GB Case Study HR Prob Sol1

Six Sigma Certification 1

Case Study Green Belt DMAICD M A I C

EXAMPLE EXAMPLE

Benchmark Six Sigma

Green Belt Training

Benchmark Six Sigma

Green Belt Training



Six Sigma

““The Structured Application of The Structured Application of

Tools and Techniques Applied Tools and Techniques Applied

on Project Basis to Achieve on Project Basis to Achieve

Sustained Strategic Results."Sustained Strategic Results."



Objective

At the end of the this case study, you will be

able to apply Six Sigma DMAIC methodology

on a given project, derive the expected

results, and conclude the project

successfully.



A software service provider

““Red Apple Technologies”Red Apple Technologies” Case Study



Company’s InformationA software company “ Red Apple Technologies (RAT) ” has clients worldwide. The company provides software solutions to its clients. The company has recently bought a 250 seating capacity space in NOIDA town to execute recently acquired projects. The company is able to provide services on any platform or technology available globally. In case the company does not have the required skill sets for any of the technologies, it enrolls software professionals either for short- term contracts or full- time employment.



The Problem

As per the company’s policies, an employee is recruited at one of the four levels, lowest being the level L1 and highest level being L4. The performance reviews for each employee is done twice a year (March & September). The employees are given increment and promotion depending on their performance.



In the recent Half-yearly HR review, the management of Red Apple Technologies (RAT) observed that the rate of attrition had increased substantially in the last two quarters. The HR produced the following data which raised concerns for the management:

Month 2004 #Employees #Attritions Resignations Terminations#New

RecruitmentsAttrition

%

Jan 500 12 11 1 0 2.40Feb 488 13 11 2 10 2.66Mar 485 30 29 1 20 6.19Apr 475 18 13 5 35 3.79May 492 17 17 0 0 3.46Jun 475 10 8 2 15 2.11

Jan ~ Jun 2915 100 89 11 80 3.43% 3.43 3.05 0.38 2.74

The Problem



L1 L2 L1 L3 L2 L1 L2 L2 L1 L1 L1 L1 L1 L2 L1L1 L2 L4 L2 L2 L1 L1 L1 L1 L1 L2 L2 L1 L2 L2L1 L1 L1 L1 L1 L2 L1 L1 L1 L2 L1 L2 L2 L1 L2L3 L1 L1 L1 L1 L1 L1 L1 L2 L1 L2 L1 L1 L1 L1L1 L1 L1 L1 L3 L1 L1 L1 L1 L1 L1 L1 L2 L2 L1L1 L1 L1 L1 L1 L1 L1 L1 L2 L1 L2 L1 L1 L3

The data showed that though some of the employees were terminated, there were many who had opted to resign. HR recorded the level- wise resignations as below:

Considering the new contracts that the company had recently acquired from many of its customers, the increase in resignations have become a cause of concern.

The Problem



The new projects required the understanding and use of technologies, the skills for which could not be obtained easily from the hired employees. Further, the organization was losing good amount of money on account of hiring new employees against attrition and training them. Average cost/ person for hiring = 700 USD Average cost/ person for training = 1000 USD

(4days@ 250 USD/ day), and Loss in project productivity = 350 USD (Losing 56

man-hours/ person averaged@ 50 USD / day)

The Problem



The ProblemThe management has directed the HR head to bring down the monthly rate of attrition from 3.43% to 1% by year- end and also acquire people possessing skills in technologies such as VAGNETTE, INTERBASE, LITEWARE to execute the new projects.

The HR head has proposed this as a Six Sigma project. You being the Green Belt are chosen to lead the project and show results after 3 months or less. Apply Six Sigma methodology to find vital causes and propose a possible solution. Demonstrate the solution with the tools used.



After brainstorming, the project managers and HR department noted down the following possible factors for high number of resignations could be poor growth prospects, poor compensation, long working hours, stressful environment, poor infrastructure facilities, attitude of reporting manager, company location or in some cases spouse relocating. For terminations, the reasons could be non-performance and/or integrity violation.

HR compared competitor’s data to find the average number of years between promotions at different levels:

Index RAT Competitor 1 Competitor 2

Level 1 to Level 2 2 1 1.5Level 2 to Level 3 2 2 2Level 3 to Level 4 3 3 2

The Problem



• HR captures the daily IN- time and OUT- time of employees giving more working hours, the Industry standard of number of working hours a day being 9.

• HR can also provide with the gross annual compensation of employees as against the competitors’.

Employee Code IN- Time OUT- Time

E1021 8:15 16:50E1024 8:10 19:20E1054 7:10 16:50E1056 8:15 19:30E1057 8:20 20:10E1086 8:15 21:07E1124 9:05 22:02E1145 8:15 16:50E1243 8:10 18:06E1245 8:17 20:40E1246 8:15 17:50E1252 8:40 20:04E1257 8:07 16:50E1275 8:15 21:50E1287 8:15 17:55

Average

Position RAT Competitor 1 Competitor 2

Level 1 1.5 2.1 2.25Level 2 4 4.5 4.25Level 3 7.5 7 7.2

Level 4 12 11 11.25

Average Annual Gross Compensation/ Employee

The Problem



DMAIC Steps

Solve the given problem and Solve the given problem and apply all the steps of Six Sigma apply all the steps of Six Sigma methodology to the data given. methodology to the data given.

You can assume data where You can assume data where ever not given.ever not given.

<GB_Case_Study_HR_DATA.xls>



DMAIC Steps

• Identify the Six Sigma project• Identify CTQs• Create Project Charter

– Business Case

– Problem Statement

– Goal Statement

– Team Selection with roles and responsibilities

– Calculating Benefits

– Project Timeline - Schedule

– Communication Plan



DMAIC Steps

Define the performance standards for ‘y’ Collect data Validate the measurement system-

Identify & Correct Measurement errors Establish Baseline, find all sigma levels Map the Process Create C&E diagram Create Function Deployment Matrix



DMAIC StepsDo analysis

1. Generate and Analyze Graphs

2. Conduct Hypothesis Testing

• List the vital Xs

• Propose a solution for project y as a function of vital Xs

• Execute and Standardize the process (get approvals, impart training)



DMAIC Steps

• Use Mistake-proofing/ Visual Standards for process control

• Create Control chart

• Develop a Control Plan

• Review the DMAIC process to check for possibility of failure



• Process Instructions

• Impart Training

• Preventive Maintenance

• Documentation

• Translation

DMAIC Steps



A software service provider

““Red Apple Technologies”Red Apple Technologies” Case Study



Project SelectionSix Sigma project is already identified. Project title would be

“To reduce the monthly rate of attrition from

3.43% to 1%

(~30%)“.

One of the possible solution for the project is given ahead:-DEFINE



Define : Identifying CTQs

Provide on-time quality solutions

Manpower Quality Technical knowledge

ControlAttrition

Discipline•Reduce Absenteeism•Improve Performance

Introduce Final Q- check

DLC Multiple reviews

CTS

CTQs

CTPs

Providing resources(Library, etc.)

Training(arranging internal/ external training

DEFINE



Problem & Goal Statement Problem Statement:Problem Statement:

The rate of attrition is has been very high since last six months (3.43% /month).

The problem was reported by the HR department after half- yearly review.

Impact of the problem is poor- quality and delayed deliveries to the clients.

High pressure on HR for new recruits.

Goal Statement:Goal Statement: To reduce the monthly rate of attrition from 3.43% to

1%.

Pro

ject

Cha

rter

DEFINE



Business Case

Due to high attrition rate, following problems are faced by the organization in client’s projects:

o The communication channels break

o Information transfer is incomplete

o Replacement is not always available

o Replacement demands training and time

These problems dissatisfy the customers thereby slowing down the business momentum. Therefore, it is important

to take the project to be able to deliver quality services

on time to the customers.

Pro

ject

Cha

rter

DEFINE



Team Selection

The team includes following members with roles

and responsibilities as mentioned Project Leader : Green Belt HR personnel

HR executive : To provide data. HR head: Solve constraints and support make

improvements.

Project Management -Manager : To implement improvements.

Financial representative : To calculate and authenticate financial benefits.

Pro

ject

Cha

rter

DEFINE



Calculating Benefits Financial Benefits- TangibleFinancial Benefits- Tangible

Reduction in hiring cost : Average hiring cost/ person = 700 USD(includes consultant fees, proportionate hiring executive salary, cost of conducting interviews)

Reduction in training cost : Average training cost/ person = 1000 USD(includes 4-day induction-to-organization cost averaged@ 250 USD / day)

Increase in project productivity : 350 USD (Saving 56 man-hours/ person for induction-to-project cost averaged@ 50 USD / day)

Total Annual Cost = 2050 USD / person * #Persons left in 6 months * 2

= 2050 USD *100 for 1 year = 205 K USD

Cost Savings = 30% of 205 K USD = 61.5 K USD

Pro

ject

Cha

rter

DEFINE



Calculating Benefits• Financial Benefits: In- tangibleFinancial Benefits: In- tangible

On- time delivery of project to customer Better quality service to customer Customer satisfaction

Pro

ject

Cha

rter

DEFINE



Project Timeline & Communication Plan• The project was registered in Six Sigma Website on 5th

June, 2004. Dates for completion of different phases are:

– Define : till 15 June

– Measure : 16 June - 30 June

– Analyze : 1 July - 15 July

– Improve : 16 July - 05 August

– Control : 06 August - 20 August, 04

• Each of the phases will be uploaded in the Website as and when they get finished.

• Team members will meet every Wednesday for 25 - 35 minutes at 10:00 AM for project meeting in Six Sigma Room. Agenda will be mailed before the meetings.

Pro

ject

Cha

rter

DEFINE



Performance Standard Matrix

Reduce Attrition rate by 30%– Item: Attrition rate

– Metric: No. of persons left/ Number of employees

– Opportunity: One

– Data type: Discrete- Defective

– Standard for judgment:

Industries of similar business have a standard of 1%.

– Measurement System: An employee is assumed to have left the organization w.e.f his/ her date of relieving. The replacement is generally searched for when his resignation letter is accepted by HR.

• Frequency: Attrition rate is circulated on 1st of every month

• Gage: Manually

MEASURE



Data Collection

HR team releases Attrition report on 1st of

every month to the management. The data is

manually collected based on the date of relieving

of the resigned employees.

MEASURE





%


Jan ~ Jun 2915 100 89 11 80 3.43% 3.43 3.05 0.38 2.74

Data Collection

WORST

BESTAVERAGE

MEASURE



Validate Measurement System

Logical ValidationLogical Validation : :

The data is released by HR recruitment executive and authenticated by HR head.

Data needs no further validation.

MEASURE



Establish Baseline

DPMODPMODefect per million opportunities :

Average number of attrition in a month = 3.43

DPMO = 3.43*1,000,000 / 100

= 34,300 ppm

YieldYield = 96.57%

MEASURE



Establish Baseline

Calculating Sigma level* :Calculating Sigma level* :

Zlt = 1.82

Zst = 1.82 + 1.5 = 3.32

Zbest = 3.53 (June month- 2.11%)

Zworst = 3.04 (March month- 6.19%)

Zgoal = 3.82 (Goal is to achieve 1% rate of attrition)

* Try to find out how the sigma values are calculated

MEASURE



Process Map

MEASURE

• Department sends demand for employee to HR

• HR advertises the demand

• It receives applications

• HR shortlists the suitable candidates

• Conducts Interviews with Dept Head

• Recruits employee

• Employee joins after one month (generally)

• Employee works for the organization

• Employee resigns/ gets terminated

• Employee leaves after a month (generally/ immediately in case of termination)



Function Deployment Matrix

Less potential Xs

Cu

sto

mer

Key

Pro

cess

Ou

tpu

t V

aria

ble

Res

ign

atio

n

Ter

min

atio

n

CustomerPriority

Rank # >>9 7

S. NoKey ProcessInput Variable

Rank % Rank

1 8 0 72 16.71

2 9 0 81 18.79

3 7 0 63 14.62

4 6 0 54 12.53

5 1 0 9 2.09

6 4 0 36 8.35

7 1 0 9 2.09

8 1 0 9 2.09

9 0 5 35 8.12

9 0 9 63 14.62

Stressful environment

Relationship with manager

Association Table

Poor growth prospects

Poor Compensation

Long Working hours

Location of the facility

Non performance

Integrity violation

Poor infrastructure

Spouse relocating

MEASURE



Potential Xs

List of Potential Xs* :

• X1 : Poor growth prospects

• X2 : Poor Compensation

• X3 : Long Working hours

• X4 : Stressful environment

• X5 : Integrity violation

ANALYZE

Resignations

Terminations

*Factors may be chosen from other tools as well like Affinity diagram, C&E diagram etc.





%


Jan ~ Jun 2915 100 89 11 80 3.43% 3.43 3.05 0.38 2.74

Analyze : Data



Data suggests:

• Maximum resignations have happened in March

• Maximum terminations in April

• Maximum attrition in March

Analyze : Data



Employees/ Attritions and New Recruitments

94.2%

3.2%2.6%

#Employees

#Attritions

#NewRecruitments

Resignations versus Terminations

89.0%

11.0%

Resignations

Terminations

• Investigations revealed that since increments and promotions are declared in March, the dissatisfied employees tend to resign.

• Some other dissatisfied employees were caught doing unfair activities (accessing restricted sites in a group) and were terminated in April.

Data Supports factors X1, X2 and X5

Analyze : Data



L1 L2 L1 L3 L2 L1 L2 L2 L1 L1 L1 L1 L1 L2 L1 L1 L2 L4 L2 L2 L1L1 L1 L1 L1 L1 L2 L1 L1 L1 L2 L1 L2 L2 L1 L2 L3 L1 L1 L1 L1 L1L1 L1 L1 L1 L3 L1 L1 L1 L1 L1 L1 L1 L2 L2 L1 L1 L1 L1 L1 L1 L1

Resignations

Analyze : Data

Pareto suggests that maximum resignations occur for L1



Analyze

X1 : Poor growth prospectsX1 : Poor growth prospects

The team managed to contact the HR executive of

the competitors and got the following data of the average

number of years taken to be promoted to the next level:

Index RAT Competitor 1 Competitor 2

Level 1 to Level 2 2 1 1.5Level 2 to Level 3 2 2 2Level 3 to Level 4 3 3 2

ANALYZE



Analyze

X1 : Poor growth prospectsX1 : Poor growth prospects

Level 1 to Level 2 Promotion Time Data was collected for comparison.

Shown in Excel File



Applying 2- sample t test to compare the promotions

• Null Hypothesis Ho : RAT = Competitor1

• Alternate Hypothesis Ha : RAT Competitor1

Analyze

P<0.05, test shows the promotion is different from that of the competitor 1



Applying 2- sample t test to compare the promotions • Null Hypothesis Ho : RAT = Competitor2

• Alternate Hypothesis Ha : RAT Competitor2

P<0.05, test shows the promotion is different from that of the competitor 2

Analyze



AnalyzeX2 : Poor CompensationX2 : Poor CompensationComparison of compensation with the competitor

Though the average compensation of the organization is high

compared to the competitors, the maximum attrition occurs in

lower levels where during initial years of employment where

the compensation is less.

Position RAT Competitor 1 Competitor 2

Level 1 1.5 2.1 2.25Level 2 4 4.5 4.25Level 3 7.5 7 7.2

Level 4 12 11 11.25Average 6.25 6.15 6.24


No.

of Resignations

ANALYZE



AnalyzeX3 : Long Working hoursX3 : Long Working hoursThe IN- time and OUT- time of employees was recorded and

analyzedEmployee

Code IN- Time OUT- Time DiffE1021 8:15 16:50 8:35E1024 8:10 19:20 11:10E1054 7:10 16:50 9:40E1056 8:15 19:30 11:15E1057 8:20 20:10 11:50E1086 8:15 21:07 12:52E1124 9:05 22:02 12:57E1145 8:15 16:50 8:35E1243 8:10 18:06 9:56E1245 8:17 20:40 12:23E1246 8:15 17:50 9:35E1252 8:40 20:04 11:24E1257 8:07 16:50 8:43E1275 8:15 21:50 13:35E1287 8:15 17:55 9:40Average 8:14 19:03 10:48

Average

Industry standard is 9 hours

ANALYZE



Employee Code

Avg IN- Time Avg OUT- Time Difference Days

E1021 8:15 16:50 8:35 0.358E1024 8:10 19:20 11:10 0.465E1054 7:10 16:50 9:40 0.403E1056 8:15 19:30 11:15 0.469E1057 8:20 20:10 11:50 0.493E1086 8:15 21:07 12:52 0.536E1124 9:05 22:02 12:57 0.540E1145 8:15 16:50 8:35 0.358E1243 8:10 18:06 9:56 0.414E1245 8:17 20:40 12:23 0.516E1246 8:15 17:50 9:35 0.399E1252 8:40 20:04 11:24 0.475E1257 8:07 16:50 8:43 0.363E1275 8:15 21:50 13:35 0.566E1287 8:15 17:55 9:40 0.403

Standard Hrs

Standard_days

9:00 0.375

AnalyzeThe Time format was converted into Numeric (no. of days)

ANALYZE



Analyze

ANALYZE

The Time 0.403 Days is considerably higher than Industry Average of 3.75.

Long Working Hours was considered as a Vital X



AnalyzeX4 : Stressful environmentX4 : Stressful environment

The factor is accounted for based on the feedback by employees to HR which included complaints against their immediate boss and sometimes against the clients and their behavior.

Conclusion : It is a subjective factor and needs improvement to reduce attrition.

ANALYZE



AnalyzeX5 : Integrity violationX5 : Integrity violation

This is the cause responsible for terminations in the organization. It includes:

• misuse of infrastructure,

• accessing restricted sites,

• stealing,

• over- issuing office stationery,

• producing fake bills.

Conclusion : Terminations account for 0.38% of the average of 3.43% in a month. To achieve the goal of 1%, terminations should also be reduced.

ANALYZE



Analyze

List of Vital Xs:

• X1 : Poor growth prospects

• X2 : Poor Compensation

• X3 : Long Working hours

• X4 : Stressful environment

• X5 : Integrity violation

Resignations

Terminations

ANALYZE



ImproveX1 : Poor Growth ProspectsX1 : Poor Growth Prospects

• HR decided to reduce the promotion period of level 1 to level 2 from an average of 2 years to 1.5 years as maximum resignations occurred during the initial years of service. Policy was made and approved from the management.

• HR started conducting awareness programs on the growth prospects an employee could expect in the organization and comparison with the competitors. Frequency : Once for all employees, During Induction of new recruits; Responsibility : HR Mgr.

IMPROVE

Mistake- Proofing



ImproveHR created policies for the employees in consultation with the management to

• Identify new growth opportunities, • Give additional responsibilities and rewards

henceforth,• Encourage inter- departmental transfers through

internal job postings, and• Promote up-gradation of skills through training.

Policy was made by HR and approved by the management

IMPROVE



ImproveX2 : Poor CompensationX2 : Poor Compensation

Raising Compensation could be an extra cost to the

organization. Hence, HR decided to restructure the

compensation across the board during the next

half- yearly Performance review in Sept, 04. The

compensation at RAT was as competitive as its

competitors but since the maximum resignations occur

for level 1 and then level 2, the restructuring was done

as shown-

IMPROVE

Mistake- Proofing



Improve

Avg. % of Tot. Avg. % of Tot. Avg. % of Tot. Avg. % of Tot.Level 1 1.5 6% 2.5 9% 2.1 9% 2.25 9%Level 2 4 16% 5.1 18% 4.5 18% 4.25 17%Level 3 7.5 30% 8 28% 7 28% 7.2 29%Level 4 12 48% 12.6 45% 11 45% 11.25 45%Total 25 100% 28.2 100% 24.6 100.0% 24.95 100.0%

PositionBefore


Before After BeforeRAT Competitor 1 Competitor 2

HR restructured the compensation for the next Performance review in Sept, 04 which rationalized the % compensation for all levels as per the benchmark industry. Management approved the proposal.

IMPROVE



ImproveX3 : LongX3 : Long Working HoursWorking Hours

Before : After conducting one-to-one sessions with employees, it was found that employees had to stay after office hours or work on weekends regularly. Reasons for this were:

• Excess work due to non- uniform work distribution• Late night teleconferencing with US-based clients• Avail extra benefits provided by the company such

as claiming money for commuting etc.• Impress the immediate manager who works for late

hours.IMPROVE



Improve

After : • First, each individual was made to list down his

job responsibilities. Then, HR interviewed the middle/ upper management to gauge non-uniformity in work load. Next, the managers were asked to uniformly distribute the work load amongst the employees.

• A new communication system was installed using which employees could attend conference calls from home to avoid night stays.

IMPROVE



ImproveAfter :

• Leverage to come late to the office the next day was given to employees who stayed late nights.

• HR circulated a note whereby any L1/ L2 employee who wishes to stay back after the office hours or work during weekends should get an approval from his immediate manager and inform the HR department.

Mistake- Proofing

IMPROVE



ImproveX4 : Stressful EnvironmentX4 : Stressful Environment

Before : This factor was revealed during a survey conducted by HR with the employees

After :

• The survey which was conducted especially for the project was made a regular feature with the frequency of once in 3 months where each employee was interviewed to check their satisfaction level.

• Exit Interviews and feedback sessions were introduced.

• HR was made responsible to solve each of the raised issues from the interactions and monitor the proposals regularly.

IMPROVE



X5 : Integrity ViolationX5 : Integrity Violation

Before :

Integrity violations such as • misuse of infrastructure, • accessing restricted sites, • stealing or sharing confidential information, • over-issuing office stationery, • producing fake bills etc.

caused terminations in the organization.

Improve

IMPROVE



After :

Security department along with the IT department: – banned access to the restricted sites,

– disabled and removed CD and floppy-disc drives from PCs,

– employees were made to sign an Integrity policy agreement to make them aware of the consequences of indulging in any integrity-related activity

HR issued a note to all employees saying all the bills and vouchers need to be approved by the immediate manager and also HR before they got cleared.

ImproveMistake- Proofing

IMPROVE



ControlControl Plan :

Each of the Xs for which mistake- proofing was not

done, were controlled and responsibilities were

assigned to the concerned persons.

Con

trol

Pla

n

CONTROL



Control X1 : Poor growth prospectsX1 : Poor growth prospects

• HR started conducting awareness programs • Frequency :

– Once for all employees,

– During Induction of new recruits

– In case of change in the policies

– Introduction of any new policy

• Strength : 20 or less employees in one session

• Material : Distribution of handouts and information through e- mails

Con

trol

Pla

n

CONTROL



Control

X3 : Long Working hoursX3 : Long Working hours

First, each individual was made to list down his job responsibilities. Then, HR interviewed the middle/ upper management to gauge non- uniformity in work load. Next, the managers were asked to uniformly distribute the work load amongst the employees.

Frequency : Once/ quarter

Responsibility : HR manager and respective department heads

Con

trol

Pla

n

CONTROL



Control

X4 : Stressful environmentX4 : Stressful environment

• Employees were interviewed to check their satisfaction level. – Frequency : Once/ Quarter

– Responsibility : HR manager

• Exit Interviews and feedback sessions– Frequency : When an employee is relieved

– Responsibility : HR manager

Con

trol

Pla

n

CONTROL



Control : I- MR Chart

Shows the data is in Control with 0.822 as the mean after project completion

CONTROL



Final Steps

The final steps were executed in the ProcessThe final steps were executed in the Process

• Process Instructions

• Impart Training

• Preventive Maintenance

• Documentation

• Translation

FINAL STEPS



Post - Completion

• Project was transferred by the Green Belt to the process owner (HR).

• The project completion was authenticated by the customer followed by a project presentation by the team to all stakeholders and Six Sigma team.

FINAL STEPS



Good Luck

For Your

Six Sigma

Journey

GB Case Study HR Prob Sol1

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Transcript of GB Case Study HR Prob Sol1