An independent licensee of the Blue Cross and Blue Shield Association. U7430b, 2/11 Aligning Recognition with Business Strategy March 2013

+ Not-for-profit, fully taxed company with headquarters in Chapel Hill and major operations centers in Durham and Winston-Salem, NC; employs 4,300 people + Largest health insurer in North Carolina, serving more than 3.7 million customers + Our network of health care providers includes 92% of medical doctors and 99% of hospitals in the state + Highest level of National Committee for Quality Assurance (NCQA) Accreditation + CEO Cancer Gold Standard Accreditation + Numerous Awards and Recognitions as Employer of Choice including: ▪Top 100 Best Company for Working Mothers ▪AARP Best Company for Workers over 50 ▪Top 50 Family Friendly Companies- Carolina Parent ▪Triangle Business Journal’s Triangle Top Healthiest Companies ▪Alliance for Work- Life Progress (AWLP) Work- Life Seal of Distinction BCBSNC – Who We Are 2

To effectively implement our business strategies and achieve our vision, we must maximize workforce engagement, commitment, development and performance. Blue Cross Blue Shield of NC’s focus areas: + Enterprise Strategies + Corporate Goals + Employee Culture and Engagement Survey Results + The Way Forward 3 The Goal

On February 2, 2011, our CEO communicated his vision for the culture he wanted to create at BCBSNC. However, the organization did not have a way to consistently reinforce this vision for employees. In the absence of a consistent corporate employee recognition program, departments were handling recognition on their own. As a result: They may not have been reinforcing the right things. It could lead to mixed messages across divisions within the same organization. Problem Statement 4

+ Recognition was not clearly integrated with The Way Forward, our enterprise strategies, or the areas for improvement identified by the Denison Culture and Engagement Survey. + There lacked a focused corporate approach to employee recognition – with inconsistent use across divisions. + With focus on Flexible Work Options, the recognition program needed to reach employees regardless of their physical location. + Although best practices caution against the use of cash awards, there was heavy utilization of this type of recognition. + The current program did not incorporate employee choice. Issues Identified with the Previous Recognition Program 5

Best practice research indicated that a successful strategic recognition program should reach a minimum of 80% of the employees within an organization, spread across divisional, geographic, and hierarchal lines. 6

+ Reinforce behaviors that support the corporate culture objectives and create a workforce that is Caring, Collaborative, Committed, and Creative + Create a consistent culture of recognition and appreciation + Support the culture of storytelling by providing tools that give employees the ability to share success stories + Increase employee engagement + Continue to retain top performers + Create a program that is not overly burdensome to establish, administer, and maintain Goals of a Redesigned Recognition Program 7

Strategic Metrics + More than 80% of employees are touched by the program + Program reaches all geographic and demographic groups of the organization + Increased measure of engagement on Culture and Engagement Survey + Retain 90% of top performers + Recognition awards are appropriately given for desired behaviors Measures of Success 8

Recommendations for a Redesigned Employee Recognition Program 9

Design a strategic recognition program that is easy to use and is both peer-to-peer and leader-to-employee. Also need to increase the frequency of manager-driven, personal recognition. Recommendation: On-line Rewards point-based recognition tool with tangible rewards. Recommendation 10

CEO PROPS Program Announcement 11

+ Consistent reinforcement of desired behaviors related to The Way Forward across the organization. + Provide a way for employees to recognize each other or managers to recognize employees in a public forum. + Excellent reporting capabilities available to both Human Resources and managers to track usage, identify areas for improvement, and measure program success. + Automatic tax reporting procedures provided by the vendor that would result in increased efficiencies in Payroll. + Provide information that can be used by Corporate Communications to spotlight specific behaviors or employees and enliven and reinforce The Way Forward. Benefits of Redesigned Program 12

PROPS Launch Event 13

Examples of PROPS Communications 14

+ 59,705 PROPS awards were given between February 1 and December 31, % of employees received at least 1 award during the past year + 84% of employees have given at least 1 PROPs award during the past year + Over the past 18 months, employee engagement increased by 7%; we attribute this, in large part, to the success of our PROPS program + The program was consistently utilized by all divisions in the company Year One Results 15

Feedback from year-end employee survey revealed: + 97% of employees responded that they feel more valued + 84% of employees have been recognized more than 4 times + 52% of employees recognized their leaders Year One Results 16

+ “This more personable approach to recognition gives me the feeling that I really do have the ability to effect change for what I think is the better.” + “I like having the option to recognize coworkers. I believe it has made my own team stronger because we regularly recognize each other this way.” + “This is the best overall recognition program I have seen since recognition can come from any level or area in the company. It really improves morale.” + “ I came in this morning and had some notifications that I received PROPS. It really made my day. This is a great motivator and incentive program. I am grateful that BCBSNC can think outside the box.” Employee Feedback 17

David Laboy (left) awarded Danielle Zielonka (right) PROPS for being COLLABORATIVE. Although her role as a Learning Technology Specialist requires her to work with other departments, it was her ability to speak Spanish that allowed her to extend her collaborative reach to other BCBSNC employees and to the community as a whole. When one of our employee networks, HABLA (Hispanic and Bilingual Learning Alliance), asked for volunteers to participate at an event at the Mexican Consulate, Danielle stepped up without hesitation. Moreover, David attests, “Employees who understand the value of collaboration help drive business results…Danielle is a true example of that! She utilizes her skills to deliver the 4C’s.” And for that, we say THANKS! Hispanic and Bilingual Learning Alliance Way to go, Danielle! Kudos on working collaboratively! 18

Questions? 19