Organization Effectiveness in a Distributed Workforce

Zak

Hello, and welcome to People Performance Radio sponsored by SuccessFactors, the global leader in performance and talent management software solutions. Without further ado, please allow me to introduce Dr Steve and Jim "The Mad Dog" Matheson.

Jim

Welcome back to People Performance Radio, you are here with your host Jim Matheson.

Steve

And Steve Hunt.

Jim

Steve, how you doing today?

Steve

I am doing pretty good, under a nice grey Oregon sky.

Jim

Ah, it's actually kind of cloudy here today as well down in the Bay Area. So today we have a nice big long interview that you did, who's this with?

Steve

Today, we are talking to Julius Schillinger, who is the Director of Organizational Effectiveness for Health Net Incorporated and this is a really interesting interview, of course I probably always say that, but this really is. One of the things that we get to do here at People Performance Radio, is we get to talk to lots of SuccessFactors' clients and, as a result, you get to talk to people dealing with all sorts of different kinds of human resource and talent management challenges and opportunities.

What Health Net, as you'll learn, one of the really interesting things that they're dealing with in this interview, is the fact that the company has expanded very very rapidly with the distributed workforce. They provide employee assistance and counseling to lots of the United States' military, and so they have people located across the entire country and the world, often working by themselves, and they've had this very rapid growth, where they have to manage a workforce that is really largely isolated, a bunch of people working by themselves, and talking about how they've been able to use talent management processes, and some of the things we normally associate with administrative processes, as really a way to derive the strategy and cohesion of their organization, it's like the talent management processes they put in place largely are the face of their organization to some of these people who work by themselves.

It was really a very very interesting around a topic that more and more companies are having to deal with, which is virtual workforces, as a matter of fact SuccessFactors ourselves are like 70% virtual so, very fascinating.

Jim

Yeah, so it was a great interview that we did, what was that earlier this week so, let's go ahead and jump into the interview.

Steve

All right, we are going to start the interview now for today's show, and we are talking to Julius Schillinger, who is the Director of Organizational Effectiveness for Health Net, so Julius, welcome to People Performance Radio.

Julius

Thank you Steve.

Steve

So, before we start into the heart of the interview Julius, can you tell us a little bit about what your role is and what Health Net does?

Julius

Sure, Health Net is a Fortune 500 healthcare insurer based in Woodland Hills, California which is southern California. About 10,000 employees total spread across four different businesses, and my role in the organization is, we refer to our human resources' function as organization effectiveness, and my role in the organization is Director of Organization Effectiveness, and that has both a business unit component, I oversee organization effectiveness for a couple of different business units, and a corporate component where I get involved in various corporate initiatives, for example, vendor selection for various web-based applications that the company may be considering to automate a particular part of our human resource portfolio.

I have been with the company for going on about six years and particularly spend most of my time overseeing Managed Health Network, one of the business units, with about 1,000 associates.

Steve

OK, what are the four different business units?

Julius

Well, there's Health Net of California, Health Net of the North East, Health Net of Arizona and Managed Health Network.

Steve

And you said Managed Health Network is the one that you do a lot of your time. So, what does Managed Health Network do?

Julius

MHN, the acronym, is essentially a provider of employee assistance programs to employers, employer groups, as well as a provider of a deeper level of behavioral health services, wellness management, disease management, kind of preventative services to employers and employer groups. Companies like Intel, Pepsi would have their employees covered by Managed Health Network's employee assistance programs, which range everywhere from offering financial counseling, legal counseling to family counseling and then the deeper level of behavioral services which would include counseling for depression, suicide and various stress related behaviors or symptoms.

Steve

I think that it is interesting that this area of sort of occupational health and safety and employee wellness is really a very growing area, it really didn't exist 15 years ago. We had people, we had employees that needed it, but companies didn't really recognize that it was important to have a mentally healthy workforce perhaps, it makes you wonder what it must have been like to work in the world 25—30 years ago, but how are you seeing this growing? Are you seeing that area of your business growing really quickly now?

Julius

It is, Managed Health Network is the fastest growing business unit within the Health Net umbrella, and part of it is that businesses today are significantly more complex and seem to be growing more so every day, and the pace of doing business now with many things being technology-enabled and the speed of communications and multi-communication channels available to everyone, the pace of doing business has gotten supersonic almost, an so it just creates a lot more pressures in terms of people's own roles within organization, and so that has I think, made many forward-thinking employers sensitive to some of the stresses both in and out of the workplace that their employees are facing, and there's this increasing need to increase productivity of the workforce while, at the same time, trying to balance a work versus personal life, and so these EAP programs and services have taken on a heightened intensity in terms of the marketplace's sensitivity to them.

Managed Health Network has two set customer segments that we market these to, one of those being what we call the commercial markets, so those are companies as I mentioned earlier Pepsi, Intel, Nordstroms is a client of ours, Warehouser, and then we have the government market segment, primarily the Department of Defense.

Steve

I think it's interesting, I want to talk more about Department of Defense, there is just a comment I wanted to make. I think it's interesting you are talking about the growth in this, so basically what I am hearing is, it is true and actually there is data showing that Americans are more overworked than they used to be, we are working longer hours, it is a faster pace. It's also unfortunately true that this is taking a psychological toll on a lot of people, that it's harder to manage the stress of that, but, the good news is that companies are really starting to invest in providing more resources to help with this, so, I just think its sort of an interesting observation that your business, I would say, a reflection of what a lot of people often complain about that you know, our world is getting more crazy as far as the working hours.

So, you were mentioning though that you also do a lot of work with military, is that across the country, or are you located in certain types of bases or does it tend to be everywhere military personnel are found?

Julius

It's both in the US and within the last couple of years, it really was the lever that catapulted or launched Health Net into the international arena. Health Net is a domestic company, and has no offices outside of the United States; however, through the work we began doing with the Department of Defense back in 2004, as a response to the increase in domestic abuse and domestic violence among returning military members and their families who were returning from war zones, the work that we did in the Victims' Advocacy, Domestic Violence Victims' Advocacy, caused the DoD to approach us to see if we could expand this overseas, and so we are now, we hired our first US ex-patriot employee in Germany, and we have various counsellor types, marriage and family life counsellors as we refer to them, EMFLAC is the acronym that the military uses, deployed in a variety of countries and soon are sending seven to Korea, so they're really US bases both here and abroad.

Steve

So how is this affecting you as the head of talent management for this division?—how is having more of a distributed workforce affecting you? Are these people working by themselves, are they in large offices, and how does that structure that they're in affect your ability to manage and guide their performance, development, retention—things like that?

Julius

Well, this business unit went from 100% office-based workforce in 2004 to today, and we have about 1,100 associates in this unit, and about 20%, and that percentage is growing rapidly, of the workforce are now geographically dispersed, primarily across military bases in the US, but also working virtually in the sense that they may be the single Managed Health Network, or Health Net, employee at that location, so as we currently have about 300 counsellors deployed across military bases, US and abroad, and again these are folks that often times have never met each other, may only see their supervisor once a year, if that, and yet when the company first was considering automating some of our people processes, we really were looking for solutions that could enable us to manage this increasingly growing component of our organization, this virtual component.

Steve

What advice would you give to somebody else who was in your position, where suddenly you're saying, "OK, you're about to have 25% of your workforce working by themselves with very rare direct contact with their supervisors"—what advice would you give them in terms of how you have to start doing things differently, as a talent management director?

Julius

Well, you have to certainly connect all your processes and you have to basically look for some tools, some technology enablement if you will, to be able to connect everybody, since you don't have the face-to-face communication as an opportunity or as part of the normal management and employee interaction, you have to make investments in other communication channels to really keep the workforce connected to the organization, both from onboarding all the way through from sourcing, onboarding, performance management, goal setting, compensation, across the entire spectrum, and our goal initially was to, when we were first looking at a variety of different applications that might help us technology-enable our people-based paper processes, we really had a couple of simple goals: one of them was, "How do we take a complex set of people processes, like performance management development, and simplify them?", so we could create a common language of performance, regardless of where the person was based, what military base, how distant they were, that we all were using the same language of performance measurement when we were talking about what an individual's goals might be and how that connected to the business's goals, and at the same time wanted to maintain a legal and regulatory compliance that is so critical in the human resource side of people management.

And the second goal was really one of linking all of these processes together, so that when individuals were conducting performance reviews for their geographically-dispersed associates, they were able to, as you can with some of the tools we are now using, for example from SuccessFactors, you can link a technology-enabled tool, you can link it to, or request input, from a wide variety of individuals who may be even closer to the performance of the particular associate than the supervisor or manager is. For example, in working with military bases, our marriage and family life counsellors often, I mean in every case they're overseen by a local military leader, a commander who oversees that base's counselling programs and services to the returning military members, and so we can, using these technology-enabled applications, we can solicit input from these, they're called "POCs", points of contact, the military leader on base, who may have a very good idea in terms of how our employee is performing at that military base.

Steve

So it's basically, what I'm hearing is, it's like the technologies enable you to create a matrix performance management system where you can pull in input directly from the customers, and the people who actually spend time with these people in the field, so the reality is that the people in your organization don't spend that much time with the people that are being reviewed, so you had to create a process that allowed you to get input from the people who do work with your employees that are your customers, and that would be difficult to do without some technology to do it in a very standardized fashion. Is that a fair characterization of the process?

Julius

Yeah, you're absolutely correct Steve, it really helps us to get to integrate a variety of perspectives in terms of an individual's performance, and of course you can do that with office-based associates as well, because every employee, regardless of their role, myself included, has certain customers, whether they're internal or external, and so we can, using these performance management tools, we can solicit that input, integrate it into a more realistic perspective on a particular individual's performance.

Steve

It's sort of like the technology is making the boundary between customer and organization fuzzy, it's a little bit like you're allowing people in the performance process to recognize that you spend more time with the customer than you do with the people in the organization, so let's reach out and bring the customers in our actual organizational processes, where in most companies those would be entirely internal.

Julius

all has to do also with a lot of what I think those of us who have seen the research coming out of various human resource consultancies over the last 18 months or so, research on employee engagement, on what attracts and what engages employees, and what retains individuals with a particular organization, and while those drivers tend to differ across various age groups, they tend to coalesce along certain points, and one of those is really how employees view themselves being treated by the organization, in terms of the people processes—is the performance management approach viewed as being fair and consistent, regardless of the employee's demographic; are the people processes viewed as being sensitive to the individual, and fair to the individual. So these are the kinds of drivers that keep people engaged, that retain folks in the organization, and they become magnified in importance when you have a distributed workforce.

The other interesting thing is, using these types of tools, for example an automated compensation application, you quickly can gauge how the organization is doing in terms of rewarding high performers, because you can take a quick cut at, OK, what is the average increase, if you use a merit increase process, what's the average merit increase that we gave to all of our folks, all of our counsellors, who received a "meets expectations" performance review, and what's the average merit increase that we've received that "exceeds expectations" performance score, and then how do those compare, and is there a significant difference? It's kind of assessing the pay dispersion between various levels of performance via counsellors.

Then you compare those against benchmarks, and you can then quickly determine if you need to make adjustments downstream in terms of your entire reward mechanisms.

Steve

I'm heearing two things as you're talking about this, I think is it a very interesting take, what you're saying is, one, when you become a more distributed workforce, the processes really become how employees judge your organization in terms of their engagement and are they being treated fairly, whereas I would contrast the two, like take a small start up company where everyone works together in the same office, and their processes, if they exist at all, are terrible, but people don't complain, because they're constantly interacting with each other, and their smiling faces make up for the lack of any decent process, but in a bigger organization you don't have those smiling faces, you've just got this entity, which is the organization workforce, so it's only, the process has become basically the face of the organization to that employee, so the processes have to be really good, because that's how they're going to evaluate the company, which is really pretty interesting.

Julius

It is, it's really their satisfaction, satisfaction with the company's people decisions and when you think about, well what are those decisions, they revolve around reviewing people's performance, providing or creating development plans for folks, creating advancement opportunities through promotions or other kinds of job assignments, and then it's the whole entire rewards portfolio.

So the processes now can really become alive for these folks, and it is a way of keeping them engaged, and at the same time retaining them in the organization, particularly, there's for us, we used this business unit to pilot our performance management system from SuccessFactors, because this particular business unit is the most complex in terms of the business, it is the fastest growing, it was the most difficult business unit to implement a new technology in, and train the users.

One of the things we looked at, in fact, when we were assessing various vendors through the vendor selection process for this application was, not only ease of implementation, but ease of learning—how easy could we train all of these disparate resources across the organization to use the technology? And that was a key driver in the selection decision.

Steve

I think it's so interesting, as you're talking about this, about really, when you're saying you're working with a distributed organization from the perspective of employee engagement, how important process becomes, and I'll go back into something famous like the Gallup research really saying one of the big drivers of retention is people saying, "Do you have a friend, a best friend in your company?" Well, if you work by yourself, and never see the people you work with, you probably don't have a best friend at the company, because you never see them, so you can't develop friendships and other things to get people to stay in the organization that are very personally oriented. So what I'm hearing is, you don't have that side to keep people, all you've got is really good processes that they feel good about, that are easy to use, so they feel fairly treated. And what you're saying too is by piloting the ultimate test of, do you have good talent management processes is do they work in this highly distributed workforce where you can't fall back on any of the traditional things we do to keep people engaged, that is talking to them all the time, smiling, giving them free lunches—that doesn't work, we don't have that, all we have is our processes. Am I overstating that, or is that a good clarification?

Julius

Well, I agree with what you're saying, and I would add that, even though a virtual employee working at some remote US military base in North Dakota could have a best virtual friend, because one of the techniques we use, and one of the things that these applications allow you to do is to have groups of like employees collaborate electronically to, prior to solidifying what the goals are going to be for a particular job group, like marriage and family life counsellors, you can get the associates together electronically to collaborate on the tool, to exchange views on what the goals should be within the broad performance categories that are set, and then cascade that, in essence not cascade it, drive it upward for management review and reshaping and fine-tuning, before it gets cascaded back. So they're collaborating in essence virtually electronically as part of the process, so the process almost provides an enablement, not unlike some of the social networking tools and sites that are out there like Facebook and MySpace and LinkedIn, it provides this vehicle for collaborating which then creates a perception that, "Hey, the company does care that we have a fair and consistent non-discriminatory approach to managing performance."

Steve

Julius, I guess I'm kind of a nerd in this thing, but I really get excited, it's so interesting, because there's the classic split between administrative HR, which is supposed to be boring and yesterday's news, although that does give us pay checks every day, and strategic HR, which is all the flash and all the talk, and what I'm hearing you saying what you guys have done, you've just said, "Look—we're going to drive our strategy, our collaboration, our engagement, but we drive it through really good administrative processes", and so we excel with using technology to do great administrative performance management, goal setting processes, but those processes are set up in a way that people are left with a sense of collaboration, a sense of fair treatment, it gives us data and insight into whether or not we're using compensation resources in the right way. So it's very like strategic administrative HR, if you will, it's a blending of the two, which I think is just cool, because having talked to a lot of people, I've never talked to someone who's quite embraced the processes so fully, so like, "Hey—we should be leveraging these for something".

Julius

Yeah, it's been a wonderful, not without its speed bumps, but it's been a wonderful way for us to essentially be connected to folks that we hire, and that really deliver some valuable services to us. The tens and tens of thousands of US military members who have spent prolonged periods of time in war zones throughout the world, often times in very precarious circumstances, and on multiple deployments, they're gone, they come back, they go back to a war zone, with their families, in particular their children, not knowing if mom or dad is ever going to return, these counsellors really deal with those kinds of situations day in and day out, and so these web-based applications really allow them to see how the company operates, see how the company treats them in terms of their rest, their rewards, their development, and in what development investment the company wants to make in them, and it does end up acting as an employee engagement and retention lever.

Steve

Cool, well Julius, I have one more question, but I just wanted to comment on what you're saying there, what I'm hearing into it is, you're saying, look, you, and it's great that companies like Health Net that are supporting the military and really help people who have real challenges, they're facing the real challenges, your customers are facing real challenges, and you're saying, our people that are working with us as counsellors, they're facing with enough issues as it is, the last thing we need to do as an organization is add any frustration to what they're dealing with, they have a stressful enough job as it is, and so it sounds like it's really pushed you as an organization to say, "We have to exceed in making the world easier for our employees, because our employees are in inherently very stressful jobs."

Julius

Yes, that's well stated.

Steve

So, I applaud that, it's cool to hear what you've done there and with the technology.

The last question I would ask is, is there anything as far as looking at distributed workforces and managing them where you've had a major lesson learned? Something where you'd say, "Well we tried this, and that didn't work", or something that you overlooked, and for other organizations, as they are going to more distrbuted workforces, something you'd say, "Here's something I know now that I didn't know five years ago".

Julius

I think our big lesson, and we're still learning it, and it's really more of a question, is we have this wonderful pool of distributed talent, and there are levels of expertise resident within that labor pool that can be even better leveraged, and so the question that we're trying to figure out, or trying to deal with, trying to answer, is, "How do we leverage the subject matter expertise of this distributed workforce to benefit both the business and other customer segments?" It's really almost like a, "How can we use the collective experience and intelligence of these field-based people resources as a new service or new product incubator?"

Steve

I see, it's almost like knowledge sharing, how can we both share knowledge and experience and use that to drive creativity, that's a big challenge. I would say, actually one of our partners, IBM, excels at that, that might be a good place to look, just as a comment.

Julius

And there are other companies, and companies like IBM that do that, they've got consultants distributed all around the world, just as some places where I've seen some very innovative approaches. That's a really good point, how when you have people distributed around, how do you get insight into what they know, and more importantly, how do you leverage that knowledge to do things beyond what we're currently doing?

Steve

Yep, and one other thing we learned, I know you only asked for one, but one other thing we learned was that, your onboarding programs for new hires have to be extremely robust, because it becomes very easy for these distributed individuals to more closely align with the military commander who happens to be overseeing the counselling programs at that base, and other members of the military at that base, to more closely align with them than they do with their employer, since they rarely see anyone.

Julius

It's almost like they go native. Interesting, yes, so you really have to make sure, how do we make sure that they're bonded to us as a company and they see the customer as a customer, and not side too much with the customer, and see us as a CSO, if you will.

Steve

Right, how do you get them embedded in the culture, and using these web-based applications helps, because people can quickly be attuned to how the company recognizes and rewards its associates, how the company measures performance, what the goal sets are, what the language is of performance, so those really are enablers, but in and of themselves they're only part of the picture, there has to be other mechanisms, whether it be a regular web-based meeting where all of a particular job group connect together for brainstorming sessions or debriefing sessions, whether it's bringing the resources to the closest available office periodically, so they can connect with the physical location of a particular part of the company.

Julius

It's interesting, SuccessFactors wrestles with that same thing, because 70% of our workforce is virtual, I work out of my house and I'm looking at some SuccessFactors' trail mix that they just sent me a few days ago, Success Leaders, lots of things like that, just to try to keep the people working out of their home, that they were thinking of you, including, at no small expense, bringing all of us together for an annual all hands meeting, which the company really wants to continue that, it gets harder to do as you become larger, but recognizing that you've got make that little extra step to make those people out in the field feel a part of the organization.

Well Julius, this has been a very fascinating interview, I've really enjoyed the conversation.

Steve

I have too, thank you so much, I appreciate the opportunity Steve.

Julius

I look forward to having a chance to talk more and learn more from you as you continue to crack the nut on distributed workforces, so thank you.

Steve

Take care.

Speaker

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