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HR’s ROLE IN TRANSFORMING

BUPA’S BUSINESS

Craig McCoyBupa Health & Wellbeing UK26.04.12

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• HR Director Bupa Health & Wellbeing July 2010

• Interim Group HRD Jersey Telecom Spring 2010

• Interim Group HRD 2ergo PLC 2009

• HR Director EMEA Aegis Media 2005 – 2009

• HR Director BT Major Business 2003 – 2005

• Group HR Director BSkyB 2000 - 2003

• HR Director UK&I Compaq Computer 1997 – 2000

• HR Director Datastream 1992 - 1997

Craig McCoy

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Back ground re Bupa

Business challenges

Changing customer perception – from Insurer to Healthcare Partner

Introduction of the Business Partner Model within HR

Engaging with and involving our people

Healthy life plans for our employees – showcasing our proposition internally

Impact on Bupa performance

Questions

What I am going to cover today:-

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Revenue Circa £8b

Head count Circa 53,000

Offices 15 countries

Bupa – Established in the UK in 1947 and is now a global brand

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Bupa – BHW – Based in the UK

Revenue Circa £1.7b

Head count

Circa 3,500

Offices Salford Quays and Staines (6th largest Private Sector employer in Greater Manchester).

Market position

NO 1 in UK PMI, circa 40%

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Bupa Business Challenges

• Diversifying business – exited hospitals and life assurance, grown internationally. More than just an insurance company!

• More aggressive competition in the market

• More integrated products with flexible choice and pricing

• Mature product lifecycle business

• Restructure to reduce operating costs

• Rising costs of medical treatment in our supply chain

• Accelerate technology enablement – e.g. eCommerce

• Enhance strategic sales capability

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The Bupa Health and Wellbeing (BHW) strategy is to create a differentiated healthcare business, offering a portfolio of healthcare products and services, to meet the needs of individuals through their life stages and businesses through their business lifecycle, to become their healthcare partner.

‘Helping you find Healthy’

BHW 2011 Transformation

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HR Service Model – Why Change?

Move away from traditional, functional HR model

Need for business partnering across BHW leadership and within HR team

‘One face to the customer’/single point of accountability

Job enrichment – broader, more multi-skilled and commercial roles

Better career development

New roles and new challenges for many

More cost-effective and efficient

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New HR Service Model

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• Ongoing programme of skills development (9 months)

• Training in business partnering (not just for business partners!)

• Business – based project work is an integral part

• ‘Action learning quads’ - balance learning from:- team colleagues along with external facilitators

• Team building, transition, handoff points between ‘centres of excellence’ and HR Business Partners

Developing Business Partnering Capability

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Employee Engagement Events

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Winning behaviours- linked to BHW Strategic Vision

• We deliver on our promises• We strive for excellence• We embrace change

• We support and challenge each other• We own and resolve issues

• We are passionate and enthusiastic

A series of experiential activities designed to allow leaders to practice the BHW

Winning Behaviours in action

Self reflection, peer feedback and facilitator observation after each leader led exercise which fed into individual Personal Action plans

400LeadersAttended

LSE

Leadership Support Events

Challenging commercial business simulation spread across two days, giving the leadership community the opportunity to stretch, test and explore leadership capability against the Winning Behaviours and identify their own development areas.

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BHW Healthy Life Plans

On site clinical services (GP, Physiotherapy, Occ. Health)

On site weight management clubs

On site gym facilities

On site health assessments

On-line goal planning and behavioural change tools

EAP services (Finance, Legal, Counselling & Dependant Support)

Health Coaching (beginning with smoking cessation)

Nutritional labelling in on site restaurants

Annualised support of tactical initiatives through Health & Wellbeing Activists

Communication plan to bring benefits to life

Increase / encourage participation in 2011 and beyond

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One Voice magazine

BupaLive

e-Distribution

Conference

Air & Share

Lunch ‘n’ Learn

e-Induction

Digital newsletters

Poster campaigns

Roadshows

Desk drops

Web surveys SOP

Communication Activists

Internal Communications Vehicles

• The rating scale applies to each factor • It aims to recalibrate performance, where a 5 is truly exceptional and

a 3 is good• The what and the how is embedded in the scale• The likely comparison to peers and the competitive market is called

out to support calibration, fair differentiation and reward

In combination, the performance and bonus approaches are designed to inform objective setting from a business and an individual perspectiveThe review of the performance management process for all managers in the Group Bonus Scheme

Performance management and bonus approach

Approach and Key Changes

• Establish a common set of principles - with a two factor objective setting and rating scale

• Encourage and reward the setting and exceeding of stretching targets - by raising the bar

• Encourage differentiation - recalibrating 3 as good, with the very highest achieving 3 rated employees eligible to receive 100% bonus

• Allow managers to manage - where each BU is awarded a bonus ‘pool’ and broad guidelines. Within these, the BU MD should identify the best way to spend the bonus pool for maximum return

• Be flexible enough to support internal moves and retention of key staff - allowing bonuses to be awarded to employees who have a) moved into under-performing business units or b) have demonstrated outstanding performance in their part of the business, which is not reflected in the totality

Objective Setting

• To support Bupa’s ambition of HCP we propose 2 factors (A and B) for objectives (all managers in the Group Bonus scheme)

• Factor A – delivering operational performance: The focus is on delivering excellent operational performance for the business in the near term (including all commercial objectives regardless of time-scale)

• Factor B – building a better Bupa: The focus is on building a strong business for the future, increasing capability, delivering continuous improvement and strengthening Bupa overall. Factor B objectives should begin with considering the business unit 3YP, and then work across boundaries to build a better Bupa

• The suggested form is simple, and aims to encourage the manager and employee to have a rich discussion

Rating Scale

Year End Rating

• The year end rating will be calculated by adding together the 1-5 ratings for each factor

• On both factors, behavioural considerations must be taken into account when coming up with the final rating

• The final rating will inform the bonus decision and individuals will be eligible for a bonus if they achieve:

- 3 or above in factor A; and- 2 or above in factor B

Bonus Proposals

2 3 4

5 6 75 106 6 7 77 88 8 9 9

NilSuggested bonus range(% of adjusted target)

Year endappraisal rating

0 - 50% 50% - 100% 90% - 115% 110% - 130% 130% - 140% 150%

6 7 8 9 10

5 6 7 8 9

4 5 6 7 8

3 4 5 6 7

2 3 4 5 654321

1

2

3

4

5

Factor ADelivering operational performance

Facto

r BB

uilding a better B

upa

• The guidelines for bonus awards are as outlined in the table below• Factor A – delivering operational performance for the business – is the lead rating in deciding where in

the bonus range to place an individual

• The distribution of ratings (and therefore likely bonus distribution) reflects the overall performance of the business

• Whilst bonus awards need to be strictly managed within the allocated BU bonus pools for the year, significant discretion can be used as to the best way to allocate the pot across their teams

5 - Exceptional 4 - Outstanding 3 - Good 2 - Inconsistent 1 - Poor

Significantly above performance and

behavioural expectations

Delivers exceptional results against

stretching objectives

Likely to be at the very top when compared to peers and against the competitive market

Well above performance and behavioural

expectations

Delivers outstanding results against stretching

objectives

Likely to be at the top when compared to peers

and against the competitive market

Consistently achieving or above performance and

behavioural expectations

Delivers good results against stretching

objectives

Likely to be a core and key contributor when

compared to peers and against the competitive

market

Achieves in some areas, although overall

inconsistently meeting performance or

behavioural expectations

Achieves objectives in some areas although not

all / achieves most objectives although they

are not stretching

Likely to be inconsistently achieving when

compared to peers and against the competitive

market

Not meeting performance or behavioural expectations

Unacceptable performance against

objectives

Poor when compared to peers and against the

competitive market

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Bupa Group 2011 results (announced March 2012)

REVENUE£8bn

PROFIT£559m

GROWTH20%

4-YEAR GROWTH

50%

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Thank you. Any questions?