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Project: To Reduce the Direct Hiring Expenses
2
Customer CommentsCritical to Quality-
CTQ’s
CEO-ABC
Our organisation has not been meeting the over all budgeted target cost. As compare to the FY 10-11 the Direct Cost has
gone up is by 25% in FY11-12, which may impact the net profit
of the company. Its not a healthy sign for the business. In order to survive the competition need to minimise the direct expenses
and to maximise the profit.
Direct Expenses.
VP- HRThe direct cost for hiring has
gone up by 20% of the allotted budget for the FY 11-12.
Exceeding the budgeted target.
HR-Executive
Increase in the businesses and high rate of attrition, lot of fast track hiring is done to fill-in the required positions to avoid any
billing loss at operation end.
Filling in the required positions to avoid any billing loss.
D M A I C
3
Approx 52% of hiring was done at MO2 level and consist of major cost contribution.
Hiring cost analysis
Business Case: ABC (Holdings) Limited (NYSE: ABC ), is a leading global business process outsourcing company. ABC offers business value to 200+ global clients by combining operational excellence with deep domain expertise in key industry verticals, including Travel, Insurance, Banking and Financial Services, Manufacturing, Retail and Consumer Packaged Goods, Shipping and Logistics, Healthcare and Utilities. ABC delivers an entire spectrum of business process outsourcing services such as finance and accounting, customer care, technology solutions, research and analytics and industry-specific back-office and front-office processes. ABC has over 23,000 professionals across 25 delivery centers worldwide, including Costa Rica, India, the Philippines, Romania, Sri Lanka and United Kingdom.
The ABC hiring need gets identified at the Operational level as a result of which Job requisition form is sent for approval by Hiring Manager to VP – Operations. After approval, the hiring request goes to the HR department from where it gets published at designated job portals and consultancies .The organization also promotes the hiring by the way of internal referral program. The Applicants appearing for the interviews, have to go thru the written test followed by another 3 rounds of interview. and if gets selected becomes eligible for the offer letter and eventually joins in training.
The cost of hiring an executive takes place keeping in mind the planned budgeted cost of xxx which has gone up as compare to the last financial yr.
Preliminary analysis shows that 52% of hiring was done at MO2 level, which majorly constitute of hiring cost.
Team
BU Head : Mithlesh Nautiyal• Process Champion :- Shishir Singh• Process Owner : Sunil Kumar• Master Black Belt :- Pranay Kumar• Project Leader :- Neha• Team Member :- Pawan, Safdar, Kunal
Problem StatementDuring (FY 11-12 ) 62% of MO2 hiring was done over the allotted budget of
Rs.4000/candidate, Rs. 81,45,574.00 were spended over the budgeted cost which has a drastic effect over a profit.
In Scope : MO2 Hiring
Goal StatementTo reduce the average cost of MO2 by Rs. 40%, Q1 of 2012
Milestones Target Date Actual date
D Aug 1st, 2010 Aug 15th, 2010 M Aug 16th, 2010 Aug 30th , 2010A Sep 1st , 2010 Sep 30th , 2010I Nov 1st , 2010 Dec 31st , 2010C Dec 1st ,2010 Dec 31st , 2010
Project Charter D M A I C
Direct Hiring Cost
CTQs*
Amount paid out to consultants for candidates getting selected.
Expenses incurred on advertisements, for the hiring.
Referrals amount paid out to the employees.
*CTQ- Critical To Quality
CTQ TreeD M A I C
Project YProject Y = Cost of Advertisement + consultancy + admin + logistics + infrastructure
No. of executives Hired in a year *100
SIPOC
Suppliers
Client & Management
Operations Team
HR Team
Inputs
OPS Team
Request Received
Newspaper, Referrals and JOB Site
Candidates Screening
Vendor
HR
Inputs
OPS Team
Request Received
Newspaper, Referrals and JOB Site
Candidates Screening
Vendor
HR
Process Request for Hiring
Approval from DPE /VP Operations
Information shared via JOB Portals, Referral Program and Advertisement
Interview Process
Background Verification
•Offer Rolled out
Process Request for Hiring
Approval from DPE /VP Operations
Information shared via JOB Portals, Referral Program and Advertisement
Interview Process
Background Verification
•Offer Rolled out
Outputs
Request Received
Request Approved
Applications Received
Short listed Candidates
Verification Done
On Boarding
Outputs
Request Received
Request Approved
Applications Received
Short listed Candidates
Verification Done
On Boarding
Customers
Management
HR OPS
HR Team
Referral/ JOB Sites OPS / HR
OPS / HRVendor / HR
OPSVendor / HR
D M A I C
Process MAP
Start
FTE requirement identified by Ops
mgr
Job requisition form filled by Ops mgr & sent for approval
Approval received from VP
Job notifications published in
newspaper for Hiring
Job sites updated with the Hiring
requirement details
Information floated within organization for Internal referrals
Applications received from
interested candidates
Scrutiny of applications by HR
team
Candidates called for Interview
Tying test conducted
Application form
shortlisted
Typing Test
cleared
Analytical test conducted
Analytical test
cleared
Manager round conducted
Manager round
cleared
Ref check done
Ref check
cleared
Candidate shortlisted & Joined
the Organization
End
EndNo
Yes
No
Yes
No
Yes
No
Yes
No
Yes
D M A I C Hiring Process
KPI Operational Definition Defect Def Performance StdSpecification Limit
OpportunityLSL (min) USL (min)
Direct Hiring Cost
Total direct cost incurred by the company from the point , hiring
request is raised candidates interview till the time he is on board for MO2
Candidates
Hiring cost exceeding the budgeted cost of Rs4k/MO2
Rs 4000 per MO2 candidate
NARs 4000 per
MO2 candidate
Hiring cost. Per MO2 candidate
KPI Data TypeData Items
NeededUnit
Plan to collect Data Plan to sample
What Database or Container will
be used to record this data?
Is this an existing
database or new?
If new, When will the
database be ready for use?
When is the planned start date for data collection?
Cost of Hiring Continues Monthly Hiring
Cost report Rs & count . Excel Existing N/A 1st Feb. Full Population of MO2
Data Collection Plan
D M A I C
Microsoft Office Excel 97-2003 Worksheet
Month Grade# Of Associates
HiredAvg. of
Cost/AgreementSum of Cost/ Agreement
Auditor A
Auditor B
Apr-2011 M02 415 6145.945753 2550567.488 Pass Pass
Aug-2011 M02 308 4174.122362 1285629.688 Pass Pass
Jul-2011 M02 412 4933.4326 2032574.231 Pass Pass
Jun-2011 M02 342 5279.648448 1805639.769 Pass Pass
May-2011 M02 391 4996.80226 1953749.684 Pass Pass
Nov-2011 M02 508 8715.008521 4427224.329 Pass Pass
Oct-2011 M02 420 6305.605914 2648354.484 Pass Pass
Sep-2011 M02 411 4606.361937 1893214.756 Pass Pass
Grand Total 3207 5798.863245 18596954.43 Pass Pass
For the purpose of data validation, the hiring cost data was checked by Auditor A and Auditor B and no discrepancy in the data found.
D M A I CEffectiveness & Efficiency
Microsoft Office Excel 97-2003 Worksheet
D M A I CGraphical Summary
P value<0.05, hence data is not normal, also the above graphical summary clearly depicts that the variation is very high as the StDev=3637.6, the median is 5000 against the target of 4000.
D M A I CNormality Test
Since the P value <0.05, hence the data is not normal.
D M A I CRun Chart
In the above Run Chart Clustering and Trends have P value <0.05, hence the data is clustered and has a trend and the data is not random and not stable
D M A I C
The above box plot clearly depicts that the Median stands at 5000 against the target of 4000And 64% of MO2 hiring was done over the budgeted cost.
Budgeted Cost per
MO2
Median
D M A I C
Defect per Opportunity 1
No. of Opportunities 3207
Total Defects 2020
DPU 0.6299
DPMO 629872
Sigma Level 1.17
The sigma level stands at 1.17 sigma, which is not a good sign.
Factors identified through brainstorming.
D M A I C
Organizing Potential Causes
D M A I C
S.No. Y(Hiring Cost) Continues Test's
1 Potential X's Data Type Centering Variance
2 Location Discrete Moods Median Test for Equal Variance
3 Process Type Discrete Moods Median Test for Equal Variance
4 Gender Discrete Man Whitney Test for Equal Variance
5 Source Discrete Moods Median Test for Equal Variance
6
Horizontal Discrete Moods Median Test for Equal Variance
D M A I C
One-Sample T: Cost As per Agreement
Test of mu = 4000 vs not = 4000
Variable N Mean StDev SE Mean 95% CI TCost As per Agreement 3207 5798.9 3637.6 64.2 (5672.9, 5924.8) 28.01
Variable PCost As per Agreement 0.000
The Mean of the sample lies at 5798.9 against the target of 4000,This clearly indicates that the process has a centering issue.
Test for Centering
Location VS Hiring Cost
It’s clearly evident from the above graph that the maximum hiring is done in Pune, Mumbai and Gurgaon location.
Mood Median Test: Cost As per Agreement versus Location
Mood median test for Cost As per Agreement
Chi-Square = 98.51 DF = 4 P = 0.000
Individual 95.0% CIs
Location N<= N> Median Q3-Q1 --------+---------+---------+--------
Bang 117 79 7500 1000 (----*CHN 24 0 5000 0 *
GGN 177 249 9000 4000 *
MUM 258 352 9000 4000 *
PUN 473 291 7500 4000 *
--------+---------+---------+--------
6000 7200 8400
Overall median = 7500
Pvalue<0.05, which means there is a significant difference in the medians of hiring cost of different locations.
D M A I C
D M A I C
The above test for variance shows that the P value<0.05, which indicates that there is significant differenceIn the variance of different locations.
Location VS Hiring Cost
D M A I CRelationship between Hiring Cost & Gender
Mann-Whitney Test and CI: Hiring Cost Female, Hiring Cost Male
N MedianCost As per Agreement-F 969 5000.0Cost As per Agreement-M 2238 5000.0
Point estimate for ETA1-ETA2 is -0.095.0 Percent CI for ETA1-ETA2 is (-391.9,0.0)W = 1483990.5Test of ETA1 = ETA2 vs ETA1 not = ETA2 is significant at 0.0035The test is significant at 0.0033 (adjusted for ties)
The P value<0.05, which signifies that there is a significant difference in the median of Female and Male hiring cost.
D M A I C
Relationship between Gender and Hiring Cost
The p value<0.05, which clearly indicates tat that there is a significance difference in the variance of two subgroups.
D M A I C
The test clearly indicates that there is s significant difference in the median of different sub groups, also contact center and Industry specific BPO are two horizon where maximum hiring at MO2 level is done.
Mood Median Test: Cost As per Agreement versus Horizental
Mood median test for Cost As per AgreementChi-Square = 355.86 DF = 7 P = 0.000
Horizental N<= N> Median Q3-Q1BizAps 4 0 1798 0Contact Center 719 988 7500 6000F&A 312 16 5000 2000Industry Specific BPO 635 460 5000 5000Legal Services 12 0 2500 1178Research & Analytics 21 14 5000 5611Support 19 2 5000 2999Technology Services 4 0 3447 3234VSGA Support 1 0 5000 *
Individual 95.0% CIsHorizental ---------+---------+---------+-------BizAps *Contact Center (--*F&A *Industry Specific BPO *Legal Services (----*--)Research & Analytics (-----------------*--------------)Support (-----------------*Technology Services (----------*--------)VSGA Support ---------+---------+---------+------- 3200 4800 6400
Overall median = 5000
Desired Median@4000
D M A I C
The above test for variance shows that the P value<0.05, which indicates that there is significant differenceIn the variance of different process type.
D M A I CMood Median Test: Cost As per Agreement versus Source
Mood median test for Cost As per AgreementChi-Square = 1261.86 DF = 5 P = 0.000
Source N<= N> Median Q3-Q1Advertisement 1 0 0 *Campus Recruitment 20 0 0 3000Institute 14 0 0 0Job_Portal 483 0 1848 171Link 655 268 5000 5000Placement Consultants 386 1212 9000 3000Walkin 167 0 0 0ABC Carrier website 1 0 0 *
Individual 95.0% CIsSource +---------+---------+---------+------AdvertisementCampus Recruitment *----------)Institute *Job_Portal *Link *Placement Consultants *Walkin *ABC Carrier website +---------+---------+---------+------ 0 2500 5000 7500
Overall median = 5000
The above test indicates that the medians of the sources used for hiring are not same.
D M A I C
Test for Equal Variances: Cost As per Agreement versus Source
95% Bonferroni confidence intervals for standard deviations
Source N Lower StDev Upper Advertisement 1 * * * Campus Recruitment 20 1178.71 1663.07 2723.56 Institute 14 * 0.00 * Job_Portal 483 196.92 212.83 231.34 Link 923 1827.35 1933.98 2052.94Placement Consultants 1598 2912.63 3041.68 3181.91 Walkin 167 * 0.00 * ABC Carrier website 1 * * *
Bartlett's Test (Normal Distribution)Test statistic = 2130.32, p-value = 0.000
Levene's Test (Any Continuous Distribution)Test statistic = 144.40, p-value = 0.000
This test shows proves that there is a significant difference in the variance of the different sub groups
D M A I CProcess Type VS Hiring Cost
Bartlett's Test (Normal Distribution)Test statistic = 1080.78, p-value = 0.000
Levene's Test (Any Continuous Distribution)Test statistic = 110.25, p-value = 0.000
The above test for variance shows that the P value<0.05, which indicates that there is significant differenceIn the variance of different process type.
D M A I C
Mood median test for Cost As per Agreement
Chi-Square = 1860.43 DF = 4 P = 0.000
Individual 95.0% CIs
Process Type N<= N> Median Q3-Q1 --------+---------+---------+--------
Complex Data 470 4 5000 3111 *
F&A 319 15 5000 2719 *
Simple Data 514 2 2500 702 *
Support 31 6 5000 3202 (------------*
Voice 393 1453 8000 2000 (-*----)
--------+---------+---------+--------
4000 6000 8000
Overall median = 5000
Mood Median Test: Cost As per Agreement versus Process Type
Targeted Median
Pvalue<0.05, which means there is a significant difference in the medians of hiring cost of different Process Typesle.Processes in voice domain are majorly responsible for the increase in hiring cost.
D M A I C
Further Analyzing the data, it has been observed that out of 2020 defects occurred, maximum defects occurred in Horizontals “Contact Center” &
“Industry Specific BPO” which has the maximum number of hiring defects.
Mood median test for Cost As per AgreementChi-Square = 355.86 DF = 7 P = 0.000
Horizental N<= N> Median Q3-Q1BizAps 4 0 1798 0Contact Center 719 988 7500 6000F&A 312 16 5000 2000Industry Specific BPO 635 460 5000 5000Legal Services 12 0 2500 1178Research & Analytics 21 14 5000 5611Support 19 2 5000 2999Technology Services 4 0 3447 3234VSGA Support 1 0 5000 *
Individual 95.0% CIsHorizental ---------+---------+---------+-------BizAps *
Contact Center (--*F&A *Industry Specific BPO *Legal Services (----*--)
Research & Analytics (-----------------*--------------)Support (-----------------*Technology Services (----------*--------)VSGA Support
---------+---------+---------+------- 3200 4800 6400
Overall median = 5000
* NOTE * Levels with < 6 observations have confidence < 95.0%
Mood Median Test: Cost As per Agreement versus Horizental
D M A I C
After analyzing all the possible factors and results obtained by conducting various test’s it was found that :
1)Out to total defective hiring of 2020, maximum of which is done in Horizontal “Contact Center” i.e. 1092 hiring defects,
having an avg. hiring cost of Rs 9226.2)In Contact Center, Process type “Voice” has the most number
of hiring defects i.e. 984 3)Total hiring done via “Placement Consultants” under
horizontal “Contact Center in Voice processes is 881 having an avg. hiring cost of Rs.9925.
Test Findings
Action Plan needs to be developed to ensure that the hiring cost does not exceed the budgeted limit.
D M A I C
As per the QFD done, the priority is to design new and affective referral policy across different locations.
D M A I C
D M A I C
Control Plan
People on bench should be given the priority over any other references. Campus hiring and referral hiring should be given priority over external hires. For hiring an external resource approval from OPS VP and HR VP is required. If external resource is to be hired & the cost for the same is exceeds the allotted cost, approval needs to be obtained from the OPS VP.
D M A I C
After conducting FMEA, Risk Treatment Plan is developed along with the responsibilities and time line assigned.
Factors having the highest Risk Priority Number (RPN) are prioritized first.
Microsoft Office Excel Worksheet
FMEA
D M A I C
Control Chart showing pre and post Improvement
Pre Improvement
Post Improvement
D M A I C
Box Plot showing pre & post Hiring Cost.
The Box Plot above clearly shows the shift in the median from 5000 (Pre Improvement) to 3422 (Post Improvement)
45004200390036003300300027002400
Median
Mean
34603440342034003380
1st Quartile 2909.0
Median 3422.03rd Quartile 3970.0Maximum 4500.0
3413.9 3456.1
3381.0 3464.5
595.5 625.4
A-Squared 37.56P-Value < 0.005
Mean 3435.0StDev 610.1Variance 372206.5
Skewness 0.02623Kurtosis -1.21290N 3207
Minimum 2400.0
Anderson-Darling Normality Test
95% Confidence I nterval for Mean
95% Confidence I nterval for Median
95% Confidence I nterval for StDev95% Confidence I ntervals
Summary for Post Imp Hiring Cost
Pre Improvement Post Improvement
Std Dev 3637.6 610.1
Mean 5798.9 3535
Median 5000 3422
Graphical Summary Showing Post Improvement
Defect per Opportunity 1
No. of Opportunities 3207
Total Defects 747
DPU 0.23293
DPMO 232928
Sigma Level 2.23
There is a significant improvement in the sigma level, from 1.17 sigma (Pre Improvement) to 2.23 Sigma Post Improvement)
Post Improvement Sigma Level