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D A I CMSix Sigma Tollgate

Turnover Reduction

Kelly Kozik – Project Manager

D A I CM

99.9% Quality is…...•One hour of unsafe drinking water per month.•Two unsafe plane landings per day at O’Hare International airport.•500 incorrect surgical operations each week.•50 newborn babies dropped by doctors every day.Six Sigma Quality is…...•One second of unsafe drinking water every six years.•One unsafe landing in all major United States airports in 10 years.•1 incorrect surgical operation in 20 years.•3 newborn babies dropped by doctors in 100 years.(Medco Green Belt training manual 2005)

Six Sigma

D A I CM

•Problem / Objective Statement•Charter / Timeline•Financial Estimate•Baseline Data•Conclusions/Next Steps

Suggested Deliverables for the Define Stage of a Six Sigma Project

DD M A I C

Problem Statement:Between May 1, 2005 - April 30, 2006, the Willingboro pharmacy lost 268 employees in the following areas; pharmacy tech, warehouse, support and Rph. This cost the pharmacy approximately $2 million in turnover expenses. Objective Statement:To reduce voluntary turnover in four classifications by 20% annualized.

PharmacistTechnicianSupport Warehouse

Problem/Objective Statement

Project Charter

Process: Duration:

Sponsor:

LOE Attendance

Internal: Hiring managers, employees

External: applicants

WarehouseBob Oehrle

Josef Blankenburg Inventory

ChampionHuman ResourcesChris Bizarro

Team member

Team Role

Team Name: Turnover Reduction

See timeline on next page

Cory Angelini Business Planning

Debbie Bertino

Problem Statement:

Between May 1, 2005 - April 30, 2006, the Willingboro pharmacy lost 268 employees in the following areas; pharmacy tech, warehouse, support and Rph. This cost the pharmacy approximately $2 million in turnover costs.

Identify and remove constraints to hiring / rentention of employees

Project Scope:Team Member

cost of turnover

Team member

Training

Financial ‘Business Driver(s) Impacted:

Meeting Minutes

Sam Addy Customer Service TurnoverTeam member

Pam West Support Critical to Quality Metric(s):Team member

Black Belt

Team Leader

Team Members Function

Ron Wizimirski Training

Kelly Kozik Recruitment

Process Customer (internal/external):

Recruitment and Retention Team Meetings:

Champion: Teamwork Location: Willingboro, NJEvery Thursday, 1:30pm - 2:30pm

DD M A I C

Timeline Step Tools Used

Plan

30-Jun-07

Team Name: Turnover Reduction Timeline11-May-06 15-Sep-06 15-Oct-06 30-Sep-08

Analyze

Improve

Measure

15-Mar-07 31-Dec-07

Control

Define

15-Dec-07

D A I CM

Analysis Period: May 1, 2005 - April 30, 2006RPh Tech Support Whse

Number of Terminations 6 77 106 79Entry Wage for Job Class 40.00 10.75 10.00 10.00Average Wage for Job Class 46.99 11.63 11.17 10.76Average Trainer Wage for Job Class 46.99 13.66 13.09 12.56Hiring Cost per Hire 152.00 212.50 394.00 273.00Total Hiring Cost 912.00 16362.50 41764.00 21567.00Training Cost 19,276.86 118,754.25 79,529.75 75,420.88Learning Curve Cost @ OT 35,524.44 161,191.80 142,082.40 51,002.40Time to Fill Position (days) 71.0 36.9 47.6 37.2Vacancy Cost @ OT 171,580.63 283,237.02 483,080.16 271,041.33Turnover Cost for Job Class 227,293.93 579,545.57 746,456.31 419,031.61Turnover Cost per Employee 37,882.32 7,526.57 7,042.04 5,304.20

Total Cost for 4 Primary Categories 1,972,327.41Inputs:Total Training Hrs (no productivity) 348 7097 6284 6320Total Peer Trainer Hrs (no productivity) 114 212 1275 973RPh Trainer Hrs (no productivity) 842Learning Impact (ramp-up prod)

Productivity Post-Training 40% 40% 50% 50%Days to 100% Productivity 35 50 40 20Labor Hrs to Make Up Productivity 84 120 80 40

Revised Turnover Cost Analysis

D A I CM

Turnover

DD M A I C

TOTAL JOB ABANDONMENT INVOLUNTARY VOLUNTARY

SUPPORT 106 34 33 39

       

WAREHOUSE 79 23 26 30

       

TECHS 77 16 18 43

       

RPH 6 1 0 5

       

  268 74 77 117

% of total turnover   27% 29% 44%

Voluntary resignations account for 44% of the annual attrition.

Suggested Deliverables for the Measure Stage of a Six Sigma Project

• Completed checklist on 117 voluntary terminations from May 2005 – April 2006– Compiled info from voluntary terminations– Reviewed exit interviews, work schedules, training,

referral, resignation letters, schedule changes, etc.• Mailed an abbreviated Exit Interview/Cover Letter

to those employees who had no exit interview.• Completing checklist on employees who left from

April 2006 to present to get additional data.• Summarized and evaluated collected data

D A I CM

2005/2006 reasons for leaving

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Pareto Analysis – Baseline Data

D A I CM

2005/2006 source

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40

60

80

100

120

employee referral walk-ins ads schools internet job fair other employment

agency

transfers

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0.2

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Pareto Analysis – Baseline Data

D A I CM

Current Team Status - Progress

• Summarized and evaluated collected data and concluded that the data was insufficient.

• Focus groups were formed to extract data from current employees to find root cause.

D A I CM

Job

People Method Measure

Communication

MaterialsEnvironment

EMPLOYEE TURNOVER

CompensationEmp. Refrerral

Interview

Orientation

Training

Lack of growth opportunities

ToolsEquipment

Cause and Effect Diagram4 Focus Groups – Over 200 Ideas Generated

RecognitionClear Job Descriptions

Never get an interview

Rotating functions

More chairs needed

Cleaner Working areas

More handhelds

More decappers

Day care

Make cafeteria better

Emr Process

Job is not what I expected

Sups aren’t encouraging emp. Development during emr

More cross training

Language barriers

No follow-up

Employee meetings needed

Bonus for performance

D A I CM

Affinity DiagramEvolved into 13 problem statements

• #1-Need a cleaner place to work

• #2-Emp don’t have a clear understanding of growth opp.

• #3-Emr process is not effective• #4-No consistency in emp

training• #5-Schedules are built solely on

Bus needs..• #6-Communication…• #7-Better understanding of job

expectations

• #8-Emp pay & incentives• # 9-Recognition incentives are

inconsistently…• #10-Ramifications of Union

Contract• #11-Onboarding process…

transition 90 day emp..• #12-Company exhibits

favoritism & inconsistency…• #13-Available resources to do

their job

D A I CM

Interrelationship DiagraphPrioritized into 7 statements

• #1-Need a cleaner place to work Total Affects

• is affected by # 4, 7, 133

•• #2-Emp don’t have a clear understanding of growth opp.• is affected by # 3, 4, 5, 7, 11, 12• Affects 8, 12

8• #3-Emr process is not effective• is affected by # 4, 6, 5, 12, 7• Affects 2, 4, 11

8• #4-No consistency is emp training• is affected by # 3, 6, 5• Affects 2, 13, 12, 11

7• #5-Schedules are built solely on Bus needs..• is affected by 7, 11• Affects 3, 12 4• #6-Communication…• is affected by 4, 3, 2, 12, 11, 9, 8, 7

8• #7-Better understanding of job expectations• is affected by 4, 13, 11, 12, 6• Affects 8, 9, 10, 1, 2, 5 11

• #8-Emp pay & incentives Total Affects• is affected by 9, 12, 2, 10, 6, 7• Affects 9

7• # 9-Recognition incentive are inconsistently…• is affected by 8, 7, 6, 12• Affects 8, 12

6• #10-Ramifications of Union Contract

• is affected by 7 Affects 82

• #11-Onboarding process…transition 90 day emp..• is affected by 13, 4, 3, 6• Affects 7, 5, 2

7

D A I CM

Identified topics to be addressed at analyzing

phase

Ability to quantify results

Quick to implement?

Does it affect all employee groups?

Is it feasible from a cost perspective?

Ability to assign ownership to single source

Reasonability of success

Easily accepted

TOTAL

Emp don't have a clear understanding of growth opp.               247

No consistency in emp training               229

Schedules are built solely on bus. needs               185

Recognition incentives are inconsistently applied               213

Better understanding of job expectations/ the on boarding process does not effectively transition an employee (prior and post hire)               241

Company exhibits favoritism & inconsistency in its decision making               147

1. Little or no relationship3. Some relationship5. Strong relationship

Prioritization Matrix

D A I CM

Areas of Improvement

• No Consistency in Employee Training

• Recognition Incentives are Inconsistently Applied

• Better Understanding of Job Expectations / On-boarding Process Does Not Effectively Transition and Employee

• Employees Do Not Have a Clear Understanding of Growth Opportunities

D A I CM

Action Teams and Improvement Processes

PROCESS PROCESS OWNER ORIGINATION DATE

Qu

Job/Shift Rebid Process XHR/ Departments Q2 2007

New Emr Process XHR (Training) Q2 2007

Internal Job Selection XHR (Recruiting) Q2 2007

Above and Beyond XReward & Recognition's Team Q2 2007

Department Goals and Metrics XDepartments Q2 2007

Attendance Rewards XReward & Recognition's Team Q1 2007

Buddy Program XSurvey Action Team

HR Information Days XHR Q1 2007

Shift Meetings XDepartments Q2 2007

Quarterly Communication Sessions XDirectors Q2 2007

Survey Action Teams XDirectors Q2 2007

Prehire HR (Recruiting) Q2 2007

Post hire on-boarding

D A I CM

Please take a few minutes and answer the following questions as accurately as you can. This questionnaire is completely anonymous.1.What is your level of awareness of the following: Select one the following responses:

■ No Idea■ Heard About

It■ Don’t know

the details■ Know a lot

about it■ Helped create it

Job/Shift Rebid Process

New EMR Process

Internal Job Selection

Above and Beyond

Department Goals and Metrics

Attendance Rewards

Medco & Willingboro Newsletter

“Buddy” Program

HR Information Days

Shift Meetings

Quarterly Communication Sessions

Survey Action Teams

1.Have you been a member of a team that developed any of the above? Please circle. Yes or No2.If not, why? Didn’t want to Didn’t know about it I was not permitted 3.How long have you worked at Medco? Check One.0-1year 1-3years 3-5years 5-8years 8 years or more1.What department do you work in? Check One.Admin BP CS HR Maint QRT Rph Security Support Syst. Coord. TA Tech Warehouse 1.What shift are you on? 1st 2nd 3rd

D A I CM

Item #

EMR Process

Shift Rebid Program

Quarterly HR Info

Days

Internal Job Selection

1 X X

2 X X

3 X

4 X

5 X X X

6 X X

7 X X X

8 X X

Never receive feedback on promotion applications

No Job rotation into new skills

Only scheduled in areas where efficiencies are high

Rated on items out of your control

Employees do not have a clear understanding of growth opportunities

Issues

Need development plan for growth

Do not understand EMR numbers and effect on promotion

Do not understand development resources that are available

No promotion availability

D A I CM

Please take a few minutes and answer the following questions as accurately as you can. This questionnaire is completely anonymous.1.What is your level of awareness of the following: Select one the following responses:

■ No Idea■ Heard About

It■ Don’t know

the details■ Know a lot

about it■ Helped create it

Job/Shift Rebid Process

New EMR Process

Internal Job Selection

Above and Beyond

Department Goals and Metrics

Attendance Rewards

Medco & Willingboro Newsletter

“Buddy” Program

HR Information Days

Shift Meetings

Quarterly Communication Sessions

Survey Action Teams

1.Have you been a member of a team that developed any of the above? Please circle. Yes or No2.If not, why? Didn’t want to Didn’t know about it I was not permitted 3.How long have you worked at Medco? Check One.0-1year 1-3years 3-5years 5-8years 8 years or more1.What department do you work in? Check One.Admin BP CS HR Maint QRT Rph Security Support Syst. Coord. TA Tech Warehouse 1.What shift are you on? 1st 2nd 3rd

D A I CM

Impact SurveyThis demographic information is optional. However, it may be helpful in analyzing the data. Thank you.

Department

Shift How long have you worked for Medco? - Circle one option Less than 1 yr 1-3yrs 3-5yrs more than 5yrs

Age – circle one option 18-25 26-34 35-42 43-50 50 +

Gender – circle one option M F

Total years in the workforce – circle one option Less than 1 yr 1-3yrs 3-5yrs 5-7 yrs more than 7 years

Strongly Agree

1

Agree 2

Neutral 3

Disagree 4

Strongly Disagree 5

Medco’s new hire processes make it difficult for a newly hired employee to do a good job.

Medco’s new hire processes make it easy for a newly hired employee to find things in and around the pharmacy.

I think it’s important that new employees learn what is expected of them right away.

The company clearly communicates how people are selected for new positions.

I understood the job rebidding process we went through last summer.

When I was a new employee, it was important to me to find a person or people to have breaks and lunch with right away.

I don’t care if I have my schedule in advance.

I believe that there are internal promotion opportunities for employees at Medco.

As a new employee, I got enough training that I didn’t need to ask questions once I was assigned to the work area.

I believe that it’s my responsibility to figure out how to be successful at my job.

I want to know how my job affects the rest of the department

I want to know ahead of time what I will be doing (at least a week in advance).

D A I CM

Turnover reduction / savingsWeek Ending: 1/0/1900

Location Description Job Category Current

Chg vs. Prior Current

Chg vs. Prior Current

Chg vs. Prior Current

Chg vs. Prior Current

Chg vs. Prior Current

Chg vs. Prior

2008 Goals

NJ WILLINGBOROBack End Support 444.29 1.08 2.00 8.66 1.95% -0.63 0.0058 -470.99 0.3039 -4.70 30.00% 29.41% 0.00% -30.91% 30%

Pharm Tech 316.31 1.27 2.00 8.66 2.74% -0.02 0.0064 -325.99 0.33 -3.67 15.00% 14.36% 0.00% -33.33% 15%

Pharmacist 133.35 0.35 0.00 0.00 0.00% -0.17 0.0012 -141.00 0.06 -0.94 5.00% 4.87% 0.00% -6.77% 5%

NEW JERSEY AT HOMEPharmacist 48.27 2.13 0.00 -0.08 0.0028 -76.00 0.145 -0.86 5.00% 4.83% 0.00% -8.67% 5%

52-week Rolling Average Wkly

Turnover

52-week Annual Turnover

Percentage Rate52-week Rolling Average

Headcount 52-week Rolling Average TermsWeekly

Headcount Weekly Terms

ProjectBaseline Q2 Avg Variance Q1 - Q2 2008 Est 2008 TY

Turnover Reduction As of June W4

RPH 5.47% 3.71% (1.76 Pts) (21,350)$ (42,700)$ Tech 52.82% 30.68% (22.14 Pts) (88,782)$ (177,564)$

Support & Whse 59.44% 25.60% (33.84 Pts) (153,836)$ (307,673)$

$263,968 $527,937

RPH % TurnoverTech % Turnover

Support & Whse Turnover %

Cost / SavingsMajor Metric Major Metric

D A I CM

Mid-year (Q2) metrics 20% savings met. Annualized savings of $1M/50%

Control Plan Strategy

• Our recommendations are based on current process/team and employee data

• In order to control this turnover reduction we will rely on continued feedback from the survey actions teams and our annual employee surveys. The processes will then need to be adjusted accordingly.

D A I CM

RecommendationsVERY WELL RECEIVED, SHOULD BE MAINTAINED:

• DEPT. GOALS + METRICSEmployees unequivocally want to know about their job and how it affects their department. This program should definitely be maintained and communicated at the dept. level.

• SHIFT MEETINGSEmployees feel strongly that this is a positive improvement, therefore we recommend it continue. Seventy three percent find it useful

• NEW HIRE PROCESSMost of the employee population has not been through this process (38% were unaware), but we recommend it continue and be evaluated periodically.

OPPORTUNITY FOR IMPROVEMENT:

• EMR PROCESSOverall this process has shown improvement, however additional progress is needed with regard to career discussions.

• BUDDY PROGRAMEmployees strongly support the concept of this program and its potential effectiveness. Thirty five percent of the employees had no positive or negative reply. This could mean they were unaware of the program. The recommendation is to re-establish, re-evaluate, and revise this program to meet the employee and department needs

• WILLINGBORO NEWSLETTERHad a positive impact on employees and the recommendation is to restart the distribution. Sixty five percent wanted a Willingboro specific newsletter

WELL RECEIVED, BUT NEED TO BE BETTER COMMUNICATED BY PROCESS OWNERS:

• ABOVE & BEYOND (WOW Program)This program is well supported and recognized by the employee population and should continue. There is an opportunity to reach 37% more employees who are either unaware of the work being done or who think it needs improvement. Better communication of the awards and results

• ATTENDANCE REWARDSThis program is highly supported by employees; however the program details and the implementation of the rewards should be evaluated and communicated to employees. There seemed to be confusion on award criteria.

• INTERNAL JOB SELECTIONSWe strongly recommend improving on the communication to the employees how this process works. Over fifty percent of the employees responded either neutral or negative.

• QUARTERLY COMMUNICATION SESSIONSThe findings were that most employees do not know what these sessions are. There is a need to communicate the purpose more effectively.Type of information employees would like to see presentedCost=24.19% Quality=30.38% Willingboro specific info=39.70% Other=5.72%

• SURVEY ACTIONResults show there is a definite opportunity on communicating the programs and their results to employees. Fifty three percent were not aware of the work being done, however fifty percent felt it was valuable.

D A I CM

Turnover reduction / savings

D A I CM

Week Ending: 2/19/2011

Location Description Job Category Current

Chg vs. Prior Current

Chg vs. Prior Current

Chg vs. Prior Current

Chg vs. Prior Current

Chg vs. Prior Current

Chg vs. Prior

2011 Goals

52-week Annual Retention

Percentage RateWeekly

Headcount52-week Rolling

Average Headcount52-week Rolling Average Terms Weekly Terms

52-week Rolling Average Wkly

Turnover

NJ WILLINGBOROBack End Support 449.04 (0.64) 0.66 (0.04) 437 0.00 0 (2.00) 0.15% -0.01% 92.21% 0.44% 90%

Pharm Tech 305.92 0.26 0.77 (0.02) 309 0.00 0 (1.00) 0.25% -0.01% 86.60% 0.34% 85%

Pharmacist 126.40 (0.09) 0.08 0.00 125 0.00 0 0.00 0.06% 0.00% 96.84% 0.00% 96%

Turnover reduction snapshot

D A I CM

• 2006 turnover

• RPH 10%

• Pharmacy Technician 65%

• Pharmacy Support (shipping and packing) 60%

• Warehouse 80%

• 2008 turnover was reduced

• RPH 5.47%

• Pharmacy Technician 52.4%

• Pharmacy Support (shipping and packing) 59.44*

• Warehouse 59%.44*

• (Operations made the decision to measure support and warehouse as one in early 2007)

• Mid-year Q2 metrics 20% savings met (slide 23). Annualized savings of $1M/50%

• Retention of February 2011

• RPH 96.84% (3.16 turnover)

• Pharmacy Technician 86.6% (13.4% turnover)

• Pharmacy Support & Warehouse 92.21% (7.79% turnover)