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Humana: Ensuring Success in Changing Times

Health insurance provider Humana revamped its HR strategy to take an integrated view of talent, linking core competencies to strategic business goals and creating a clearer line of sight for all employees.

April 4, 2008
Related Topics: Technology
KEYWORDS metrics / technology

According to an African proverb, “smooth seas do not make skillful sailors.”

Talent managers at Humana, a Louisville, Ky.-based health insurance company, couldn’t agree more.

In the past decade, the health insurance industry has undergone massive change. The organization no longer serves merely as a vehicle for premium payments; it has evolved into a service and guidance provider. Additionally, many large companies such as Humana have faced major increases in claims costs. The company has projected a jump of nearly 20 percent.

To further complicate talent management concerns, the Medicare Prescription Drug Improvement and Modernization Act of 2003 allowed Humana to roll out services to seniors, growing the business from roughly 14,000 to more than 25,000 employees in less than three years.

The company was certainly no stranger to upheaval. To adapt to the times, Humana adopted a more holistic approach to talent management as part of its new operating strategy or consumer engagement model. Core competencies replaced job roles, live 360s became part of employee assessments, leadership training was institutionalized, corporate visibility was established — and, of course, many new challenges arose, said Carleen Haas, vice president of human resources at Humana.

TM: Describe Humana’s approach to talent management.

Haas: A lot of companies are organized — and their infrastructure is built — around jobs. You’d say: An analyst has to have the ability to generate reports. That would be on the task list. We decided it’s great to understand what you need to do, but it’s probably more important to understand who you need to be. So we created roles that had a profile of competencies and contributions attached. We changed it to: [An analyst] has to be good at analysis, he has to have business savvy, he has to understand the system upstream and downstream. That platform allowed people to plug directly into roles and see, ‘What is it I do that creates success for the company?’ This competency and contribution system drives how we hire, how we promote, how we pay, how we develop. It’s almost like the hub of a wheel.

TM: How does this new outlook affect performance management?

Haas: Before, individual managers would have looked at each of their people and assessed them against the job that they did. [Now, we] do calibration. We put all the managers who have analysts in a room, and we talk about what success looks like. You’re educating everybody, but you’re also having dialogue about the talent and getting a real, live 360 right there. People get to see all the different aspects of performance, [and] you’re teaching all the managers participating to have the same standards. It allows us as a company to talk openly about talent, so we know who comes at the top of the list, who comes at the bottom of the list, and that helps us to drive holistic development plans. You can choose to move people around the company as you see need, and people also can have a career path. People start recognizing [talent] as a corporate asset.

TM: How does performance management connect to Humana’s strategic objectives?

Haas: We drove the roles out of the capabilities required for each organization within Humana to perform the business results that it needs. People definitely know how their role connects to the outcomes they’re trying to get at the company. A lot of companies have cascading goals. We don’t have anything that formal. But we do have documents called “strategy on a page.” Each organization has a strategy that’s driving towards a specific business result. “Strategy on a page” puts down all of the business goals and who’s accountable for them.

TM: What programs have you established to improve workforce performance?

Haas: We’ve done some wonderful things with leadership development. We found out we were throwing supervisors out there, giving them no life vests and saying, “You’re anointed to be a supervisor. Go out there and make it work.” And that’s a pretty tough thing. We started new leader on-boarding so new leaders understand what the expectations are, what the human capital philosophy is at Humana. We then have a frontline leader program. We wanted all our leaders to get it, to get what our business was, end to end, not just their part [but] how the business works together. We have a value proposition that says associate value drives customer value, which in turn drives shareholder value. And we believe leadership excellence creates the ability to have associate value.

TM: How does your company culture factor in?

Haas: Culture eats strategy every day of the week. The culture is where you either have things take root and flourish or not. Everybody goes through one day called “Spirit of Success,” our orientation program. Everybody is required to do it, from top to bottom, to understand what our cultural expectations are, what we believe are the values in the company structure and what our mission is and how they’re connected. It’s really important to make sure you have expectations set early on. Every leader is measured and held accountable. We have moved people out of leadership roles because they were not able to create that culture of engagement, or that culture that’s going to allow people to have a real strong talent mindset.

TM: In February you kicked off an inclusion initiative. Tell us about that.

Haas: Diversity and inclusion are critically important. If we’re going to be consumer driven, we have to mirror the changing demographic. We need to look at our workplace, our communities and our marketplace to really leverage inclusion in the way we want to. And we define diversity really broadly. Ethnicity is important, gender is important, age is important. Those are all the things that you can see. But we also want diversity of thought because we’re trying to be an innovative company that disrupts the industry. So we need a whole lot of diversity of thinking. We wanted to make sure we had some programs in place that would help us to jump-start that outside-in thinking.

TM: How does all of this affect compensation?

Haas: We blew up the old pay system that used to be attached to jobs, with minimums and maximums and midpoints. We decided that we were going to look at the set of skills, the set of knowledge, the set of behaviors someone needed to have in order to be successful, and then price those in the marketplace. There’s much more alignment between pay and performance now. We are not as big on financial rewards because, [while] salary is important, people really want to be recognized for what they do well. We spent a lot of time focusing on how people want to be recognized. Some people love it if they can stand in front of a whole room and be recognized; for other people, it makes them just crazy. So it’s important when you’re talking about recognition and incentives to know how people want to be rewarded and to individualize that.

TM: What challenges impact talent management in your organization?

Haas: We’re a very strategic HR department, and a lot of people would like us to go back to being personnel. We’re not about service. We don’t have customers. When any HR person walks into a room, the business acumen needs to go up and not down. That’s challenging for people who have been around a long time to accept a human resources department that has an opinion.

[There’s also] the challenge of growing your company from 14,000 to 25,000 in two and a half years. How do you get your leaders to stay up to speed? How do you make sure that everybody is consistent? How do you get the message past the mid-level leaders and roll out this human capital philosophy so it goes all the way down to the front line? How do you get people to own all of this stuff? This is the first time in the history of the world that you have four generations in the workplace. We have 3 percent traditionalists, 37 percent baby boomers and then 60 percent Gen Xers and Millennials. How do you deal with a generation that really wants a lot of feedback and wants it instantly and is used to text messaging as a way of doing business? There are a bazillion challenges.

TM: What’s next for talent management at Humana?

Haas: We’re perfectionists. We’re not nearly where we want to be. We’re always looking at what’s next on the horizon. We’ve got to move the needle in a lot of ways: deal with the changing generational talent; manage talent virtually in a way that’s good for the company and good for the associates; and leverage diversity in better ways, more effective ways. It’s been a blast.

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