Whether making or buying, HRO Today Forum keynoter John Murabito of Cigna is the consummate pro.
By Katie Kuehner-Hebert
John Murabito likes tackling the improvisation that comes with being a human resources practitioner.
“You have to make things happen through people, and people are unpredictable—you don’t know exactly how people are going to react to change,” he says. Human resources is all about “getting the most out of human assets, whether it be through innovation or execution.”
The seeds for Murabito’s career—he is now executive vice president of human resources and services at insurance giant Cigna Corp.—were first sowed during summer work between college semesters as a steel worker in Midwestern mills. “I got to see the whole management-labor dynamics, so I knew by the time I was a junior in college that I wanted to go into labor relations,” he says.
After receiving a bachelor’s degree in economics in 1980 at Augustana College in Rock Island, Ill., Murabito entered the master’s program in industrial relations at the University of Iowa. He received his advanced degree in 1983. While working on the master’s, he took a labor relations position at air conditioning manufacturer, The Trane Co., handling grievances and working with the union to resolve employee issues. In 1985, he moved on to Symobion Inc., a biotechnology start-up in Salt Lake City, becoming the human resources manager.
“It was an opportunity to run the whole department for a small company,” he says. “It was very hands-on and it was a chance to learn some things that I had not done before—benefits, compensation. At that point in my career, it was very interesting and developmental.”
He spent another two years at Symbion as a product manager in the marketing department, and what he learned most in that position was that he preferred the HR field. Consequently, in 1987 Murabito moved back into an HR position, for sales at Frito-Lay Inc.’s Los Angeles office. He spent the next five years progressing in generalist positions at the firm, before being appointed director of compensation and benefits at Frito-Lay’s Plano, Texas headquarters.
“It was kind of a risky move on their part, because that was not an area of expertise for me,” he says. “But for me it was a great developmental opportunity to get some deep learning in an area that became particularly important later in my career. Compensation is so critical today.”
Murabito held several more positions at Frito-Lay, rising to group vice president of human resources in Atlanta, headquarters for the company’s parent, PepsiCo. In 1997, he became vice president of human resource operations at St. Louis-based Monsanto Co., rising to senior vice president of human resources and corporate services. He moved to Philadelphia-based Cigna in 2003 to become its chief human resources officer.
The practical achievements are inextricable from thought leadership. Throughout his career, Murabito has been involved on the boards of academic and professional organizations dedicated to advancing the HR field, including Cornell University’s Center for Advanced Human Resources Studies, The Personnel Roundtable, and the Human Resources Policy Association, a Washington, D.C.,-based lobby group for HR executives of large employers.
“The association has worked hard over the last couple of years to influence the healthcare legislation and some of the rulemaking that’s taken place since then—ensuring that the reforms are reasonable to large employers, that they can actually be administered properly, and that they make sense for our employees,” Murabito says.
Murabito is particularly proud of how Cigna has developed a successful “health culture.”
Through the HR department’s partnership with the company’s national accounts group, Cigna has fostered a commitment to health and wellness companywide through very assertive management and consumer-driven benefits program, he says. Employees are incentivized with lower contributions to their healthcare premiums if they stop smoking, maintain their “body mass index” at healthy levels, or undergo a health risk assessment every year. As a result, Cigna’s overall healthcare costs—including the out-of-pocket costs for its employees—have been significantly lower than the national average, Murabito says.
Moreover, a substantial percentage of employees take advantage of Cigna’s wellness programs such as smoking cessation classes, weight management, and healthy baby programs. “All of these things are indicators of a population that is more focused on health,” Murabito says.
Cigna’s activities are also indicative of a growing trend within corporate America, as healthcare costs continue to skyrocket even after Congress passed the Affordable Care Act. “I think large and small employers alike will continue to be very proactive on how to drive down healthcare costs, and they’ll continue to look for more ways to be innovative with their benefits programs,” Murabito says.
Balancing Strategy and Efficiency
As the science—and art—of the HR field continues to evolve, Murabito says practitioners have to balance two central challenges: becoming more strategic in their activities, while simultaneously maintaining an efficient shop. “Efficiency will continue to be driven by outsourcing, and if that’s not appropriate for some companies, they’ll at least b trying to find ways to take care of their administrative load more efficiently than in the past—making sure transactional services are delivered in a cost-effective way for their company,” Murabito says. “At the same time, how do we also become more strategic—understanding what’s going on in the workforce, demographics, and our own business challenges? We need to be proactive and reactive, such as putting in the right tools in our company to solve business issues. It’s a just matter of HR people being more aware of their business challenges and getting in front of those challenges with good people solutions.”
A good example is handling the challenges inherent in global expansion—challenges many large companies are experiencing, including Cigna, Murabito says: “Our business outside of the U.S. is our biggest growth engine, and we have to make sure we have people working at the company who are capable of leading a global business outside the U.S. That tells us in HR we have to develop people with global skills and a global mindset.”
Such leaders would be people who are comfortable working with those who have different perspectives, who might come from different backgrounds, Murabito says. These would be people who don’t have a uniform view of the world and who are open to different ways of doing things. They also need to be on top of the varied employee laws and regulations throughout their markets.
“To make sure our people are properly trained, we have to be better at sharing our knowledge within the U.S. and outside the U.S.—we have to be more collaborative as a company,” Murabito says. “HR can affect this through recruiting, development, and team building. That’s one example of being proactive around a key business strategy.”
Another challenge for many companies, including Cigna, is developing a deeper bench of IT professionals who possess years of expertise, particularly of internal systems, to take on leadership roles once senior IT professionals retire, Murabito says. At Cigna, Murabito’s HR team is ensuring its IT function remains robust through its university graduate recruitment, talent development, and succession planning activities.
Cigna has had success outsourcing its key HR transactional services functions, including employee self-service, manager self-service, performance management, goal-setting, compensation, administration and benefits management, as well as some basic employee relations activities, Murabito says. The firm’s partner has primarily been IBM, but Cigna has also outsourced some of its training activities to General Physics. Currently, Cigna is transitioning to ACS as its primary outsourcer.
Going Global
“As we go into 2012, the next chapter of our outsourcing is going global,” Murabito says.
Overall, outsourcing has proven to be a challenge for a fair number of companies, but most of that has been for internal reasons, and not because of the capabilities and/or limits of the outsourcing firms. “Usually, when companies invest in outsourcing, it can be more efficient, more strategic, and more cost-effective, but many companies have not been able to achieve that vision,” Murabito says. “It takes discipline to actually have fewer generalists within your organization, and it’s just been a tough transition for many companies.”
The root of the problem, he says, is getting both employees and management to truly accept a self-service environment, rather than the historical hands-on assistance from HR staff.
“Some companies have had a hard time with the change,” he says. “I’m sure there’s been some issues with the effectiveness of outsourcers, but the bigger issues have been within the companies themselves.”
Perhaps a more fundamental way to look at outsourcing is in terms of its everyday functionality, Murabito says. “I think some people mistake it as a strategy, but it’s a tool you use within your functions to get things done for your company,” he says. “It’s no different from how you run succession planning, recruitment, or training.”
