Project Management Committee Meeting

1. Project Management Committee Meeting Building the Human Resources and Payroll Environment for the Next Generation of North Carolina State Government March 3, 2005

2. Project Management Committee Julie Batchelor, OSC, Chair Rod Davis, DENR Dan Domico, DOT Bob Giannuzzi, ITS Carl Goodwin, OSP Wendy Griffin, DOT Kathy Gruer, DHHS Ginny Klarman, State Health Plan Tracy Little, DOC Jim Macaulay, OSC John Morgan, OSC Rob Nelson, UNCGA Jim Newman, DOI Catey Oliver, State Health Plan Kim Padfield, DOT Tom Runkle, ITS Gary Wiggins, OSP Margaret Wiggins, AOC Jonathan Womer, OSBM Pam Wortham, Treasurer’s Office OSC Management Robert Powell, OSC Gwen Canady, OSC Project Team Linda Hudson, OSC Shannon Byers, OSC Lowell Magee, Deloitte Bradd Craver, Deloitte Dorie Kehoe, Deloitte James Stovall, Deloitte Katie Beacham, Deloitte Parham Gerami, Deloitte Ed Brodsky, Deloitte Doug Oliver, Deloitte Stas Krapivnik, OSC Welcome and Introductions

3. Agenda • Welcome, Introductions and Agenda • Committee Update • HR/Payroll Project Status • JAD Sessions Review • Proposed General Statute Changes • Business Process Redesign Strategy • Change Management & Communications • Open Discussion • Action Items Review • Adjourn

4. Committee Update

5. Committee Update - Initiatives • NCTIME Project • SBIP News • Data Warehouse • Legislative Update

6. HR/Payroll Project Status

7. Status Report Status Report • Activities Completed This Period • 2/4/2005 – 3/3/2005 • Completed HR JAD sessions • Began Payroll JAD sessions • Began Technical work stream • Conducted follow-up meetings as needed • Submitted draft of HR Group 2 preliminary requirements and process flows • Continued development of change management strategy options • Completed and began distribution of marketing pamphlet (tri-fold) • Shared project news and preliminary requirements with agency HR directors to begin to engage them in the project • Conducted general statute research • Prepared and submitted ITS monthly report for January • Hired intern

8. Status Report Status Report Status Report • Plans for Next Period • 3/4/2005 – 4/7/2005 • Conduct remaining JAD Sessions for Payroll • Conduct follow-up meetings as needed • Prepare and conduct CFO meeting (late March) • Prepare and conduct CIO meeting (early April) • Submit draft of Payroll preliminary requirements and process flows • Continue Technical work stream • Continue development of change management strategy options • Conduct change management focus group and follow up interviews • Outline reengineering and organizational strategies deliverable • Conduct second HR Directors meeting on March 15, 2005 • Complete overview meetings with technical management • Conduct PSC meeting on March 16, 2005 • Begin to update SB991 for Phase 2 • Finalize QA approach • Prepare and submit monthly ITS report for February

9. High Level Project Timeline Plan Execute Close Vision Project Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Month Nov Dec Jan Feb March Apr Date 25 1 8 15 22 29 6 13 20 27 3 10 17 24 31 7 14 21 28 7 14 21 28 4 11 18 25 • • • • • • • • • • • • • • • • • • • • • • • Project Management Change Management Group I Human Resources Group II Payroll Technical • – Project Status Report – Final Deliverables – Offsite Working/Holiday HR – Group I HR – Group II Payroll Technical • Personnel • Compensation • Payroll • High level Administration Management Administration technical requirements • Recruitment • Job and Salary • Payroll Processing Surveys • Security • Applicant Tracking • Labor Cost • Position Evaluation Distribution • Infrastructure • Disciplinary Action and Analysis Complaint Management • Time Collection & • Integration • Benefit Management • Incident and Accident Administration Tracking • Budget Support • Workforce Analytics • Exit Interviews • Organizational • Competency Based HR Management Management • Employee Self • Performance Service Management • Leave Tracking • Training Administration

10. JAD Session Review

11. JAD Sessions Completed • HR JADs • Manage Compensation and Classification - 20 participants • Process Owner - Duane Hinkle • Maintain Benefits and Enrollment - 18 participants • Process Owner - Pani Tademeti • Administer Benefits - 11 participants • Process Owner - Pani Tademeti • Payroll JADs • Collect Time and Attendance - 14 participants • Process Owner - Kathy Reitzel • Manage Payroll Pre-Processing - 47 participants • Process Owner - Phyllis Creech

12. JAD Session Observations • System support of variable pay structures • Benefits enrollment processes • Move Payroll to more strategic activities vs. transactional • Elimination of multiple agency employee payroll records • Develop strong Payroll processing policies and procedures • Automate online time collection • Develop service center capabilities (employees and payroll processing) • Bi-weekly payroll statewide • Eliminate multiple (12) leave tracking systems and replace with standardized policies • Develop state wide standards for health plan employee handling/reconciliations • Eliminate split check/multiple W2 issues • Clear separation of duties between HR and payroll

13. Barriers • Sheer magnitude of project • History of potentially failed state projects • Current lack of standardized processes among agencies • Resistance to change, uncertainty, don’t see the need to change • Fear of losing job • Barely have time to do job, so I don’t have time to learn a new way • Resources being pulled away from jobs to help with implementation • Need management to be willing to provide capable resources for implementation and to provide support • Fear of change created by implementing new technology • Support from senior leadership • Fear of identity theft

14. Proposed General Statute Changes

15. Business Process Redesign Strategy

16. Business Process RedesignAdvantages and Risks of Doing BPR Now • Potential Advantages • Realize some immediate efficiencies and standardization • Capitalize on current project momentum • Achieve successes that can be lauded as “early project wins” • Move closer to where the new technology will take us • Ease into the changes that are coming • Slowly reduce resistance to change • Reduce level of effort required during implementation • Spread BPR and change effort across greater timeframe to reduce risk and resistance • Surface strategic questions, and potentially make decisions on them • Address key issues now rather than during the relative tumult of implementation • Potential Risks • Investing in changes that may have to be revisited later • Only implement changes that are either indifferent to the new technology or that support it • Inability to agree upon which changes to implement now • Only focus on changes with highest reward for the lowest cost and effort

17. BPR Work Stream Related to Implementation Timeline 2006 2008 2005 2007 2004 System Rollout HR Payroll Project prep Selection Requirements Design/Blueprint Build Pre-Implementation BPR BPR BPR Rollout System BPR Independent of System Improvements System Enabled Improvements

18. Opportunities for Business Process Redesign Changes • Independent of System • A single application for applicants to use when applying for any job within the State • More streamlined approval processes in many areas – Enabled by Workflow • A standardized list of skills and competencies to be used for Career Development, Job Descriptions, and Performance Review • Simplified, standard job descriptions • System Enabled • A consolidated database of applicants with standardized, automated screening processes • Treating employees who move between agencies as transferred employees rather than terminating them and rehiring them • Electronic, rather than paper Organization Charts

19. Change Management & Communications

20. Change Management Update • Completed North Carolina HR/Payroll Project Tri-fold • Development of Change Management Strategy • The Importance of Change Management • Change Management Strategy and Framework • Next Steps for North Carolina HR/Payroll • Preparing North Carolina IT Projects Lessons Learned Focus Group • Identify lessons learned from previous project • Discus communication methods • Document methods to ease transition to new processes and systems • High level assessment to state government’s culture and change readiness

21. Ongoing Change Management Activities • North Carolina should pursue the following change management activities prior to the implementation phase: • Leadership Alignment • Prepare leadership alignment interviews and activities plan (actions, communications, etc. leaders should perform) • Communication • Identify and build the change network • Individuals throughout the enterprise with key change management and communication roles and responsibilities • Increase project-related communications • E.g. website, regular project briefing documents/newsletters, external communications… • Develop Implementation PhaseCommunications Plan • Organization Transition • Conduct change readiness assessment • Of those being affected, how ready are they for the coming change (culture, skills, organization) • Conduct high level change impact assessment • Who will be affected, how, and when? • Training and Capability Transfer • Develop high-level training and capability transfer strategy (e.g. classroom training vs. online training, who will conduct training - state vs. contractor, identify training tools, etc.) • Project Team Effectiveness • Develop project team structure, on-boarding and training plans, etc. • Develop clear project governance structure, processes, and roles • E.g. steering committee, project sponsorship, issue management and escalation…

22. Open Discussion

23. Action Items Review

24. Upcoming Meetings • March 15, 2005 – HR Directors Meeting • March 16, 2005 – PSC Meeting • March 28, 2005 – CFO Meeting (tentative) • April 7, 2005 – PMC Meeting • April 13, 2005 – CIO Meeting (tentative)