1. Human Resources Leadership Meeting March 15, 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  JAD Process Owners  OSP HR Leaders Project Team  Robert Powell  Gwen Canady  Thom Wright  Gary Wiggins  Julie Batchelor  Linda Hudson  Shannon Byers  Jessica Blume  Tom Walker  Lowell Magee  Bradd Craver  Dorie Kehoe  Edward Brodsky

3. 2 Agenda  Welcome, Introductions, and Agenda  SBIP Program Update  HR Effectiveness  High Performance Organizations  Process Session Reviews –NC Print Process Flows –Process Requirements –Process Summaries  Change Management/Communications  Questions  Action Items Review  Adjourn

4. 3 SBIP Program Update  HR/Payroll Project Update –Completed HR 1 and 2 JAD Sessions –Completed Payroll JAD Sessions –Initiated Technical Requirements Gathering  Data Warehouse –Hired Project Manager –Began Scoping and Planning activities  Legislative Update

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 Pre-Implementation Activities Pre-Implementation Activities Identify HR and Payroll business and functional requirements Develop business process flows Confirm selection of system as well as technical service delivery Confirm HR/ Payroll strategy for implementation Business reengineering opportunities Perform the implementation objectives for a new, fully automated HR/ Payroll system for the State of North Carolina

7. 6 HR/Payroll 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 HR Effectiveness - Vision 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

9. 8 HR Effectiveness - 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

10. 9 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 HR Effectiveness - Transformation 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

11. 10 Current OSP/HR Directors Initiatives  Mediation Program  Equal Employment Opportunity  Competency Modeling  E-Learning  Career Banding  HR/Payroll Systems Replacement Project

12. High Performance Organizations

13. 12 Are you feeling the stress? I'm not sure exactly how it works, but this is amazingly accurate. The photo on the next slide has 2 almost identical dolphins in it. It was used in a case study on stress level at St. Mary's Hospital.  Look at both dolphins jumping out of the water.  The dolphins are identical. A closely monitored, scientific study of a group revealed that in spite of the fact that the dolphins are identical, a person under stress would find differences in the two dolphins.  If there are many differences found between both dolphins, it means that the person is experiencing a great amount of stress.  Look at the photograph, and if you find more than one or two differences you may want to take a vacation.

14. 13 Can You See the Differences?

15. 14 So, HR is really important! Moving the Game Up  What Is a High Performance Organization?  Why Are Higher Performance Levels Required?  What Are High Performance Practices?  How Does HR Impact Development of a High Performance Organization?  How Can HR Measure Contribution to a Performance Organization?

16. 15 The Challenge – To Create a High Performance Organization Embrace Government that is:  Efficient, Effective, Trustworthy, and Responsible to citizens and their needs  Prepared with a workforce to meet the demands of a global economy  Aligned – Strategy, Leadership, and People to Organizational Infrastructure, Processes, and Technology “Now as one economic era has ended and another has begun, the time for indecision and timidity has passed. We are already on the path of progress. Our full attention must be focused on the transition of our economy consistent with the educational demands of this global era.” - Governor Easley, 2005 Inaugural Address

17. 16 Government and Corporate America Must Move Up Organizational Performance  Meet budgetary demands to create more value with less  Fight the competition and improve constituent value  Develop workforce plans to meet State strategic objectives  Develop and retain the best talent  Provide HR services that support mission critical activities at the State level as well as at the agency level  Meet expectations of candidates and future employees  Create infrastructure to support efficient HR service delivery

18. 17 Organizational Efficiency Operational HR Cost (HR processes) Personnel Cost Flexible Compensation State Competitiveness Workforce Planning Human Capital Flexibility Effectiveness in People Development Statewide Strategy HR Strategies and Initiatives Effectivenes s Perspective Efficiency Perspective Link NC Strategic Objectives to HR Activities

19. 18 HR Value Creation Can Rise to the Top Performance Measures HR Performance Strategic Value e.g. Reduce turnover to <20% for critical roles e.g. HR benefit transaction costs reduced by 25%

20. 19 HR Impact on Development of High Performance Organization  Performance Management Processes and Policies  Organizational Change Management  Strategic Workforce Planning – Talent Management  Risk Management  Workforce Training and Development "Develops a workforce prepared to meet the demands of a global economy by expanding life-long learning opportunities" “The top in innovation, creativity, knowledge, talent, and skills“ - Mike Easley, NC Governor

21. 20 Measuring HR Effectiveness  Measures must be strategically relevant and aligned with statewide objectives and specific agency goals  Measures must be limited but focus on: –Key drivers of performance and their outcomes –Provide Cause\Effect relationships among measures  Example Measures –Percent of trained employees with increased KSAs as reported by management –Percent of new hires who are exceeding expectations after one year –At least a 25% pay differential between good and excellent performers –Total cost of vacant positions –Voluntary turnover rate of high performing employees –Percent of grievances settled through mediation

22. 21 Proposed Conceptual Framework for HR Measures Agency Perspectives People Organizational Effectiveness Organizational-Wide HR Measures HR Functional Measures Framework Levels Example – Strategic Performance Measurement Categories Budgetary Perspective HR Process Measures Manage Employee Recruitment & New Hire Integration and Manage Employee Separation Process Develop & Train Workforce Administer Pay & Benefits and Control Employee Information Manage Employee Relations HR Planning & Analysis and Strategy Development Manage Performance Management Context -Specific Agency Objectives Constituent Relations Operations

23. 22 HR Project Perspective  Significant opportunity for business process redesign now  Significant opportunity to leverage technology to support process improvements long term

24. 23 HR Process Reviews HR Process JAD SessionsProcess Owners Group 2 Plan and Manage HR Programs and Plans Gerry Fisher (Office of State Personnel) Design and Maintain Organizational Structure Joe Stroup (Dept of Environment and Natural Resources) Manage Compensation and Classification Duane Hinkle (Office of State Personnel) Maintain & Administer BenefitsPani Tademeti (Office of State Personnel)

25. 24 HR020 – Plan and Manage HR Programs and Plans

26. 25 JAD Session Highlights Plan and Manage HR Programs and Plans Process Overview  Once HR programs and plans have been established, their effective management includes communication, eligibility determination, plan enrollment, plan changes, and coordination/information exchange with any third parties. Improvement Opportunities  Increased statewide consolidated planning for HR programs to allow better sharing of resources and exchange of best practices across agencies Potential Barriers  Budgetary restrictions may restrict future system improvements  Employees do not understand the benefits of this project and fear how it will affect their jobs  Users are afraid they will not know how to perform basic transactions and will not know who to contact for help  People are used to moving paper and fear an electronic environment  Some of the workforce is not familiar with computers  Lack of commitment from top management Benefits  Consolidated data will be available to measure a program’s success  Ability to report on statewide data without having to call agencies to collect fragmented data  Greater ability to plan at the state level due to statewide consolidated data  Ability to be proactive, rather than reactive to requests or problems  Ability to spend more time analyzing data than collecting it  Ability to spend more time on strategic HR functions rather than HR administration  Ability to make more informed decisions due to real time data access

27. 26 HR030 – Design and Maintain Organizational Structure

28. 27 JAD Session Highlights Design and Maintain Organizational Structure Process Overview  The objectives of this process are to determine organizational design, define competencies and reporting/working relationships for each position, maintain job descriptions and responsibilities for each position in the organization, and create an organizational development plan to achieve desired staffing and skill levels. Improvement Opportunities  Standardize the use of electronically generated organizational charts across all parts of the state  Simplify and consolidate job descriptions  Simplify approval processes with fewer people touching data Potential Barriers  Legislature does not understand the HR information they are provided  Computer equipment is out of date  Fear of change, particularly changes in responsibility and authority  Insufficient training could create additional errors  Difficulty in moving beyond “we’ve always done it this way”  Lines of approval vary across agency  Agencies do not want to pay for support or changes  Uniqueness of the Judicial branch hinders standardization Benefits  Ability for agencies to access real time data to respond to legislature or budgeting requests  Ability to create more professional looking job postings that appeal to a wider variety of applicants  HR and Payroll can better support decision making and been seen as strategic partners  New technology and processes will bring the state closer to the way the private sector operates  Ability to eliminate shadow systems and the cost of maintaining them  More accurate data can generate cost savings. For example, position planning to reduce overtime  Organizational charts are more accurate because they can be produced electronically rather than maintained manually

29. 28 HR070 – Manage Compensation and Classification

30. 29 JAD Session Highlights Manage Compensation and Classification Process Overview  The objectives of this process are to manage employee promotions, transfers, and status changes; and to develop and implement employee compensation programs linked to performance/geographical guidelines that conform to budgeting and planning constraints. Improvement Opportunities  Eliminate duplicate systems that do not interface with each other  Simplify range revision and balancing processes  Implement a variable pay structure  Eliminate Commission approval for classification decisions – potential to remove statute  Integrate outside survey data with HR system data Potential Barriers  Insufficient funding for the project  Constraints on salaries caused by legislation and limited funding  Legislature does not understand cost and risk of not implementing new system  Aversion to change  Fear of how newly available data will be used or managed Benefits  Reduced clerical burden  Ability to make more informed decisions with increased information available  Ability to track different types of pay plans  Employees will be treated more fairly with standardized processes

31. 30 HR080 – Maintain Benefits and Enrollment

32. 31 HR090 – Administer Benefits

33. 32 JAD Session Highlights Maintain Benefits Enrollment and Administer Benefits Process Overview  This process includes maintaining the rules for benefit plan eligibility and enrollment. Voluntary, employee-paid, and employer- paid benefits are included. In addition to traditional benefits, flexible spending, tax-exempt, and tax-deferred plans are also included.  The administration of benefits is focused on the processing of disability claims. Improvement Opportunities  Start employee benefits upon hire rather than after a waiting period  Change benefit plan year to calendar rather than fiscal year to make it easier for employees to manage their benefit deductibles  Track employees plan enrollment statewide and base decision making on consolidated data  Simplify transfers between agencies and remove unnecessary paperwork  Automate the calculation of the disability payment  Automate the transfer of funds from the retirement system back to the agency rather than payment by a check Potential Barriers  Different benefits options with special rules that have been grandfathered in add complexity to the development and administration of plans  Some employees have limited computer skills, or less solid reading skills  Limited employee access to computers  Language barrier for employees that must use the system but do not speak English  Interface with Retirement System may be difficult to implement Benefits  Ability to provide employees with a total compensation statement that includes benefits  Ability to provide a seamless experience for employees transferring between State agencies  Ability to process transactions more efficiently with less administrative work and fewer errors  Employees will have greater faith in the accuracy of their benefits changes  Employees become more empowered and more responsible  Consistency of information across agencies allows for better decision making  Less time spent on administrative tasks  Ability to provide better customer service  Improved ability to meet deadlines  More correct and timely processing of disability claims

34. 33 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

35. 34 Change Management Update  Scheduled North Carolina IT Projects Lessons Learned Focus Group –Identify lessons learned from previous projects –Discus communication methods –Document methods to ease transition to new processes and systems –High level assessment to state government’s culture and change readiness –Participants include Bob Bellamy (Dept. of Public Instruction) Sharon Hayes (Information Technology Services) Sondra Williams (Community College System) Tom Runkle (Information Technology Services)  Wrap-Up Development of Change Management Strategy –The Importance of Change Management –Change Management Strategy and Framework –Next Steps for North Carolina HR/Payroll

36. 35 HR Leadership Action Items  April 15, 2005 – Next HR Leaders Meeting  Review JADs HR Group 2 Summary –Submit comments to Gary Wiggins by 3/22/2005 at (gary.wiggins@ncmail.net)