mgmt 591-Final Project Duewk7

8/12/2019 mgmt 591-Final Project Duewk7

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Making Humana A World Class Organization

Project Proposal

Juan M. Quintero

MGMT591

Course Project - Final


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Introduction:

Humana Inc. headquarters are located in Louisville, KY at 500 West Main St Louisville, KY 40202. The

company has at this time almost 44000 full time employees. Humana operates as a health care company

that offers a range of insurance products and health and wellness services (initiative from last couple of

years) that incorporate an integrated approach to lifelong well being. The company operates in the

following segments: Retail, Employer Group, and Health and Well Being. The retail segment provides

Medicare managed care programs and commercial health insurance plans including dental, vision, and

other supplemental medical plans. The company also offers a variety of retail life products such as junior

estate builder plans, final expenses plans, etc. The companys Employer Group segment offers Medicare

and commercial products as well as a number of administrative services to employer groups. Humana

administers Veteran Affairs Health Insurance for the Southeastern part of the country and works along

with Medicaid to facilitate healthcare to low income subsidy families in many states. Humanas Health

and Wellness segment offers pharmacy, provider services, and home healthcare.

Humana has a market cap of approximately 11 billion dollars. According to its latest balances sheet the

company has total cash amount of 9.31 billion dollars. The company stock currently trades at around 69

dollars a share. Humana is the largest fortune 100 company (by revenue) headquartered in the

Commonwealth of Kentucky. The company has over 11 million customers in the United States. Humana

products are sold in all 50 states, Puerto Rico, and Hawaii. The company was founded by David Jones

and Wendell Cherry as a nursing home company in 1961. Back then known as Extendicare, it because the

largest nursing home chain and moved into purchasing hospitals in 1972. Humanas name was adopted in

1974 and by 1980 it was the worlds largest hospital company. In the 1970s Humana was building

hospitals at the rate of approximately one per month. As the United States health system began to change

in the 1980s Humana evolved and began to market insurance products. Humana transitioned from a

hospital company to an insurance provider in the 1990s. In 2006 Humana began to market Medicare

managed care programs also known as Medicare Advantage Plans, and prescription drug coverage plans


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to Medicare beneficiaries. Humana also launched its new mail order service; RightSource around this

time, the mail order pharmacy grew to become the second largest in the country to date.

Some notable accomplishments include:

1. Development of the double corridor model for hospital construction. This highly efficient designminimized the distance between patients and nurses by placing nursing support services in the

interior of the building with patient rooms surrounding the perimeter

2. Humana brought the pioneeringartificial heart research of Dr.Robert Jarvik and Dr.WilliamDeVries,the inventor and surgeon of the first artificial heart implant performed at theUniversity

of Utah in 1982, to create the Humana Heart Institute, in Louisville in 1985

3. Launch of Rightsource mail order pharmacy in 2006, which went on to become one of the largestin the country.

List of acquisitions from 1990 to 2012:

Michael Reese Health Plan , Group Health Association, The Dental Concern, Carrington, Employers

Health Insurance, Physicians Corp of America (PCA), ChoiceCare, Memorial Sisters of Charity, Oschner

Health Plan, CarePlus Health, Corphealth Behavioral Healthcare , CHA Health, CompBenefits (now

offered as Humana One Dental as individual programs or added component to medical plans), OSF

Healthplans, Metcare, Cariten, Concentra Urgent Care Centers, MD Care , Anvita Health Plan, Arcadian

Health Plan.

Humanas leadership has been brought to spot light by Michael McCallister, Humanas former CEO

(2006-2011), he was rated as one of the most successful CEOs in American business at creating

shareholder value by Forbes Magazine. Humanas stock peaked at approximately 83 dollars during

McCallisters reign. In 2011 Bruce Broussard was named President of Humana Inc. Broussard will lead

the company for the foreseeable future and help fulfill the companys goal of life -long well being in
http://en.wikipedia.org/wiki/Artificial_hearthttp://en.wikipedia.org/wiki/Robert_Jarvikhttp://en.wikipedia.org/wiki/William_DeVrieshttp://en.wikipedia.org/wiki/William_DeVrieshttp://en.wikipedia.org/wiki/University_of_Utahhttp://en.wikipedia.org/wiki/University_of_Utahhttp://en.wikipedia.org/wiki/University_of_Utahhttp://en.wikipedia.org/wiki/University_of_Utahhttp://en.wikipedia.org/wiki/William_DeVrieshttp://en.wikipedia.org/wiki/William_DeVrieshttp://en.wikipedia.org/wiki/Robert_Jarvikhttp://en.wikipedia.org/wiki/Artificial_heart


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which the company expects to offer enough products so that a customer will have all of their well being

services from Humana Inc.

The Problem:

As briefly outlined in the preliminary proposal outline, with the rapid grow that Humana has enjoyed over

the past years comes the problem at hand. Due to the rapid changing nature of the industry, little time is

left in order to address things like employee satisfaction levels. Many of Humanas most important

sectors are plagued by extremely short associate work life cycles. In simpler terms people working in the

consumer service areas are leaving the company after an average of 1 year. Employees are citing that the

work environment is hostile, leadership is lacking, communications arent clear, goals are not realistic,

etc. Currently there isnt a great deal of transparency in the department in regards to things like

promotions, schedule selection, and compensation. Leaders arent properly trained to retrieve information

when available or on how to communicate information to their subordinates clearly while making sure to

be correct in accordance with company policy. The goal measuring systems are not properly thought out

and agent are being measured incorrectly, since not everyone is doing the same project, or taking the

same phone calls due to different agents having different licenses. Not all agents have 52 licenses and

furthermore, everyone who has less than 50 licenses, possesses different states in their license packages.

This can cause production measuring problems since the company has a wide portfolio and different

products are often in different parts of the country. Another concern is favoritism, which is rumored to be

the main driver for advancement. The management team is only willing to promote those who share

similar values and work ethics as those already in power to ensure that the status quo remains unchanged.

Agent become disgruntled after realizing that if they dont share the views of their leaders there is

nowhere to go but out.

The root of the problem can be found in the traditional culture of the call center. Traditionally call centers

are not desirable places to work, so from the get go folks coming to work have a negative view of their


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work environment before even stepping through the door. In the past the call center, were perceived to be

for those employees of the company that lacked the capacity to do any other job. Call centers employees

are look at by their leadership as drones, or numbers. Easily replaceable is one term that comes to mind

when describing a call center employee. Things have changed, with most companies now conducting their

business online and over the telephone the value of the call center has increased. With the introduction of

new regulations and certifications or licenses now needed in order to just have a conversation with a

prospective client over the telephone, the amount of training needed to become a call center employee and

its costs have increased tremendously. Nowadays it pays to keep employees, rather than to just replace

them with new ones that must be trained for months before they can be productive.

Unfortunately while the industry has changed, the leadership culture remains untouched. This is partially

due to lack of training that leaders of a call center have due often times to the unattached nature of the call

center (from the rest of the organization). Leaders have been around for a long time and their methods

have proven to be successful in the past, so why change now?

Literary Review:

A company is driven to reduce employee turnover to decrease the exceptionally large expense that comes

with it. It is safe to say that as a company reduces its employee turnover rate the more profits are seen.

Saving money, reducing costs, and increasing profits are serious motivations that companies have to

reduce employee turnover. However there is more than just money at stake when it comes to employee

turnover. What is the cost of employee morale, employee efficiency, quality of work, and productivity?

According to Laser (1980), While these human costs may be less tangible, their expense is equally

significant" (p. 17).

Determining the driving force to why people leave a company is important. A common misconception is

that money is the sole reason why people leave an organization. If it was that easy to understand then any

company can just pay more and keep their people. However this is not the case. Mowday (1984) suggests


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that, "organizations that understand the reasons why their employees leave can take steps to reduce

turnover" (p. 366). Money is not the sole motivator. People have certain needs, wants, and desires that

money cannot buy. Understanding the needs of the people who work in the organization is the first step in

understanding employee turnover reasons for a company. If employees are all leaving for the same

reasons then management can specifically address these reasons to decrease employee turnover.

Job satisfaction tends to correlate with employee turnover. If employees are satisfied where they work

then there is no reason why they should leave. A company is responsible for maintaining a high level of

job satisfaction among employees. According to Covey (2007), " Learning and career development

opportunities often are in the top three decision criteria when people are considering joining a particular

company" (p. 1). Money is not even in the top three reasons people pick jobs. Therefore, it is important to

understand what satisfies employees and target this. Since money is not a top incentive companies will

need to put more time in understanding their own people in order to truly satisfy them.

If people are not motivated by money, then what does motivate people? According to Schermerhorn,

Hunt, Osborn, and Uhl-Bien, "these factors are related to job content - what people actually do in their

work. They include such things as a sense of achievement, opportunities for personal growth, recognition,

and responsibility. When motivator factors are minimal, low job satisfaction decreases motivation and

performance; when motivator factors are substantial, high job satisfaction raises motivation and

performance" (p. 115).

In summary, minimizing employee turnover is a multidimensional task in which a company needs to

invest in their companies employees. When companies can effectively and honestly invest in their

employees a result is in a boost in employee job satisfaction thus decreasing employee turnover. A

company who invests in their own employees have the best chance to decrease employee turnover.

Analysis:


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The problem is not a particularly difficult one to identify, and it is one which has been common to call

centers for some time now. Every environment is different, and therein lays the problem. The upper

echelon of Humanas Corporate leadership has began to put pressure on department heads in order to get

to what is causing the problem and take the proper steps to fix the issue.

Treat human capital management as being fundamental to strategic business management. Integrate

human capital functional staff into management teams. Leverage the internal human capital function with

external expertise. Hire, develop, and sustain leaders according to leadership characteristics identified as

essential to achieving specific missions and goals. Communicate a shared vision that all employees,

working as one team, can strive to accomplish. Hire, develop, and retain employees according to

competencies. Use performance management systems, including pay and other meaningful incentives, to

link performance to results. Support and reward teams that achieve high performance. Integrate employee

input into the design and implementation of human capital policies and practices. Measure the

effectiveness of human capital policies and practices.

Solutions offered:

Retraining of senior and veteran leadership in the following areas:o CommunicationsConsisting of multiple sessions that will study the best methods of

communications used in companies across the industry, which have experience similar

problems. Training will be detailed and continuous; in order to make sure that clear

communication becomes part of the culture. The different methods of communication

available such as personal, email, phone, group, will be examined in order to determine

when it is best to use each one. The message must be consistent and must come from the

correct source; this will help with the concept of one message no matter where it comes

from.


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o Value of keeping employees / costs of replacementIt is imperative to drive home thepoint (to the leadership) that keeping employees is cheaper than replacing them. This

training will drive home the point that once an employee is chosen to fulfill a role, he/she

must be treated as an asset of the company and as such must be treated with care and

properly trained in order to, like a tree, bear fruit. If we cut down the trees every couple

of years and plant new ones, then we will enjoy very little fruit. The company will lose

the informal leader on the floor which serve as guides for the younger employees coming

onboard.

o TransparencyCommunication isnt much good if the message does not make any senseor if the content is known to be false; as such we will make sure that whatever message

we convey or communicate is a truthful one. It is known that certain pieces of

information are sensitive, and above certain people. This is the case with every industry,

but that does not excuse those who went faced with the situation at hand choose to lie

rather than to just say I simply cannot tell you. Others will choose to lie in order to

keep themselves from sounding ignorant, a solution which is only short term, since the

truth is eventually found out. If the leaders are not truthful and forthcoming in their

communications, they will lose the respect of their subordinates. Without respect it will

be very difficult to have the orders followed, and thus conducting business will be a

chaotic affair. There will be resistance to every little change due to the lack of trust on

leadership steering the ship in the right direction.

o IncentivesIncentive packages must be obtainable by clearly outlining all of the stepsthat are needed for achieving goals. Employees must be given clear goals for the year, not

just the week, and these goals must be clearly thought out, (taking into account internal

and external industry factors) so that they are not changed every other month as is the

case currently. Employees should be given means to monitor their own performance in

order to have clear understanding of where they are in accordance with the goals.


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Employees should not have to rely on leaders to be told if they are performing up to par

or falling behind. The systems are already in place for associates to track their own

statistics, what is happening (or not) is a clear case of laziness and lack of effort on the

part of the senior leadership, which clearly has ignored time and time again the requests

of the workforce for transparent measurements to track its performance in real time.

o FavoritismThis is a two faced problem. First with must deal with the issue itself, as it isa real one which unchecked can cripple with workforce and divide the center into smaller

subgroups; which will no longer have a common goal in mind but rather different

agendas depending on the groups. In order to create a favoritism free workplace all

people have to not only be treated equally, but also they must be seen to be treated

equally (perception is the other side of the problem). The perception of favoritism is as

dangerous to the unity of a group as favoritism itself. To combat this we must train all

leaders to act in the same way when coming across different employees. This is not to be

confused with having all leaders act the same, as this is not possible, since everyone has a

unique personality. What we aim to achieve is that leaders display their personality

equally to all lower level associates when coming into contact with them regardless of

ethnicity, gender, etc.

Reattachment of the call center to the organizationo The call center is not a separate entity but a cog in a big wheel that is Humana Inc. and

this should be the mentality of the not only the members of our call center but also those

outside looking in. This is a two prong operation, on the one side we have the frontline

leader which will be in charge of making sure that the workforce feels like the

department is part of the company, on the backend the upper management must achieve

the same view from those other departments with which our center shares the building.

The ladder can be accomplished with a few simple but important cross department

activities both professional and recreational. For example: All Humana employees are


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of the phone call rather than with providing the person on the other side of the phone line

with a truly great experience and helping them with solving of their issues. Humanas

motto until not long ago was Guidance When You Need it Most, in view of recent

survey responses from our members, I would say that we are not acting as advertised.

The root of this particular problem can be found in the current Quality Assurance

measures by which agents are being measures and the importance of those compliance

measurements to the career development and the longevity of the employment itself. In

plain words, the QA scores have come to weigh heavily in the decision to give employees

yearly raises as well as a disciplinary platform. Consistent below mark scores in QA

could eventually end a agents career. There is no doubt that this approach has set forth a

chain of event that ends with the consumer getting a service that is not at all focused on

his/her needs as the agent is more concerned with hitting all the necessary compliance

marks on each call rather than giving the caller a great service experience.

o Development of proper measuring systems for Quality Assurance. In order to fix theabove stated problem we must go to the root, and pull it out. We must revamp the entire

compliance system and make it into a true quality measuring system. In the health

insurance industry there are several things that have to be said in each call, as set forth by

regulating bodies such as The Department of Insurance, and in our case Medicare.

However, this does not mean that the introduction of these required statements has to be

done in a robotic, not conversation way. For example, if a person calls and says that they

need help with the medications, the answer should never be, youre not required to

provide personal information The agent must acknowledge the request and express

his/her willingness and ability to help before they address any compliance aspects of the

call. A little empathy goes a long way.


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Reflection:

The leadership is going to play a key part in the solution of the problem since they are the main focus

point in solving the problem at hand. While I believe that the creation of new measuring systems for the

employees of our call center will make the leaders job easier, this is just a small piece of the puzzle.

Leadership must embrace the cultural change that has resulted from the industry changes that now dictate

the importance of keeping employees and valuing their contributions. Resistance is not an option, a point

which must be driven home with the frontline leader workforce. Managers often use statements such as

youre lucky to have a job in this economy, the reality is that were all fortunate to be here and the

salary of one manager can sustain three agents. The call center is no longer a place that no one wants to

belong to or work inside of. Today the call center is a place where professional do some of the more

productive and profitable work for the company. As such these employees need to feel the pride that

comes from the centers accomplishment. Communication of those accomplishment, individual and

group, have to be shared and rewarded with the employees. If we can achieve a culture of harmony,

transparency and mutual respect, then we can achieve a workplace where people can feel happy and

professionally fulfilled for many years to come.

Personally this assignment has helped me understand the necessity for a harmonious workplace.

Furthermore I have learned what is needed to achieve such feed. I will save my research and I look

forward to having a chance as a leader with the organization in the department I belong to. I will use what

I have learned in this course, and particularly as a result of this paper, to help me bring the correct

mentality to the leadership position. Human capital is one of the most important aspects of a successful

support business model, and as such it should be paid its due importance, it is up to leaders to represent

the company in empowering the workforce and giving each individual member its due importance.


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References:

DeTienne, K., Agle, B., Phillips, J., & Ingerson, M. (2012). The Impact of Moral Stress Compared to

Other Stressors on Employee Fatigue, Job Satisfaction, and Turnover: An Empirical Investigation .

Journal Of Business Ethics, 110(3), 377-391. doi:10.1007/s10551-011-1197-y

Choi, S., Cheong, K., & Feinberg, R. A. (2012). Moderating effects of supervisor support, monetary

rewards, and career paths on the relationship between job burnout and turnover intentions in the context

of call centers.Managing Service Quality, 22(5), 492-516. doi:10.1108/09604521211281396

BATT, R., & S. COLVIN, A. J. (2011). AN EMPLOYMENT SYSTEMS APPROACH TO

TURNOVER: HUMAN RESOURCES PRACTICES, QUITS, DISMISSALS, AND

PERFORMANCE.Academy Of Management Journal, 54(4), 695-717. doi:10.5465/AMJ.2011.64869448

Naeem Tariq, M., Ramzan, M., & Riaz, A. (2013). THE IMPACT OF EMPLOYEE TURNOVER ON

THE EFFICIENCY OF THE ORGANIZTION.Interdisciplinary Journal Of Contemporary Research In

Business, 4(9), 700-711.

Humana Adding 140 Jobs at its Tampa Medicare Sales Call Center in NetPark. (2011).Biomedical

Market Newsletter, 1141.

Levey, R. H. (2005). A Call Center With a Heart.Direct, 17(14), 64-65.

Williamson, E. (2005). Time for a change. Travel Weekly: The Choice Of Travel Professionals, 8.

Humana, I. c. (8). Humana Celebrates 50 Years of Helping People.Business Wire (English).

Web:

"Yahoo! Finance - Business Finance, Stock Market, Quotes, News." Yahoo! Finance. N.p., n.d. Web. 31Mar. 2013.

Complaints Board. Made by the people for the people. (2010). Domino's Pizza Complaints. Retrieved

from http://www.complaintsboard.com/bycompany/domino039s-pizza-a901.html

Covey, S. (2007). Organizational Development. Training, 44(4), 40. Retrieved from Education Research

Complete database.

Jobs Vent, reviews of jobs we love and hate. (2010). Reviews of jobs at Domino's Pizza. Retrieved from

http://www.jobvent.com/dominos-pizza-job-reviews-C1648

Laser, S. (1980). DEALING WITH THE PROBLEM OF EMPLOYEE TURNOVER. Human ResourceManagement, 19(4), 17-21. Retrieved from Business Source Complete database.

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Wiley.

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mgmt 591-Final Project Duewk7