1. Human Resources Leadership Meeting February 11, 2005 Building the Human Resources and Payroll Environment for the Next Generation of North Carolina State Government

2. 1 Welcome and Introductions Human Resource Leadership  HR Directors  JADS Process Owners  OSP HR Leaders Project Team  Linda Hudson  Shannon MacFarlane  Lowell Magee  Bradd Craver  Dorie Kehoe  Edward Brodsky

3. 2 Agenda Welcome, Introductions and Agenda SBIP Program Background HR/Payroll Project Overview Vision Overview Process Session Reviews  NC Print Process Flows  Process Requirements  Process Summaries Change Management/Communications Questions Action Items Review Adjourn

4. 3 Program History Session Law 2001-491 directed the Office of the State Controller (OSC) to determine the feasibility of developing and implementing a new business infrastructure for the State. The systems included in the State Business Infrastructure Study (SBIS) supported the following business functions: financial management, cash management, payroll, human resources, budget management, procurement, treasury, retirement, and revenue accounting. The study concluded that continued use of the current business systems may adversely impact the fiscal integrity of state government, as well as the efficiency and effectiveness of its operations. Therefore, the State decided upon a replacement strategy that carefully weighs the risks of potential system failures with the current State budget condition and State funding priorities. The strategy involves an extended implementation approach with the first focus on replacing the Human Resources and Payroll Systems. Ratified Senate Bill 991 appropriates funds to implement this strategy. Both summary and detail report information can be accessed on the SBIP Website which is located on the Office of State Controller web site: http://www.ncosc.net/SBIP/SBIP_Index.html

5. 4 Statewide Business Infrastructure Program (SBIP) Legend:Current ProjectPast ProjectsUpcoming Projects Past ProjectsCurrent ProjectUpcoming Projects Future Projects Financial & HR Business Infrastructure Study Phase 1 Inventoried present systems and provided assessment of technical and functional capabilities Financial & HR Business Infrastructure Study Phase 2 Provided a blueprint for viable implementation options and a recommended course of action HR/Payroll Planning Project Identify process re- engineering and structure Develop integration strategy and risk analysis Develop business requirements HR/Payroll Bid Preparation Project Develop bidding document for implementation Select Vendor for HR/Payroll Implementation HR/Payroll Implementation Project Implementation Statewide Business Infrastructure Project – Budget & Financials Statewide Business Infrastructure Project – Tax & Revenue SBIP Data Warehousing Planning Project Develop needs assessment Confirm Scope Develop implementation timeline and approach Develop business requirements SBIP Data Warehousing Implementation Project Implementation Future Projects

6. 5 HR/Payroll Project Overview Planning Implementation Begins Implementation Begins RFP Development RFP Development Identify HR and Payroll business and functional requirements Develop business process flows Execute a formal bidding process. Confirm HR/ Payroll strategy for implementation Perform the implementation objectives for a new, fully automated HR/ Payroll system for the State of North Carolina

7. 6 High Level Project Timeline HR–Group I Personnel Administration Recruitment Applicant Tracking Disciplinary Action and Complaint Management Incident and Accident Tracking Exit Interviews Competency Based HR Management Performance Management Training Administration HR–Group II Compensation Management Job and Salary Surveys Position Evaluation Analysis Benefit Administration Workforce Analytics Organizational Management Employee Self Service Leave Tracking Payroll Payroll Administration Payroll Processing Labor Cost Distribution Time Collection & Management Budget Support Technical High level technical requirements Security Infrastructure Integration PlanExecute Vision Close –Project Status Report –Final Deliverables –Offsite Working/Holiday 12345678910111213141516171819202122232425 181522296132027310172431714212871421284 111825 Group I Group II Payroll Change Management Technical Date Project Management MonthDec Project Week Human Resources NovJanFebMarchApr

8. 7 What are the current risks and why should we act now?  Risk of payroll system failure resulting in delayed payments to over 80,000 state employees  Retiring HR/payroll system support staff –Inability to maintain current systems due to retirement of system support staff –Limited resources with the knowledge required to maintain existing technology  Future labor market competition and an aging state workforce –Current recruitment and retention capabilities need to be improved to address forecasted labor and skills shortages associated with retiring baby-boomers –Next generation of employees will demand online visibility to HR and payroll details State of North Carolina Employee Statistics  Implementation of new system will be a multi-year effort –The risks associated with the current systems will increase each year until the outdated systems are replaced  North Carolina is lagging behind state and private sector systems and process trends

9. 8 HR/Payroll Project Vision and Goal HR/Payroll Vision A strategic business partnership supporting the human resource and payroll needs of State government, enabled by utilizing leading business practices and current technology HR/Payroll Project Goal Through a statewide collaborative effort, the goal of the HR/Payroll Project is to develop an enterprise-wide Human Resources/Payroll system utilizing leading industry practices to provide a foundation for effective management, increased efficiency, and the information needed to make timely and appropriate decisions

10. 9 HR/Payroll Project Guiding Principles  Create a seamless HR/Payroll experience for employees  Provide an environment for employees to make informed decisions about their careers and employment benefits  Streamline business processes to drive efficiency  Increase productivity and make the State of North Carolina more competitive  Develop a single repository, with a common set of data elements, to successfully support the State’s reporting and management activities  Move transactions closer to the point of origin (Employee Self Service/Manager Self Service)  Provide a flexible system able to respond to changing HR/Payroll needs  Eliminate redundant systems and duplicative processing  Provide real time access to transaction activity

11. 10 HR/Payroll Today  Transactional Focus  Separate and Isolated from Mission  Fragmented data prohibits meaningful reporting  Manual, paper-intensive processes  Processes and procedures vary by agency  Employees require assistance to change personal data  Inconsistent standards and forms across agencies  Duplicate entry of HR data into multiple systems  Fragmented data across agencies makes statewide reporting difficult Why Transform NC’s HR/Payroll? HR/Payroll Tomorrow  Strategic Focus  Key Part of Organizational Mission  Consistent information enables accurate enterprise reporting  Automated, technology-enabled processes  Employees can manage selected personal data  Standardization of forms and similar processes across agencies  Single HR/Payroll system to reduce data re-entry  Consolidated HR/payroll database across all agencies for better reporting Business Process Reengineering Technology Implementation

12. 11 HR Leadership Pain Points What are the HR system and process issues that your agency is facing?

13. 12 JAD Session JAD Session Industry Best Practices Process Designs State of NC Process Designs Review Process/Subprocesses Identify Activities Identify Opportunities HR/Payroll Business Requirements Future Processes Business Impact/Benefits Potential Barriers Performance Measurements Project Vision Scope Industry Best Practices JAD Session Objectives

14. 13 What is IndustryPrint™? IndustryPrint™ is a tool used to represent a logical and sequential collection of best business practices in a graphic format. The three main symbols used in the graphic displays are: Process : A group of activities in performed by an organization. Manage Human Resources is one of these processes Subprocess : A subprocess is a segment of a core process that focuses on a single business area. For example: Train Workforce Business Activity : A business activity is a breakdown of a subprocess that produces a measurable result. For example: Deliver Training Manage Human Resources (HR) Manage Compensation (HR-070) Maintain Classifications (HR-070-060)

15. 14 Why Do We Use IndustryPrint™ ? Activities are arranged in activity flow diagrams Components of the activity flow diagram include: Activities Decision points Subprocess connectors

16. 15 HR-070 Manage Compensation and Classification

17. 16 HR Process Reviews HR Process JADSProcess Owners Group 1 Career and Succession PlanningPam Frazier (Information Technology Services) Manage Recruiting, Hiring, & IntegrationHelen Dickens (Department of Transportation) Develop and Train WorkforceAnn Cobb (Office of State Personnel) Monitor Employee Health & SafetyMike Chapman (Office of State Personnel) Manage Labor and Employee RelationsDrake Maynard (Office of State Personnel) Manage Employee SeparationBetty Smith (Dept of Health and Human Services) Group 2 Plan and Manage HR Programs and PlansGary Fisher (Office of State Personnel) Design and Maintain Organizational StructureJoe Stroup (Dept of Environment and Natural Resources) Manage Compensation and ClassificationDuane Hinkle (Office of State Personnel) Maintain Benefits EnrollmentPani Tademeti (Office of State Personnel) Administer BenefitsPani Tademeti (Office of State Personnel)

18. 17 Career and Succession Planning HR-040

19. 18 JAD Session Highlights Career and Succession Planning Process Overview  Career planning is centered on developing an employee's competencies, and helping to prepare an employee for the next steps in his/her career.  Succession Planning involves looking at future vacancies in the organization and identifying steps the organization can take to prepare. It can include looking to fill a specific future vacancy or identifying activities to mitigate a general loss of multiple key skill leadership positions. Improvement Opportunities  Conduct organized career and succession planning across the state  A standardized and exhaustive list of skills that span across all agencies  A consolidated procedure and process throughout the State for career and succession planning as it currently seems to be fragmented and informal  A statewide competency modeling effort rather than independent agency efforts Potential Barriers  Moving to competency based hierarchy will be difficult  Allowing employees to enter their own skills may cause employees to ‘over- inflate’ skills when they are directly related to compensation level  High potential employees cannot be flagged and high performers cannot be groomed for a position due to legal limitations Benefits  Ability to identify individuals within the State who may be well suited to fill upcoming leadership gaps  Allows employee to enter skills that are not related to a specific job, which will empower both employees and managers in locating needed proficiencies  Gives employees ownership of their careers and gives managers tools they did not have previously  Positions the State as a competitive employer, particularly with the coming labor shortage  Allows HR to function as it is truly intended  Improves decisions on how to most effectively use a limited training budget  Enables accountability on the use of training dollars

20. 19 Develop and Train Workforce HR-060

21. 20 JAD Session Highlights Develop and Train Workforce Process Overview  The objective of this process is to design and deliver training, education, and development programs to effectively improve skill levels to meet current or future business plans.  This includes: –assessing current skills inventory to determine training and development requirements –creating development plans to achieve or maintain desired skills and corresponding competency levels Improvement Opportunities  Employees directly view their training history and enroll in new courses via ESS  All internal training tracked in one consolidated system  Mandatory courses can be standardized  Pooling of trainers to teach standardized courses Potential Barriers  Access to a computer or high speed networks  Supervisor’s fear of employees having too much independence  Elected officials and political appointees may fear the loss of control due to ESS/MSS Benefits  Improved decision making  Comprehensive training record  Real-time data  Employees have direct access to manage their own careers  Training is linked with new competency-driven pieces  Good networking tool among agencies  Better informed supervisors  Opportunities for group purchase of training materials  Training records automatically updated upon completion of training

22. 21 Monitor Employee health and Safety HR-120

23. 22 JAD Session Highlights Monitor Employee Safety and Health Process Overview  Implement plans and practices that ensure the organization consistently meets government reporting requirements related to health and safety  Track work related incidents and their outcomes  Develop incentives that promote a safe work environment Improvement Opportunities  Completing and approving forms via workflow  Application of SIC and more discrete codes at the job level for improved reporting  Tracking the types of incidents across jobs as well as within an agency Potential Barriers  All employees do not have access to computers  Agreement on common data elements may be difficult  Industrial commission makes frequent changes in requirements  Need to determine who is going to pay for this going forward  Security of system if all data is in one place  DOT does not use the same Third Party Administrator that other agencies use Benefits  Reduced clerical burden  Focus on solving problems, rather than gathering information  Better able to measure the improvements with better information  Increased efficiency  Cost savings through reduction in Worker’s Compensation overpayments  More open communications between employees and supervisors  Cost savings from electronic transactions  Save physical space with reduction in paper  Managers more involved with safety through ESS  Ability to flag salary continuation that the supervisor can turn on and off

24. 23 Manage Labor and Employee Relations HR-130

25. 24 JAD Session Highlights Manage Employee Relations Process Overview  This process includes managing communications with employees as well as monitoring and resolving grievances, disciplinary actions, and discrimination complaints.  It also includes activities around performance appraisals Improvement Opportunities  Consolidated data in one system  Automatic notifications for follow up activities  Make grievance policies more proactive  Consolidated data should make it easier to identify trends Potential Barriers  Access to computers and other infrastructure issues  Agencies currently have different processes  People are resistant to change and will need extensive training  Terminology differences  Fear that data will be used to hold up progress, rather than for its intended purpose  Managers may not be ready for the accountability  Employees may not trust their managers Benefits  The ability to spend more time on people activities and less time on administrative activities  Better data should make it easier to identify trends  Better business intelligence will be available  Data is more readily available for decision making  The ability to accomplish things at the lowest level  Connect previously disjointed systems

26. 25 Manage Employee Separation HR-140

27. 26 JAD Session Highlights Manage Employee Separation Process Overview  The objective of this process is to manage voluntary and involuntary employee terminations, including performing exiting activities and recording separation data.  Activities may include collection of employer property, packaging of severance or other separation packages, and discontinuance of benefits Improvement Opportunities  Sending out an acknowledgement of separation with frequently asked questions and benefits contact information  When an employee is moving between agencies, handle the process as a transfer rather than a separation  Have a checklist for hiring and separation  Workflow notifications to appropriate parties (security, fixed assets, etc.) when an employee is separated Potential Barriers  Access to computers and computer literacy  Different technology infrastructure at agencies  Challenge to reach a consolidated decision on some issues  Employees currently see the agency as the employer, rather than the State of North Carolina as the employer Benefits  Ability to transfer between agencies and to take employment “history” with employee  Ability to report turnover on a state level with real time information, leading to better workforce planning  Ability for employees who have a leave of absence or are rehired to keep historical information  Better tracking of property should increase recovery from separating employees  A system-generated separation letter should reduce the number of follow-up questions and grievances and provide a better information trail  More transparent and less onerous for employees  Automatic workflow notifications when someone leaves so no step is forgotten  Separating employees are left with a positive experience

28. 27 Manage Recruiting, Hiring, and Integration HR-050

29. 28 JAD Session Highlights Manage Recruiting, Hiring and Integration Process Overview  Develop and implement processes, systems and controls to ensure appropriate selection, hiring and placement of staff  Manage current and future position openings through effective processes in identifying best- qualified candidates  Manage the assimilation of new employees into the organization Improvement Opportunities  Create a single site to submit applications to any State agency  Allow online application  Provide automated screening of applicants  Streamline workflow enabled position approval Potential Barriers  New terminology (jobs vs. positions vs. classifications)  Access to computers  Subject Matter Experts felt it would “be difficult to make changes in the bureaucratic environment”  Changes in laws, policies, and processes may affect the re-design of system  Hesitation to leave current system to new consolidated system Benefits  Less confusion for applicant  More meaningful and useful reports  Data entry process would be easier  More data consistency  More flexibility in making changes and corrections  Self-service resulting in less paper work  Improve image as an effective state government  More responsive and greater interoperability among agencies  State seen as more attractive and competitive employer  Meeting expectations of younger generation  Increased sharing of information between agencies  Ability to attach documents to records (resume)

30. 29 Organizational Themes  SME feedback –Enthusiastic about the possibilities of a new solution –Supportive of common processes and standardization –Sessions have provided a good networking forum –Appreciative of the opportunity to provide input  Business Benefits –Reduced clerical burden –Increased efficiencies –Better decision making with better consolidated data –Reduction of various side systems  Potential Barriers to Success –Computer availability and technical infrastructure –Fear that data will be misinterpreted – data security –Acceptance of employee/manager self-service –Common change barriers –Training (system and process) and PC skills

31. 30 What is Change Management? Change Management, as it pertains to projects like this, is primarily about:  Building and sustaining a leadership coalition to guide successful project completion  Reducing long-term costs of the project  Fully understanding and softening the impact of changes to affected employees  Ensuring that behavioral changes brought about by the project are “made to stick”  Bringing about higher organizational performance as a result of the project  Reducing risks related to: –Disruptions in productivity and customer service –Missing project time and budget targets –Misalignment of expectations Metaphorically, Change Management is…  The grease that makes the project (and the resulting new business processes) run more smoothly, and  The glue that gives the project a sustainable, valuable impact

32. 31 The Change Curve – change is difficult, but it can be managed Bail Out? “This is not something I want to be a part of.” Key to Success: Reduce the duration of the trough, and accelerate the upslope via a well-planned and executed change management program. Time Uncertainty “What does this mean for me?” Resistance “I can’t work with all of this uncertainty and turmoil.” Adaptation “This is hard, but we can do it.” Organizational Performance Baseline Commitment “This was the right thing to do.” Withdrawal “I’ll do what is necessary to survive.”

33. 32 Keys to success in Change Management programs The keys to building and implementing a successful change management program include, among others:  Develop and adhere to a set of guiding principles to drive your change strategy  Build and foster an extensive change network of leaders and employees with clear roles in championing the case for change  Understand your stakeholders, their interests, their needs, and their motivations…and communicate with and involve them accordingly  Communicate, communicate, communicate – develop a well-thought-out communication plan and execute on it  Develop and sell a compelling business case that works at multiple levels – management, employees, and other stakeholders  Empower all project team members with a full understanding of change management and how they, as members of the “change team”, must promote the change strategy  Surface dissatisfaction and dissension and address it early

34. 33 Communicate for Buy-in Empower Action Create Short- term Wins 6 6 4 4 5 5 Don’t Let Up Make it Stick 7 7 8 8 Build the Guiding Team Get the Right Vision 2 2 3 3 1 1 5 Kotter, John P. and Cohen, Dan S. The Heart of Change. Boston: Harvard Business School Press Engaging and enabling the whole organization Creating a climate for change Implementing and sustaining change Change Management Framework: The 8 Steps of Change Increase Urgency

35. 34 HR Leadership Action Items  March 15, 2005 – Next HR Leaders Meeting  Review JADs HR Group 1 Summary –Submit comments to Gary Wiggins by 2/25/2005 at (gary.wiggins@ncmail.net)