The work, that was initiated by the KLP HR department, started in June 2000. The personnel chief officer and her consultant decided to join Forum for Intellectual Capital, a joint venture between Bates (advertising agency) and NIPA - Norwegian Institute of Human Resource Management - an HR non-profit organization.

In October 2000 Bates and NIPA invited members of the Forum to participate in a Consortium for Intellectual Capital. The personnel chief officer and her consultant joined the Consortium together with representatives from 6 other companies. After review of a number of different tools and management practices to start integration of IC, conducted as part of the learning process in the Consortium, among others the Sveiby Toolkit, Videnregnskapet, Company IQ (a Bates/NIPA tool for core competence analysis and benchmarking of IC based on Thomas Stewart), KLP decided to use the Human Capital Index as a start up integration tool and coaching as the management perspective. The intention is to build on an increasing awareness of the importance of managing IC and continue with other integration, reporting and communication tools.

Preparation to use the Company IQ-tool to conduct a core competence analysis of one division has all ready started. In the beginning of next year the HR department intends to start a project for monitoring and reporting the global IC of KLP.

1. The idea/purpose of the NIPA Human Capital Index (HCI)
The idea behind the NIPA HCI is to identify and monitor the management's focus on and ability to build a strong work place. Refering to extensive resarch conducted by the English Gallup Organization, it is possible to communicate to line management that there is a strong correlation between the managements ability to build a strong work place and financial performance. This strong correlation and the simplicity of the tool (it can be calculated as often as financial KPIs), makes it possible for the HR department to awake the interesst among line managers for working with IC. In this respect the Index is regarded as an alternative to the commonly used climate surveys. Line managers very fast acknowledge that the level of the index has something to do with financiel performance. And they find it meaningful to start working with improving the index in order to improve financial performance. The way to start improving the index is to stop "managing" and start "coaching". There is a strong improvement focus in the way the tool is used. It is not a tool for appraising the managements performance. It is more a navigator tool for improving performance.

The index is calulated on basis of the coworkes answers to the following 6 questions : 30 is the top level of the index. 20,4 indicates in this case that there is a huge potential for improvement. The index also indicates where to start the improvement. You should start with question one and at least reach a level of 4.5 before you start working with question two and so on. The global index should at least reach 24.

Emphasis is put on a sensemaking process in a 3 hour workshop. The action plan, developed in a second workshop, and the implementation og the action plan drawing heavily on coaching techniques, are the two most important ingredients of the tool/process.

2. Practice and documentation concerning these tools and processes?
The NIPA Human Capital Index has been used with Lindorff, Visa, Thorn and KLP during the last 12 months. It was developed by Egil Sandvik and Bjørn Tommy Tollånes, senior consultants at NIPA and lectures at Norwegian School of Management (Handelshøyskolen BI).

Three students attending the Master Programme in Knowledge Management 1999/2000 and tutored by Sandvik wrote a project paper on the index and tried it out in the Gjensidige Nor Group spring 2000. On basis of the positive conclusions in the project paper, Lindorff, a company in the Gjensidige Nor Group, decided to use the index instead of the the Group's ordinary climate survey that was conducted on a yearly basis. Egil Sandvik and Bjørn Tommy Tollånes were asked to develop a web based version of the index and implement the tool as a regular monitoring system for the Lindoroff management on the management's ability to build a strong work place at Lindorff.

The research behind the index is very strong and well documented, among others in the book "First break all the rules" (Coffman, Buckingham 1999). The concept Human Capital Index used in this book is however a bit misleading. The Index is in fact not monitoring the Human Capital but part of the Structural Capital, that is the management, the teamwork and the culture of a company. The thinking behind the follow up program is among other sources documented in the book "Underveis til fremtiden- kunnskapsledelse i teori og praksis" in the article by Egil Sandvik "Lederen som coach". The book is about to be translated to English. An English translation of the article is enclosed.

3. The experiences of KLP so far
It is too soon to draw final and extensive conclusions of the results using the Human Capital Index as an IC tool and IC approach in KLP but some tentative conclusions can be drawn:

• to get line managements attention the HR department ought to speek the language of line managers. To label a survey "Human capital" communicates far better than a "Climate survey". • to have the line managers to focus on IC on a regular basis you have to monitor IC on a regular basis. The Human Capital Index is simple to monitor and you can report the Human Capital Index as a KPI among other KPIs (that is financial KPIs) as often as you wish. KLP now monitors the HCI every 3 months in the divisions that are included in the project.
• it has turned out that the scientific foundation of the Human Capital Index is of important value. You don't have to waste time on discussing the validity and realibility of the questions and answers. The survey is done in a few minutes. The sensmaking workshops takes three hours. After that you are ready for the improvement process and the coaching approach.
• the HR department very often lauches big developement projects without focusing on results. The Human Capital Index tool and approach, allthough comparably a very small project, is a key project where the HR department can demonstrate quick wins in focusing on IC. The HR department is suddenly regarded as result oriented and business forcused.
• very often the HR department has no real top management support for its initiatives. In good times the organization can "waste" some costs on HR projects. The Human Capital Index tool and approach has turned out to make it possible for the HR department at KLP to get top management attention in realy bad times for KLP.
• the HR department has chosen an emerging approach to the IC perspective. Think globally but start small in the right directon is the departments slogan. So far it has turned out to be a wise decission.
• IC is for many people an invisible and difficult issue. It has turned out to be a great advantage to use external advisors with combined academic credibility and process know how. The process that we have described is in its inital fases. The project management now wants to make a link between the operational IC management approach that is optained with the HCI and the strategic direction and development of KLP. The project management thinks that the core competence approach to strategic management and the tool Company IQ (described by Thomas Stewart in a recent Forune article) is worth a try."

Kilde: Arne Henriksen