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Transform Your Talent Management Capability Through EffectiveStrategic Workforce Planning:A Case Study

Jan Ahrens JohnDirector, Strategic Workforce Planning

March 2, 2010

2©2009 Regence

The Current Landscape

Regence—Our Journey

Approach

Lessons Learned

Impact

Agenda

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The Current LandscapeStrategic Workforce Planning (SWP)

Sources:• Sibson Consulting, Rewards of Work Study, 2009• Bersin & Associates, The Modern Approach to Workforce Planning, 2009• HCI, Identifying Business Value in Workforce Planning—Articulating the Return on Strategic

Workforce Planning, 2008

SWP is a Relatively New Practice

While workforce planning has been around for decades, only recently has attention been focused on its strategic value:

92% of companies have some level of workforce planning, but only 21% take a strategic, long-term approach to addressing their talent needs

Identifies Key Roles and Workforce Data to Drive Performance

Enables senior leadership to understand and forecast future talent needs based on relative value to strategy execution:

74% of executives consider workforce planning a priority in their organizations, while only 57% of HR professional perceive it as a corporate priorityOnly 25% of organizations are able to help business leaders forecast revenue and operating budgets

Prioritizes Talent Management Actions and Investments

Informs the business and HR of the “build, buy, or borrow” actions and investments needed to close critical talent gaps:

Almost 70% of the surveyed organizations are changing their talent management programs based on the results of their workforce planning analyticsHigh performers had higher Engagement, EVP satisfaction overall, and lower turnover intentions than the overall sample

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Three Types of Workforce Planning

21%

Business Planand Headcount

TraditionalWorkforce Planning

Business Planand Headcount

Business Planand HeadcountBusiness Planand Headcount

Basic Workforce Data and Analytics

Workforce Data, Analytics andForecasting

Workforce Data, Analytics andForecasting

Business Strategy and Segmentation

of Workforce

Business Strategy and Segmentation

of WorkforceWorkforce Analysis

StrategicWorkforce Planning

Increased Value to the Business

Deg

ree

of P

eopl

e In

vest

men

t

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Driven by business strategy and objectives

Accurate and objective segmenting of the workforce

Consistent process and approach

Readily accessible analytics

HR capability to lead change

Keys to Making Strategic Workforce Planning…“Strategic”

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Poll Question

If you were to implement strategic workforce planning, which of the following challenges/barriers would you experience:

Lack of resources

Little support from top management

Lack of business case

Lack of capability or defined methodology

Lack of tools and technology

Two or more of the above

Three or more of the above6©2009 Regence

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The Current Landscape

Regence—Our Journey

Approach

Lessons Learned

Impact

Agenda

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Who is Regence?

Regence, a member of Blue Cross and Blue Shield Association, is the largest health insurer in the Northwest/Intermountain region, serving members in ID, OR, UT, and WA

We have 2.5 million members accessing health careacross the country and around the world, andprocess nearly 3.5 million claims a month

We have 6,200 employees and partnerwith more than 52,000 providers and2,400 facilities in nearly1,000 communities

Our $8.9 billion company defines success by how well we advocate for—and make a difference in—the health of our members…a promise we have kept for more than 90 years.

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Where we were in 2008

Rising health care costs

Increasing focus on health care reform fueled by political debates

Aging workforce—potential lossof critical knowledge

Changing landscape—with morecompetition from national players

Expanding product lines thatrequired new capabilities

Broadening use of technology to provide instant validation

Understanding the current workforce and the required future organizational capabilities and talent was a top priority for the business and HR.

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New Problems Required a New Approach Key Questions

How do we identify which roles are most and least critical in driving results?

What capabilities are absolutely essential, and what investments are needed?

How do we predict and analyze the implications of our internal workforce dynamics?

How do we better anticipate dynamics in the external labor?

Targeted Outcomes

Understanding of our Current and Future Talent NeedsClear connection between the business strategy and our people strategy

Right skills in the right places to drive execution of our strategic objectives

Control of Workforce DynamicsBetter insight into the internal and external workforce dynamics to ensure we have the right people in the right roles at the right costs

Talent Management as a Core Business ProcessEstablished and repeatable processes to do the work, owned, and driven by the top of the organization

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Our Journey

Initiated Diagnostic Baseline

Assessment of HR

Began announcing

layoffs

Launched SWP engagement

Completed 19th

(and final!) SWP for year one

Built internal capability of

HR staff

Researched consulting firms & selected Sibson

Jan moves from Director OD to

Director SWP role

Launched 3 SWP pilots

2008 2009‘08Q1 ‘08Q2 ‘08Q3 ‘08Q4 ‘09Q1 ‘09Q2 ‘09Q3 ‘09Q4

Building Accountability & Buy in: If you build it RIGHT…they WILL come.

Scheduled additional 16

Divisions

Launched additional plans, provided just-in-time training for other

HR staff

Analyzed input by Strategic

roles in annual Engagement

Survey

Installed web-hosted tool; rolled up enterprise-

wide data

Announced pension plan changes and

more layoffs

Developed initial EVP collateral for Strategic roles in

3 Divisions

Incorporated SWP into annual

planning process

Roll out succession

planning for all Strategic roles

2010

Launch SWP Year 2

‘10Q1 ‘10Q2

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The Current Landscape

Regence—Our Journey

Approach

Lessons Learned

Impact

Agenda

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Our ApproachUpfront Considerations

What expertise did we need?Decide on the appropriate subject matter partner—credibility and track recordAbility to move fast was criticalMust transfer capability, we could not afford to be consultant dependentAvailable as ongoing lifeline

How could we make SWP sustainable?Ensure internal HR capability and business ownership for the long runRequire a repeatable, yet customizable processAccess to robust analytics—real time decision making

Where should we start?Build support and address resistance early on Start small and grow from thereSelect pilots from both ends of the spectrum (large and core to the business/small and more fringe)Use our successes as leverage

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Our ApproachConceptual Framework

Specific HR and Line

Operating Plans to

Execute the Strategy

Actions and Investments

Talent Development“Actions to develop

current andnext generation

talent”

Succession Management

“Talent portfolio anddecision process”

Integrated Performance

Management and Rewards

“Reinforcements that drive accountability”

Talent Acquisition“Branding,

sourcing, and engagement”

RoleRequirements

Business Strategy and Objectives

Strategic Workforce Planning

Type

Gaps and Priorities

Number

Actions/Investments

4

2

3

1

DifferentiationDifferentiation

Strategic Workforce Planning serves as the headwaters to make informed decisions on Human Capital Priorities and Investments.

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Our ApproachConceptual Framework

Segmentation enables you to understand and manage your human capital like a portfolio of assets.

Segmentation strategically values talent and enables prioritization of talent needs and talent investments.

StrategicCritical to driving long-term competitive

advantage, with specialized skills or knowledge

CoreThe “Engine of the Enterprise,” unique to the company and core to delivering

on its products and/or services

RequisiteCannot do without, but whose value could be delivered through alternative staffing

strategies (other than full-time headcount)

MisalignedTalent whose skill sets no longer align with the company’s strategic direction

Roles that drivethe strategy

Roles thatsupport

the strategy

Roles impacted bythe strategy

Talent SegmentImpact Investments Over Time

Strengthen

Protect

Streamline/Outsource

Redeploy

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The Current Landscape

Regence—Our Journey

Approach

Lessons Learned

Impact

Agenda

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Lessons LearnedFirst Steps

Piloted with three different divisions

“Timing is everything:”The BOHICA Syndrome

The Ugly Baby Syndrome

“Strategies? What strategies?”

“All of our roles are strategic!”

“Layoffs tomorrow”

“How can we…if we don’t know…?”

TIP #1: Be ready to be an ACTIVE cheerleader & change agent.

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Lessons Learned“We are where we should be”

Rolled out consistent process for 19 Divisions:Each Division has a planOver 105+ leaders involvedOver 35 talent requirements developed out of 110 strategic roles (8% of workforce)10 enterprise-wide actions and investments are being tracked

Emphasized collaboration—Divisions and functions worked across silos Increased risk awareness (e.g., time to proficiency, build/buy decisions, etc.)Increased knowledge of workforce implications on business—web-hosted tool Gained ground: Old Way—“Think people first, position second”Proactive applications

TIP #2: Link to the business and get the role requirements RIGHT.

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Exhibit 7: Staffing Needs to Fill Talent Gaps

Lessons Learned“We are where we should be”

Exhibit 6: Talent Gaps

Exhibit 8: Cumulative Quarterly Staffing Costs

Exhibit 5: Training Needs and Residual Talent Absorption (Ramping Up)

TIP #3: Speak the language of business, let the data talk.

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Lessons LearnedWhat People Are Saying…

“ This is the first time we’ve ever talked about what we’ll need 3 years from now.”

“ Great tool for making strategic decisions…viable option to look at future (e.g., Demographics, age, very telling).”

“ Opened a window that not all skills sets/people are interchangeable. Helped us name premium roles.”

“ A discipline that comes with repetition”

“ Better understanding of the inter-relationships of my Strategic roles in other divisions. I’ll manage their availability to cover the most critical work.”

“ Looking at this data will change the way we run our business.”

“ Let’s use this again as soon as federal reform info comes out.”

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The Current Landscape

Regence—Our Journey

Approach

Lessons Learned

Impact

Agenda

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ImpactWhat is different today?

SWP is now included in the annual business planning process—prior to budget settingSWP metrics are part of the Regence corporate balanced-scorecardTalent requirements for the majority of current/new “strategic” roles are in place Specific retention strategies have been created to address specific markets and talent needsExecutive “pull” established for an enterprise-wide succession plan for all critical rolesA Differentiation culture is emerging vs. a “everything, for everyone, all the same”cultureConsistent approach in place across all major divisions for developing external sourcing strategiesQuantified that our “strategic” roles averaged .5 STD below other company employees on engagementClear definition and agreements on which roles are most critical to the organizationEmployee Value Propositions (EVPs) created for several “strategic” roles

TIP #4: “It ain't over till it's over.” —Yogi Berra

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ImpactConnection between Strategic Roles and EVP

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ImpactConnection between Strategic Roles and EVP

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ImpactConnection between Strategic Roles and EVP

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Final Words from a SWP Expert

“ Opportunities are never lost. Someone will take the ones you missed.”

“ Ignoring the facts doesn’t change the facts.”

—Andy RooneyImage Source: billypalooza, Flickr.com