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There are some success stories, but because there are no end-to-end systems, implementation can be treacherous.

One company that has enjoyed some strategic success through its use of HCM software is WellPoint Inc., one of the nation's largest health-benefits companies, with over 38,000 employees, and $37 billion in revenues. HCM has been de rigeur in the WellPoint HR department since 1998, says staff vice president of human resources information systems Chuck Moore. Back then, the company was experiencing unhealthy employee turnover that cost roughly $60 million each year. "This is a real numbers-oriented company, and employee churn was an issue," he says.

WellPoint partnered with PeopleSoft to install HCM software, all the while talking to employees to identify trouble spots—such as managers who might need additional training, or ensuring that important skills didn't walk out the door with departing employees. The data was added to a repository that could be aggregated and analyzed—and action was taken on the results. In addition to adding training courses, managers' bonuses were based partly on turnover reduction. The company also unveiled an annual employee survey of roughly 100 questions on everything from job satisfaction to their perceptions of HR. The results are presented to the executive team and managers, who in turn use the information to make procedural changes.

For example, one survey revealed that employees felt they had limited job advancement potential because of a rule that required them to get permission from their managers to apply for another job inside the company. After changing the rule, internal promotions increased by roughly 15 percent, Moore says. And within three years, employee churn was reduced by half.

Since 1998, WellPoint—which has grown from 7,000 employees in 1997 to 38,000 in 2004—has added several modules to its HCM system, including self-service benefits administration, an employee portal and succession planning software.

Moore claims that the company's growth has been significantly aided by its HCM program. Since putting the system in place, he says, "our churn has gone down every year, our satisfaction has gone up every year, and every year we have exceeded the previous year's profitability. Those lines are all going in the same direction."

The success that WellPoint has found in HCM came over a long period of time and required quite a bit of juggling. The succession planning module, for example, wasn't offered by PeopleSoft; Moore had to find a separate vendor to provide it. "I don't think there's any one vendor out there that can deliver end-to-end HCM. The large ERP companies have been traditional providers of HRMS systems and are adding HCM modules into their system, but they're not as mature as those from other players," says Symons of Forrester Research.

This article was originally published on 01-05-2005
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