Human Capital Management gives Premera Blue Cross a strong advantage.
by Alison Weiss, May 2011
It’s the big unknown in the U.S. healthcare industry: what is the full impact of the sweeping regulatory changes introduced by the 2010 Patient Protection and Affordable Care Act? No one is certain how the implementation of the law will play out, but the changes could be transformative. Add data privacy concerns and rapidly increasing healthcare costs, and it is clear that the health insurance industry faces significant—and evolving—challenges.
For Premera Blue Cross, a health benefits company that serves 1.6 million people in Washington and Alaska, the solution is simple. Leadership is looking to its biggest and most valuable asset to maintain competitive advantage—its employees.
“Without great talent, we really can’t be successful,” says Barbara Magusin, senior vice president of human resources at Premera. “Our company invests huge energy into finding the right people and making sure that we optimize their contributions by training them for new and different types of work over their careers and putting together a value proposition to retain them. Managing all these pieces and getting them in the right balance is a part of our business.”
And while Premera has received numerous accolades for being an employee-focused company, management realized that more could be done to put data from its human capital management (HCM) system to work for the company’s more than 3,000 associates. According to Magusin, Premera wanted to do more-strategic analysis to hire and retain the right staff with the right skills to successfully navigate market challenges and spark the innovation the company needs to grow and thrive.
Fortunately, Premera’s integrated PeopleSoft HCM solution from Oracle has the depth and functionality to enable the company to achieve its objectives. The system features core HR, payroll, benefits administration, and self-service, as well as financial management. With the recent implementation of ePerformance, associates and managers can monitor progress against goals in real time, changing performance management from an annual review to an ongoing process. At the same time, HR professionals can more easily access accurate and timely workforce statistics required for long-range planning.
Why Talent Management?
A few years ago, human resources strategists were focused on policies and programs that support a workforce with generational differences. “What’s important to our employees and what’s important to our company has changed as the world itself has changed,” says Susan Hill, senior manager, HR systems and projects, at Premera. “Talent management has always been important, but as things like the economy and the political climate shift, talent management demands shift. PeopleSoft allows us the flexibility and functionality to predict, meet, and support those changing demands.”
Premera’s focus on talent management is smart, according to Jodi Starkman, a human resources consultant with more than two decades of experience. In her work transforming businesses with talent management, most recently as vice president of global talent management consulting at global HR management consulting firm OCR Worldwide, she has found that good talent management practices start with some very fundamental principles.
“Talent management starts with the premise that people matter. Regardless of the kind of organization you work for or the kind of business you’re in, it is critical to provide an inventory of the capable and productive people to be able to deliver whatever service and/or product offerings you have,” says Starkman. “And to be profitable, you need to make sure you’ve got them at the right price.”
Starkman reports that any time an industry is undergoing significant changes—like those facing healthcare today—there are also changes in the skills and competencies that are going to be most critical for the organization’s performance or an individual’s performance moving forward. It becomes even more important for managers to understand what personnel they have, what knowledge employees possess, what jobs employees are doing, and how much they cost.
“All this information comes together in the HR system, but historically, not very well,” says Starkman, sharing that HCM systems in the past may have provided a good inventory of personnel and their job titles, but they didn’t easily identify what employees know.
Indeed, this was the case for Premera. With a driving need to continue to efficiently and effectively leverage the deployment and utilization of its HCM system, the company decided to work with Optimum Solutions, an Oracle Platinum Partner, to upgrade to Oracle’s PeopleSoft Enterprise 9.1. The upgrade would allow Premera to take advantage of key integrated talent management features.
Now, Premera has a systems-based talent management solution that helps the company be competitive, supporting strategic analysis of workforce skills. In addition, this understanding can provide a more engaging work experience for employees. Employees can self-report accomplishments, use the system to track required certification and licensure, and keep abreast of career opportunities and the skills required to move into different roles.
Creating an HCM Foundation
Premera’s strategic investment in HCM didn’t begin with the project in 2010. In fact, the company’s incremental HCM metamorphosis started six years ago. In 2005, Premera was using a largely paper-based system to manage administrative work filling out forms and occasionally pulling reports. Then, management decided to implement PeopleSoft Financials to get better consistency.
Next, in 2006 management recognized a need to transform its HCM system. Premera partnered with industry leader Optimum Solutions to implement an integrated PeopleSoft-based HCM system, including core HR, payroll, benefits administration, and self-service applications. The company also hired a new human resources technology team with strong PeopleSoft experience.
Susan Hill, in her work with HR systems and projects, found that consolidating the system gave associates and managers one source to see information that previously was pulled from multiple sources. She says this work, in itself, drove changes in talent management for her own department, as different skills were needed to maintain a fully integrated enterprise resource planning suite than what was needed to support the legacy paper-based system.
“Since then, there’s been a focus on continuing to evolve our HCM and technical skill sets, and we’ve made our decisions on how we implement very deliberately,” says Hill. “We listen to our end users, and we draw on our expertise to provide solutions that support our business.”
Fast-forward to 2010. Once again, Premera’s management wanted to expand the HCM system to include more system analysis functionality—with an emphasis on talent management. “We wanted to enable better decision-making, as well as use data to drive action,” says Hill. “As HR professionals, it can give us the ability to contribute to the success of the business by understanding what our workforce looks like and plan for the workforce we need.”
Optimum came aboard for the project because it had played such an instrumental role in implementing the PeopleSoft HCM foundation years earlier. “They understand our company’s culture. Optimum was a natural choice to help us from a PeopleSoft Enterprise 9.1 perspective to assess and do the actual upgrade,” says Hill.
With a very aggressive timeline starting in April 2010 and launching in November 2010, Optimum helped Premera use a “big bang” approach to deploy PeopleSoft Enterprise 9.1 human capital management and financial management applications, PeopleSoft Enterprise Learning Management, and PeopleSoft Enterprise Applications Portal, as well as PeopleSoft PeopleTools 8.50—all at one time.
Premera has a tight integration between HCM and financials, and needed to upgrade both suites at once to take advantage of design and testing efficiencies.
“Our industry-leading PeopleSoft Enterprise 9.1 expertise and 9.1–specific RapidSolutions upgrade approach enabled us to mitigate the clear risks associated with a parallel upgrade of four separate 9.1 applications at once,” says John Doel, senior director of HCM practice at Optimum Solutions. “Having implemented more than two dozen 9.1 solutions, we were able to draw upon our considerable 9.1 experience to provide proven recommendations for the most impactful and efficient way for Premera to proceed with its upgrade.”
Integrated Talent Management
Since going live with PeopleSoft HCM, Premera has seen positive results regarding talent management. “Our biggest payoff so far is efficiency,” says Hill. “Before, we had the data and we had the processes, but they weren’t in a single database, requiring a great deal of manual intervention to cull data and consolidate it. When things were on paper, it was very challenging to identify trends or conduct true analysis in a timely manner.”
According to Tracy Martin, senior director of PeopleSoft HCM strategy at Oracle, the newly integrated talent management features in PeopleSoft Enterprise 9.1 make it possible for HR personnel to do higher-end strategic analysis, such as determining why certain business units outperform other units or whether it is possible to mobilize and target new markets. “Talent management tools are easier to use, you can get to information more quickly, and the data is more reliable,” she says.
One goal was to put the specialized data in the hands of the employees who know it best, empowering associates and managers by giving them the accountability to maintain the data that they own. “In order for those individuals to have the data they need, we required a system that was accessible at the desktop and accurate and timely and that could serve first-line managers and team leaders who could access information about their workforce at their desks,” says Magusin.
And while Premera’s improved talent management functionalities benefit the company in terms of systems analysis, there is definitely a positive payoff for employees, as well. Many talent management features are employee-specific, like career planning, allowing employees to be proactive. Such features help provide a better workforce experience for Premera personnel.
PeopleSoft Enterprise 9.1 also offers a wealth of system enhancements, making it more efficient and easier to navigate. There’s more real estate on the screen to see more transactional menus, and menus are more efficient. A new approval workflow engine automatically provides a multilevel audit trail for any transaction that’s in the system, delivering regulatory and legal benefits by automating what used to be very difficult and expensive to customize. The new system leverages Oracle Business Intelligence Publisher capabilities to expand the PeopleSoft ePerformance review process. “From a reporting perspective, the company now has a robust, Premera-specific, user-friendly visual [PeopleSoft} ePerformance report,” Doel says.
Jon Wilson, vice president, IT application delivery services, at Premera, applauds the depth of functionality available to his IT team as a result of implementing the latest version of PeopleSoft PeopleTools. “The improved functionality with the base application has simplified the support of the platform. We find ourselves having to develop and maintain fewer customizations than we did,” he says.
And the work is not finished yet. Magusin says that Premera has a long-term talent management commitment and will continue to invest in HR technology going forward.
Starkman agrees that taking a long view on talent management is the best strategy for companies that hope to weather regulatory, economic, and security pressures like those that face the health insurance industry. “Companies need to begin to think from a leadership perspective, asking ‘What kinds of leaders do we need, and what experiences do they need to have in order to be effective?’ These things are information that the business needs in order to make good business decisions. It’s an opportunity for HR to contribute hugely to business performance,” she says.
To serve that end, Premera will be adding the next building block to the HCM system later in 2011 for improved talent management. “The opportunity for us with PeopleSoft Enterprise 9.1 is to have a detailed manager profile of our entire workforce—what are the competencies, who are the people, what is their potential? It’s a much richer, deeper functionality than we’ve had,” Magusin says.
“We’re in the process of changing the way we do our work and looking at ever more efficient and cost-effective ways to do it,” says Magusin. “It remains to be seen exactly how it’s going to go with healthcare reform, but we stand at the ready to move quickly.”