determine merit budgets and awards. This approach involves funding larger merit budgets for business units that have a greater impact on overall value creation for the enterprise and delivering larger merit awards to individuals who are high performers and who work in jobs that directly contribute to the competitive advantage of the enterprise (does not have to be an executive role). While not widespread, more and more organizations are considering this kind of approach in their quest to achieve a greater return on their significant merit pay investment.

Each of the approaches outlined above has been used successfully in organizations for putting the merit back in merit pay. Careful diagnosis of the organization's current and desired performance culture is a good starting point. A formal definition of the role of merit pay in the total compensation strategy and system is another key step. A third step involves beginning to measure the return on merit pay along such dimensions as productivity and retention. Employing these steps and choosing one of the proven practices we have described will go a long way in making merit pay matter again in your organization.

*Reprinted by permission

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4. Talent Management Systems: Best Practices In Technology Solutions For Recruitment, Retention And Workforce Planning

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# Talent Management Systems: Best Practices In Technology Solutions For Recruitment, Retention And Workforce Planning

By Allan Schweyer, John Wiley & Sons, 2004

We're at the brink of the next global battle in the war for talent, and companies with a firm grasp on today's technologies, and the best view over the horizon, are positioned to win. No one understands the intersection of talent and technology better than Allan Schweyer and, as this book demonstrates, no one tells us the story as clearly as he. This is an essential read and an important work in the now-critical discipline of human capital management." - Michael Foster, CEO, AIRS, and Author of Recruiting on the Web "Allan Schweyer has been on the leading edge of recruitment technology since the dawn of the Internet. In many ways the Internet has created more confusion than solutions for the world of recruiting and talent management. It has certainly made things more complex.

HR professionals and even company presidents have become desperate for clarity on the future of talent management-Allan Schweyer's book provides that clarity and establishes him as the authority on web-based hiring and talent management. No major implementation decision should be made without this invaluable guide."- Graham Donald, President, Brainstorm Consulting "Talent management has suddenly gone from being a nice idea to a core business function. No one knows more about this new function, and the technologies that make it possible, than Allan Schweyer."

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5. Case-Law & Legislation Review: Management Of Incapacity Due To Ill Health

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Management Of Incapacity Due To Ill Health: By Xolani Matyolo, Perrott, Van Niekerk & Woodhouse Inc.

This is a discussion of the award in National Education Health and Allied Worker's Union ("NEHAWU") on behalf of Lucas and the Department of Health (Western Cape [2004] 25 ILJ 2091 (BCA).

In this matter the Applicant had been employed as a general worker in the nursing department of the hospital operated by the Department of Health. After being injured on duty she could no longer be able to bend or lift heavy objects and was transferred to the clerical department while she was being assessed. She did not cope well there the other employers were unhappy that her work output was low and that she received special treatment. After an unsuccessful application for a more senior administrative post her superintendent applied for her discharge for incapacity in terms of the Public Service Act 1994 but the department required that she be assessed by a specialist and by an occupational therapist.

She was "advised" by her union and refused to be seen by the occupational therapist. Subsequent thereto her employment was terminated for incapacity due to ill health or injury. The Department's code incorporated the Labour Relations Act Code of Good Practice and the employer purported to have complied with the terms of items 10 and 11 thereof.

In determining the fairness of the dismissal the arbitrator noted that the Code of Good Practice in the Employment Equity Act 55 of 1998 was far broader than the Labour Relations Act Code in respect of impairments that amounted to a disability. In that, where impairment amounted to a disability under the Employment Equity Act the employer was entitled to reasonable accommodation. The arbitrator adopted a purposive approach that the general objective of the statutory arrangements in both the LRA and the Employment Equity Act was to promote procedural and substantive fairness in relation to people with disabilities and to encourage employers to keep people with disabilities in employment if there is good reason to be accommodated. The arbitrator was of the view that the general concept of fairness required an employer to consider whether a particular employee was a person with disabilities under the Employment Equities Act in determining whether there was a sufficient, valid and fair reason to terminate employment. The arbitrator's view was that even in circumstances where the employee had not specifically sought special treatment with reference to the Employment Equity Act and claimed the status of the person with a disability, The above ought to be taken into consideration. The Arbitrator made a point that disability status is not to be considered only as a weapon to claim special treatment under the affirmative action provisions in chapter 2 of the EEA but that it should also be considered as a shield to protect the person who has a disability from being dismissed from employment for a reason related to that disability.

In this case it was common cause that the employee lived with incapacity on the grounds of ill health or injury within the meaning of item 10 of the Labour Relations Code. After considering the evidence the arbitrator however found that she also fell within the definition of people with disabilities as defined in the Employment Equity Act. On perusal of the evidence it was found that the employer had attempted to accommodate the employees disability in terms of Section 10 in terms of the Labour Relations Act rather than as an employee with a disability in terms of the Employment Equity Act. The arbitrator considered which procedure would have produced a substantively fairer outcome for the Applicant and concluded had the parties followed the Employment Equity Act Code and the Technical Assistance Guidelines on the employment of people with disabilities at an early stage they all would have informed themselves, worked together and identified possible accommodation.

Having considered the extent of the employer's duty to make reasonable accommodation for the employee, the arbitrator found insufficient evidence that the employer had considered any reasonable accommodation in relation to this rule or the nursing department but all in relation to a clerical job for which she was in any event not qualified. What this means is that more than only looking at alternatives, the employer must also try and "create " a suitable role for the ill employee.

What this award raises is that compliance with the Labour Relations Act Code may not be sufficient in instances where ill health leads to disability. The LRA Code requires employers to look for suitable alternatives adapt the employee's current role where possible to accommodate the employee's circumstances. With the general notion being that if the employer complied, the termination is viewed as being fair both substantively and procedurally. Under the Employment Equity Act Code however and in particular item 11 which is a guideline on retaining people who became disabled during employment, employers are required to assess if the disability can be reasonably accommodated and the employer is enjoined to explore the possibility of alternative reduced work or flexible work arrangements.

The technical assistance guidelines on the employment of people with disabilities have been published and require the employer to engage in the various steps viz. clarification of work limitations; development of job modification; return to work options etc.

This requires that there should be consultation with employees and that supervisors must feel comfortable and ensure that they understand the nature of the employee's work limitations and that both parties must have a stake in the success of any job modification and all return to work plans.

What this entails is that the employer together with the affected employee need to look and investigate the ways of modifying the work environment and investigate whether or not there are any other ways in which the work can be done moving away from the traditional ways in which specific work had been done. It is submitted that this imposes a much more onerous duty and has the effect of broadening the employer's requirements for fairness in circumstances of ill-health terminations.

It is suggested that employers should familiarise themselves with the Employment Equity Act Code and indeed the technical assistance guidelines when dealing with and indeed managing ill-health incapacity. It is also advised that even when the process has been followed to the latter, it is important to hold "that last meeting " to hear the employee out before a notice of termination is given.

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6. Downloads: Executive Briefing: Teams, Technology And Data: The Basic Elements Of Workforce Planning

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INTRODUCTION

The ratio of tangible to intangible assets in US corporations has changed significantly over the past 20 years. Tangible assets are physical assets, and include land, facilities, equipment, and inventory. Intangible assets, on the other hand, are driven by a company’s talent, and include such things as intellectual property, business methods, goodwill, brand recognition, customer loyalty, and culture. In 1982, intangible assets comprised 38% of a company’s market value. By 2002, that number had soared to 85% Market value in the US, and increasingly in the global economy, is driven largely by human capital, not physical and financial capital. Technology companies such as Microsoft have proven the value of human capital in the marketplace.

Service companies that use technology or the Internet, such as eBay, also appear to have great staying power. The value of these companies in the market is almost entirely based on their human capital and intangible assets. But even more traditional companies such as Wal Mart and GE, which are very physical asset-intensive, derive the majority of their market value from intangible assets and human capital.

The 2002 Deloitte & Touche Human Capital ROI Study found that human capital practices may account for as much as 43% of the difference between a company’s market-to-book value and that of its competitors. Market-to-book value is a ratio of enterprise market value divided by book value of assets. This ratio represents the portion of a company’s total value not explained by or accounted for by physical and financial assets. The increasing importance of human capital creates serious competition for and shortages of top talent. “With future job growth being concentrated in highly skilled and knowledge based work, and estimates of 21 million new jobs with only 17 million new entrants to the workforce by 2012, organizations will lose their status quo if they aren't prepared with a workforce strategy," says Diane Berry, managing vice president at people3, Gartner’s human capital management practice.

The importance of human capital to business success is clear. Yet human capital planning remains a challenge for nearly all companies. In a 2005 Aberdeen Group study of HR leaders, more than 40% of respondents said the predicting and planning their future workforce was a significant challenge in creating a high performing workforce.

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Equity-Skills News & Views is a free bi-monthly newsletter for business owners, Line Managers, and Human Resource Practitioners (who support Line Managers) with the implementation of fair and developmental people management systems and practices. The style of this e-Newspaper fits between the traditional email newsletters and printed professional trade journals & magazines. Subscribers will be kept up to date with the latest developments in the world of people management, receive handy people management tips, and feedback about labour court rulings that relate to the implementation of the key Labour Acts. Please add equity skills news & views to your list of approved senders if your Internet provider or server administrator filters incoming e-mail, to make sure you receive periodic e-mail alerts and this newsletter to which you are subscribed.

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