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Six sigma Case Study on Full and Final in HR.
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Six Sigma Case Study
Theme: Full and Final Settlement Time Reduction
The Case: While consulting an ITeS organization, we had a brainstorming session with the
Middle and Top level management of various departments in order to identify the
improvement opportunities in their specific processes to help the organization
grow.
In brainstorming with the HR Management, we identified one of the metrics of HR
performance was performing way below the expectations, which was FnF settlement process, so
we decided to take this up as one of the Six Sigma initiatives to improve the performance.
This was imperative as high settlement time was impacting the employee satisfaction and
also the resource utilization of the people involved in the settlement process was getting
impacted.
Pre – DMAIC: As a pre-requisite to initiate any Six Sigma project, we collected the data for the
last FY and first checked the normality, the spread and the central tendency of the
process, in the Normality test the result was Ha, which meant the data was Not Normal, so we
had to look at the Median as the measure of the Central tendency, which was 51 days, whereas
the target timeline to close this was 45 days and the management wanted this to be reduced to
30 days, so for the project, we decided to go ahead as 30 days as the project target, which was
validated by the 1 Sample Sign Test, as in the result below:
The Opportunity: The internal SLA for the Full and Final Settlement closure was 45 days,
but the Process was taking approximately double the time to close the
same, with the Median of 51 days and resulted in the Dissatisfaction of the employee who is
quitting and also impacted the utilization of the resource involved in the settlement process.
As per the historical data, for last FY, average of 577 employees resign per month from the India
region and all over India there are 10 employees involved in the Settlement process.
Time taken 1 employee to complete the settlement is xxx hours, whereas after improving the
process, the time would be reduced to xxx hours, which would result in xxx hours saving per
month and as the Billing rate per hour is xx USD, so this would convert to xxx*12 USD saving per
year.
So, basis the above calculation, we got the Total savings that would be derived out of this project
would be xxxx USD.
The Target: Referring to the above calculation, we decided to reduce the FnF settlement TAT
from 45 to 30 days in next 6 months.
The Process:
Measuring “Y”: Y being the cycle time, was considered as continuous data and the performance
standard was 30 days, which was the upper specification limit
The Criticals:
As the entire lifecycle of FnF settlement was handled through SAP, wherein the entire progress
and dates were maintained, however, these dates were also available with the HR team, as they
captured them manually, so for Measurement System Analysis, we conducted Repeatability and
Reproducibility to confirm the resignation and the settlement dates of 10 people attrited and for
the same, we asked different people from the HR team to provide these dates.
As, all the dates communicated by the HR team were correct, so the data was successfully
validated and we can use this data for further analysis.
So, we moved on to the Analyze Phase:
Emp ID Emp Name Source1 Resignation Date Last Clearance Date Source2 Resignation Date Last Clearance Date Agreement Analysis - Resignation date Agreement Analysis - Clearance date
51355864 MANPREET KHURANA Settlement SPOC 3-Jan-13 11-Feb-13 HR Manager 3-Jan-13 11-Feb-13 TRUE TRUE
51371412 Harish Suthar Settlement SPOC 21-Dec-12 14-Feb-13 HR Manager 21-Dec-12 14-Feb-13 TRUE TRUE
51374661 PRIYANKA CHAUHAN Settlement SPOC 4-Dec-12 7-Jan-13 HR Manager 4-Dec-12 7-Jan-13 TRUE TRUE
51377436 DEEPAK SAGAR Settlement SPOC 18-Dec-12 1-Feb-13 HR Manager 18-Dec-12 1-Feb-13 TRUE TRUE
51433754 Indrajeet Trigunayat Settlement SPOC 1-Dec-12 31-Jan-13 HR Manager 1-Dec-12 31-Jan-13 TRUE TRUE
40115168 ATIF KHAN Settlement SPOC 11-Feb-13 21-Feb-13 HR Manager 11-Feb-13 21-Feb-13 TRUE TRUE
40129542 DEEPAK SHARMA Settlement SPOC 2-Nov-12 7-Feb-13 HR Manager 2-Nov-12 7-Feb-13 TRUE TRUE
40138261 Girish Nair Settlement SPOC 1-Feb-13 14-Mar-13 HR Manager 1-Feb-13 14-Mar-13 TRUE TRUE
40141516 Nitin Jaitly Settlement SPOC 14-Oct-12 15-Jan-13 HR Manager 14-Oct-12 15-Jan-13 TRUE TRUE
40144622 NEETI MATHUR Settlement SPOC 15-Nov-12 14-Feb-13 HR Manager 15-Nov-12 14-Feb-13 TRUE TRUE
RCA:
To identify the root cause of the problem we conducted a brainstorming session with the HR
team including the HR Managers, Executives and the Settlement SPOCs and thus identified
different causes contributing to the High settlement time, which are listed below:
Potential Causes Payroll activities are happening monthly only
LWP entries activities are happening monthly only
Salaries are prepared bases on attendance will 20th only
Employees IDs are kept open for some time even after separation
Separation from GEO are not intimated on time to parent entity
No such checklist where the complete steps of F&F settlements marked
Band
Resignation Type
Last Clearing Vendor
For the Causes mentioned above, the only tangible X’s were Band, Resignation Type and Last
Clearing Vendor, which were already available with the HR team, so moved ahead with
Hypothesis Testing to check these X’s for their impact. For others, we discussed with the HR team
to identify if these were impacting and we summarized the output of Analyze phase as:
Potential Causes Hypothesis Test Result Impact (Y/N) Basis of decision
Payroll activities are happening monthly only NA Y Brainstorming
LWP entries activities are happening monthly only
NA Y Brainstorming
Employees IDs are kept open for some time even after separation
NA Y Brainstorming
Separation from GEO are not intimated on time to parent entity
NA Y Brainstorming
No such checklist where the complete steps of F&F settlements marked
NA Y Brainstorming
Band Ho (p-value>0.05) N p - value
Resignation Type Ha (p-value<0.05) Y p - value
Last Clearing Vendor Ha (p-value<0.05) Y p - value
With this we decided to move to Improve Phase and decide the Activities to improve the process.
The Improvement:
To design the improvement plan, we got together with the Team HR along with the
representatives of different departments involved in the settlement process and after rigorous
discussions, we got to the implementable Action Items to ensure improvement
Potential Causes Brainstormed Solutions Owner
Payroll activities are happening
monthly only/ Resignation type
Separated employees payroll activities can happen once i.e.
10th of every month /twice i.e. on 5th and 15th of next month
(2 separate payroll areas can be created to run these 2 payrolls
of separated employees. As soon as the employee withdrawn
action runs, the payroll area can be changed to that withdrawn
payroll area)
XYZ
LWP entries activities are
happening monthly only
Similarly LWP entries activities can also happened once or twice
before 2 days of payroll activities i.e. by 31st of same month
and by 10th of next month
Employees IDs are kept open for
some time even after separation
Employees IDs needs to get blocked in 7th days after separation
(the LWP / attendance / Leave updation will not be considered
after 4th day of separation)
Separation from GEO are not
intimated on time to parent entity
Separation from GEO are intimated within a week time to
parent entity so that recoveries can be processed in respective
GEOs
No such checklist where the
complete steps of F&F settlements
marked / Last Clearing Vendor
One complete checklist of Separated Employees steps to follow
properly so that no entry can get missed by any chance. This is
required because different Tiers are putting different
settlement entries
Snapshot of the Gantt chart for Improvement (Implementation Plan)
After implementing the Improvement Plan (November), we waited for 2 months and started
collecting the data from February, the process of data collection continued for 3 months from
Feb till April.
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Separated employees payroll activities can happen twice i.e. on 5th and 15th of next month (2 separate payroll areas can be
created to run these 2 payrolls of separated employees. As soon as the employee withdrawn action runs, the payroll area can
be changed to that withdrawn payroll area)
XYZ
Similary LWP entries activities can also happened once or twice before 2 days of payroll activities i.e. by 31st of same month
and by 10th of next monthXYZ
Employees IDs needs to get blocked in 7th days after separation (the LWP / attendance / Leave updation will not be considered
after 4th day of separation)XYZ
Separation from GEO are intimated with in a week time to parent entity so that recoveries can be processed in respective GEOs XYZ
One complete checklist of Separated Employees steps to follow properly so that no entry can get missed by any chance. This is
required because different Tiers are putting different settlement entriesXYZ
After collecting the data, we started validating the improvement, for which we conducted the
Comparative Analysis before and after improvement (Pre-Post Analysis)
For Pre Post Analysis, we conducted the Mann-Whitney test to validate the improvement (as in
the test result above), and got the p-value as 0.000, which meant we had to accept the
Alternate Hypothesis and hence the improvement was validated.
We also conducted the Pre-Post Analysis using the Control Chart (I Chart), below is the image
for the same:
Hence, we have successfully validated the improvement and now we needed to ensure the
sustenance of process performance and for the same we moved ahead to the Control Phase.
The Control: In Control Phase, we brainstormed with the HR team members and designed the
control plan as below:
Controls to be Implemented Owner Start Date End date
Audits of All the implemented Activities ABC Monthly
Train the HR team on the New Process ABC 20-May-13 23-May-13
After Implementing the Control Plan, we collected the data for a month and validated if the
process performance was in control or not.
To check the Process Control we prepared the Control Chart for Individuals and got the chart as
below:
As in the Chart above, all the data points are within the Upper and Lower Control Limits, hence
it is validated that the process is in control.
Now the Improvements had sustained, now it was the time to Quantify the benefits of the
project, so we conducted the Cost Benefit Analysis and calculated the Financial Value as a result
of improvement, summarized below is the savings calculation:
Actual Savings
Month Withdrawn
Direct Support Sales Total
Jul-12 505 53 4 562
Jun-12 590 77 11 678
May-12 514 49 6 569
Apr-12 452 70 5 527
Mar-12 517 67 10 594
Feb-12 530 37 4 571
Jan-12 478 34 4 516
Dec-11 601 41 6 648
Nov-11 528 27 10 565
Oct-11 491 54 8 553
Sep-11 445 47 6 498
Aug-11 585 54 6 645
Average F&F per month 577
Time Taken by 1 person (in Hours) 264
Expected Time Taken by 1 person (in Hours) 176
Saving of time 1 person (in Hours) 88
Saving of time in % 33%
Per hour cost 1 person (in USD) 5
Employees involved in F&F (all regions) 10
Saving per month in USD 4,400
Saving per Annum in USD 52,800