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Making Humana A World Class Organization Project Proposal

Juan M. Quintero MGMT591 Course Project - Final

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

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 design minimized 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 pioneering artificial heart research of Dr. Robert Jarvik and Dr. William DeVries, the inventor and surgeon of the first artificial heart implant performed at the University 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 largest in 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

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

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

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:

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 Communications Consisting 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.

Value of keeping employees / costs of replacement It is imperative to drive home the point (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.

Transparency Communication isnt much good if the message does not make any sense or 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.

Incentives Incentive packages must be obtainable by clearly outlining all of the steps that 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.

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 Favoritism This is a two faced problem. First with must deal with the issue itself, as it is a 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 organization o 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

trained the same way when it comes to the handling and securing of privileged consumer information, and as such there is no reason why training sessions could not include members of different departments. Recreational activities such as company picnics is one way that different departments can interact and feel like a part of a big family. Sales vs. Provider Relations 4 on 4 volleyball anyone? Hiring of diverse leadership (will form diverse culture) o Embracing change in the industry is something that has been lost on the current bash of leaders in our department. The status quo has been unchanged for several years now and the standard operating procedures are showing a few wrinkles around the face, could use a facelift. There has not been an injection of new leadership in our department in the past two and a half years. Over half of the leadership personnel in our department have been with the company in the same position for over 10 years; most of them came from Sears before becoming part of Humana. It started with one manager that was hired, and then two, four, now we have a total of eight former sears employees. The pool of ideas has become increasingly stagnant, and thus is time to shake the waters a bit and get some new mentalities and personalities in the mix. Humana senior corporate leadership has put a increasing amount of emphasis on the employer wellbeing as a focal point in the companys ability to provide a high class service to its consumers. This makes sense as studies show that happier, more realized employees are usually more productive. The message however is been slow to reach some of the departments, where the culture is being resisted by those in key leadership positions. With the hiring of new leaders we will help diversify the culture of our department. Quality of service rather than compliance o Design a truly great experience unhindered by compliance. Recent survey information from our consumers has revealed that the experience being offered by our agent on the phone is less than perfect. Agent have become too concerned with the compliance factors

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 the above 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.

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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