© 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Why redesign? A shift in business strategy for competitive advantage Acquisition, merger, or downsizing of businesses Globalization of markets Major change in work or technology Growth or retraction in volume Key staffing changes Ineffectiveness of current structure Challenges in business performance Trends in employee engagement 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Your Role Provide design expertise and consultation Support the management team in creating a change structure Provide content and process knowledge on change Work on systemic alignment Develop change capability 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

The STAR Model The STAR Model is the foundation on which we base our design choices. The framework consists of a series of design components that are controllable by management and can influence team member behavior. The components are tools with which management must become skilled to shape decisions and behaviors of their business units effectively. For an organization to be effective, all components must align with one another. The STAR Model is not only a way to look at organizational design, but also a way to consistently look at organizational life through the lens of strategy, structure, processes, rewards, and people. This model may be used as we look at people strategy, organizational consulting, and change management in addition to org design. 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

The STAR Model Strategy Specifies values & mission, goals & objectives Establishes direction Delineates products or services, markets, and value Specifies sources of competitive advantage Strategy is the organization’s formula for winning. This is when leaders engage in long-term planning, and assessment of key metrics. It specifies the values and mission to be pursued, as well as the goals and objectives to be achieved. It establishes clear direction for the organization about priorities and success factors. It delineates the products or services to be provided, the markets to be served, and the value to be offered to the customer. It also specifies the sources of competitive advantage and tries to provide superior value. Strategy is foundational to the way you look at every element of the STAR model. Every element must align with the strategy. *Caution: Often, leaders want to engage in a redesign initiative without revisiting the strategy. 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

The STAR Model Structure Specialization: type & number of job specialties Span of Control: number of people in each department Distribution of Authority: centralized or decentralized Teams/Alignment: basis for forming departments Structure determines alignment, roles & responsibilities within an organization. The structure is where you identify how the organizational capability (or work that has to be done) will be established. This helps determine the core functional units needed. This is where you think about if you need a structure based on geography, product, customer, function, etc. It outlines specialization – the type and number of job specialties used in performing the work, Span of control – the number of people constituting the departments at each level of the organization, Distribution of authority – whether it’s centralized or decentralized, and Teams & alignment – the basis for forming departments at each level of the structure: functions, product, work flow processes, markets, and geography. This is where you start to understand more about core competencies needed to support the strategy. 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

The STAR Model Processes Vertical: allocate scarce resources of funds & talent Horizontal: designed around the work flow Enables cross- functional collaboration & integration Processes describe the flow of information and decision processes between levels and across units. Processes support the structure and can be vertical or horizontal. Vertical processes allocate the scarce resources of funds and talent (e.g. business planning and budgeting processes), while horizontal processes are designed around the work flow (e.g. new product development). Processes enable cross-functional collaboration & integration. Process facilitates focus on customer, business outputs, speed, or customer responsiveness. An understanding of process and process interdependencies is integral to the ability to execute on the structural design and deliver to the criteria. *Caution: Process is often overlooked. Be aware of biases in designing structures that result in silos when cross-functional engagement is needed. 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

The STAR Model Reward Systems & Metrics Align the goals of the team members with the goals of the organization Provide motivation and incentive Define policies Reward Systems & Metrics provide an opportunity to enhance performance by motivating desired behaviors. Rewards Systems & Metrics also provide an opportunity to celebrate successes at key metric milestones. This is vital to employee engagement. Reward Systems & Metrics align the goals of the team members with the goals of the organization. They provide motivation and incentive for the completion of strategic direction. They define policies regulating salaries, promotions, bonuses, equity, etc. Rewards Systems & Metrics are effective only when they form a consistent package in combination with the other components of the organization. 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

The STAR Model People Practices (Capability & Capacity) Govern HR policies of recruiting, selection, rotation, training, & development Produce the talent required by the strategy Impacted by structure and process People Practices help align people to strategy. To enhance the capability and the capacity of an organization requires you to understand the need and fulfill that need to create a competitive advantage. People practices govern the human resource policies of recruiting, selection, rotation, training, and development. People practices, in the appropriate combination, produce talent required by the strategy and structure of the organization, generating the skills and mindsets necessary to implement its chosen direction. People practices are impacted by the design of the structure and adjustments to process, which could result in capacity management. People capability must be linked to learning needs assessment, and work best when they are consistent with the other areas of the organization. This is where you equip team members to be successful. Like any good team, you must have the right talent, in the right position, at the right time and you must be prepared to coach them for success. 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Org Design Process Overview
Define Diagnose Design Deliver Thought Change Management Action Phase 1 Phase 2 Phase 3 Phase 4 During the Define phase you identify and outline the scope of the org design/redesign initiative. Key Task: Complete the Charter During the Diagnose phase you assess the effectiveness of the organization using the STAR model. Complete the STAR Model Diagnostic Questionnaire During the Design phase you construct a micro level organization that satisfies design criteria. Key tasks: Conduct functional org review Complete the RACI chart Define functional roles & responsibilities Define the new org structure During the Deliver phase you execute on the design plan. Key task: Initiate the Change Management planning process 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Phase 1: Define Purpose: To identify and outline the scope of the org design/redesign initiative. Clarifies the purpose of the project Sets the project parameters and scope Describes success Clarifies roles & responsibilities Ensures org design aligns with strategy Describes future state needs 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Phase 1: Define Key Task Supporting Tool Additional Resources Complete the Charter Charter Template Design Criteria Reference Guide 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Phase 2: Diagnose Purpose: To assess the effectiveness of the organization using the STAR Model. Describes the current state Describes organizational gaps Ensures org design aligns with strategy Describes future state needs 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Phase 2: Diagnose Key Task Supporting Tool Additional Resources Complete the STAR Model Diagnostic Questionnaire Diagnostic Questionnaire Data Gathering Reference Guide SWOT Analysis Reference Guide 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Phase 3: Design Purpose: To construct an organization that satisfies design criteria. Outlines all org design elements (structure, processes, rewards systems & metrics, people practices) Closes all organizational gaps Addresses interdependencies Ensures org design aligns with strategy Ensures functional alignment and role optimization 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Phase 3: Design Key Tasks Supporting Tools Additional Resources Conduct functional org review Complete the RACI chart Define functional roles & responsibilities Define the new org structure Design Resource Guide RACI Template Design Plan Template Macro & Micro Org Design Reference Guide Comparison of Organizational Designs Reference Guide Span of Control Guidance Business Process Map Template Design Evaluation and Discussion Guide 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Phase 4: Deliver Purpose: To execute on the design plan. Key Task Supporting Tool Initiate the Change Management planning process Change Management Toolkit 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Simple You have been asked to assist with the redesign of the Contract organization. The organization will remain customer-centric, but will now support government and commercial contracts. The objective is to increase capability for different customer sets. Define Diagnose Design Deliver Phase 1 Phase 2 Phase 3 Phase 4 Key Task: Complete the Charter Complete the STAR Model Diagnostic Questionnaire (limited) Key tasks: Define functional roles & responsibilities Define the new org structure Present design plan for approval Key task: Initiate the Change Management planning process 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Moderate You have been asked to assist with the redesign of the call center. The center is implementing a new system and moving from a geographical structure to a customer-centric focus. It is expected to foster the development of strong customer relationships and optimize resource allocation for people and system. Define Diagnose Design Deliver Phase 1 Phase 2 Phase 3 Phase 4 Key Task: Complete the Charter Key Tasks: Complete the STAR Model Diagnostic Questionnaire Present diagnostic findings to stakeholders Key tasks: Complete the RACI chart Define functional roles & responsibilities Define the new org structure Evaluate design plan for “fit” & “good” and alignment with guidance for layers & span Present design plan for approval Key task: Initiate the Change Management planning process 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

Complex You have been asked to assist with the consolidation of 2 Product Management teams, resulting from a merger. One organization has 15 team members and the other has 8 team members. In total, there are 2 VPs, 4 Senior Directors, 4 Directors, and the balance of the team are titled “Product Managers.” There is a need to decrease cycle time and the design must facilitate fast reaction to market changes. Define Diagnose Design Deliver Phase 1 Phase 2 Phase 3 Phase 4 Key Tasks: Complete the Charter Validate vision and strategy Identify design criteria Complete the STAR Model Diagnostic Questionnaire for each organization Conduct a SWOT Analysis with focus groups for each organization Present diagnostic findings to stakeholders Key tasks: Conduct functional org review and develop recommendations Complete the RACI chart Create process maps for key processes Define functional roles & responsibilities Define the new org structure Evaluate design plan for “fit” & “good” and alignment with guidance for layers & span Present design plan for approval Key task: Initiate the Change Management planning process 11/8/2018 © 2016, 2017 Change Healthcare Solutions, LLC. All Rights Reserved.

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