Corporate Project “winter 2019”

“Employee Utilization plane for Master Tiles”

Supervised By:
Corporate Supervisor: “Sameer Amjad”

Academic Supervisor: “Suleman Anwar”

Submitted By:

Zainab Mustafa 181950003

Nimrah Butt 181950004

Usama 181950005

Arousa 181950010

GIFT BUSINESS SCHOOL

GIFT UNIVERSITY, GUJRANWALA
FINAL PROJECT
 Project Submission Approval Sheet

Title of Project: Employee Utilization Plan for Master Tiles

Name of Students:

Zainab Mustafa 181950003

Nimrah Butt 181950004
Usama 181950005
Arousa 181950010

Program and Semester: MBA, winter 2019

Approved by:

Academic Supervisor: “Name” SULEMAN ANWAR

Examiner: “Name”

Examiner: “Name”

Examiner: “Name”

Project Director: “Name” SAMEER AMJAD

GIFT BUSINESS SCHOOL

GIFT UNIVERSITY GUJRANWALA
 Certificate of Project Submission

It is certified that MBA final project titled employee utilization in Master tiles has been prepared
by students, Usama 181950005, Nimrah 181950004, Zainab Mustafa 181950003, Arousa
181950010.

Project Academic Supervisor:

SIR SULEMAN ANWAR

Project Director

SAMEER AMJAD
 Declaration

We Usama 181950005, Nimrah 181950004, Zainab Mustafa 181950003, Arousa 181950010

hereby declare that the project titled “project title” has been submitted by us in the fulfillment of
the requirements for the degree of MBA. This project is carried at GIFT University, Gujranwala
Campus. We consciously declare that this project does not necessarily represent the position of
GIFT University. We consciously declare that this project is solely our effort and original. If it is
found to be a plagiarized work as a whole at any stage, even after the award of a degree, the work
will be cancelled and the degree will be revoked. We also declare that confidentiality of the
project contents including documents, data, which we have obtained to prepare and complete this
project concerning to the client will be ensured.

Zainab Mustafa 181950003

Nimrah Butt 181950004
Usama 181950005
Arousa 181950010

Date: 3-11-2019
 Terms of Reference
Project Title:
Employee Utilization Plan for Master Tiles

The Mandate:
Design a plan for optimum utilization of employees of Master Tiles by literature review and
comparative analysis of other industries. The comparison would range from the local company to
the Multinational companies.

Designing Plan for Optimal use of Work Force in Marketing Department of

Master Tiles

Project Outcomes plan for client will be designed on the basis of

Following are the Deliverables of this project

Job Evaluation

Job Analysis

Identification of fact ors leading to better optimization of employees

Ranking of factors on basis of their impact

Usage of Five steps to optimizing Human Capital Model to analyze performance

Organizational Structured

Organogram

Span of control

Chain of Command

Formalization

Centralization/Decentralization
Analysis of marketing department

Number of employees working in marketing section

Structure of employees in marketing section

Performance measures and working hours

Range of working hours

Duties and responsibilities

Current optimization plan being used

Optimization plan

Market Survey

Survey of compatible organization using optimization plan for their employees

Examining the tools and techniques

Observe the current using practices in market

Collection of useful data

Converting of data into useful information

Interpretation and application of data being used

Compensation & Optimization plan Document

Deliverables

Weekly progress reports

Optimization plan including assessment and recommendations, in a formalized written report

PowerPoint slides

Formal presentations

Complete secondary data and survey results

Project working plan

Work on project will be designed immediately after the approval of client. Project will be
completed in many phases and every phase will be allocated a specific time frame designed
according to the job requirement. Weekly progress reports would be shared with the client.

Phase 1 Job Evaluation

Review of current information about company

Job Analysis regarding factors and tools which can be used to enhance job optimization

Finding factors which can be of our usage to develop current scenario of job optimization

Factors would be identified and ranked on the basis of their impact on organization

Phase 2 Market Survey

Examining the ongoing market conditions

Examining g of tools currently being used to generate the best out of employees

Purpose of survey would be defined

Questionnaires and direct questions would be used as a tool for collecting information

Collected data would be assembled and analyzed

Phase 3 Plan development

Proper optimization plan will be designed in a suitable way for our client using

Current job Analysis

Survey results

Recommendations and suggestions

Phase 4 Plan Submission

Submission of our plan to our client in the form of

Hard copy

PowerPoint slides
 Time duration for project completion

We have three months for the completion of this project.

Project Plan Schedule:

Phase Week Week Week Week Week Week Week Week Week Week Week Week
1 2 3 4 5 6 7 8 9 10 11 12
Dec Dec Dec Dec Jan Jan Jan Jan Feb Feb Feb Feb

Job
Evaluation

Market
Survey

Plan
Development

Plan
Submission
Confidentiality:
The confidentiality of the project contents including documents, data, concerning to client and
which we have obtained to prepare and complete this project, will be ensured.

Corporate Supervisor: Academic Supervisor

Name: Sir Sameer amjad Name: Sir Suleman Anwar

Signature: Signature:

Name of Students:

Zainab Mustafa 181950003

Nimrah Butt 181950004
Usama 181950005
Arousa 181950010
Project Base on Employee Utilization Plan for
Master Tiles
Executive Summary
Chapter 1
INTRODUCTION
History of Master Tiles
The Company History:

For almost four decades now, Master remains the most trusted name in a diverse range of high-
end sanitary fitting solutions. The huge respect the brand commands, is derived from a constant
trail of pioneering innovation, highest quality standards, wide range of choices and above all,
real value for money.

Starting from production of faucets in early eighties, it was the instant acceptance and trust of the
customers that contributed to a never-ending growth and expansion that continues even today.

Today, we are not only the largest producers of our product categories in Pakistan but also the
one offering widest range of choices in highly cost effective and immensely creative products.

Constant change management and the inquiry to remain ahead of the competition, not only at
home but also among players all around the globe, results in application of the world’s most
advanced and innovative technologies. The moving force behind our research and development
is to create unique product lines; convenient, reliable and durable in their function and efficient
in their cost as well as performance.

As our effort towards making living more and more worth living continue, we are thankful to
Almighty Allah and take pride in effective role we have been able to play in positively changing
the lives and lifestyles of our people.

Master Group of Industries is the trendsetting leader in sanitary fittings, wall and floor
tiles and bathroom accessories. The constant quest for perfection at Master spreads over more
than three decades. These decades have witnessed unprecedented growth in terms if brand
equity, market leadership, product innovation, human resource development, training and
application of reliable management systems. The combination has really worked.
 Master today is not only the market leader in Pakistan but is also well positioned in the
quality and service standards of the world leaders in its categories of business.

It started in 1982 as a small setup with big thoughts, high ideals and honest commitment, Master

today, stands as an unparalleled leader in world class wall and floor tiles, sanitary fittings and

plastic garnishes along with a host of other high quality products. Master group of industries is in

business from 1982, now with more than 8 different industrial units.

1. Master Tiles & Ceramics

2. Master Granite

3. Master Sanitary

4. Master Poly Plastic

5. Master Baby(dippers)

6. Master Ballpoint

7. Master Poly Pack

8. Master PPRC pipes

1982

Launch as company developed and advertising high quality sanitary fittings, with clarity of

concepts, the target at that time was to provide a well-coordinated complete bathroom to our

clients.

1987

Established as the pioneer and market leader in world class sanitary fittings, Master introduced

the concept of matching bathroom accessories in technical collaboration of England and

Germany.

1995

At a time when the market was busy with import wall tiles as the only quality option, as they

called it, Master once again took the lead. Based on the world’s top of the line Italian technology,

Master launched its range of double fast fired wall tiles. Far superior in quality and artistic values

than imported ones, Master tiles took the market by storm and immediately gained a major share

of the market.

2000

Master tiles were such a tremendous hit in the market, to meet the growing demands, production

capacity had to be tripled in the year 2000. Same year, Master added up world’s best plant and

acquired best recipes for in house production of tiles raw materials including frits and colors.

These advanced recipes in frits and colors resulted in giving an entire new look to the product

appearance, quality and finish. Adding endless possibilities to the imagination of our valued
customers, Master introduced a range of decorative tiles including strips, trims, motives, panels

and mosaics. To facilitate the customers in better applications and maximizing their benefit,

Master provided its own brand of quality grout and adhesives.

2003

Master Granite storms the market. These tiles are produced using Italian technologies that are yet
to be practiced in Italy and the finest raw material found in Pakistan.

2005

Master Granite Tiles:

Bring a true revolution in the tile industry, this was the year when Master proudly introduced

Ball points and Granite tiles which were by their quality standards, second to none in the world.

The years that followed witnessed an innovative approach setting new benchmarks in product

quality, range spread, accessibility through a wider network and a bundle of value added services

like customer alertness and direction campaign unmatched after sales service and complaint

handling.

2010

Customer Focus:

After 10 years, Customer direction remains the key word in all our plans and execution.

Reaching at the doorstep of our clients, wherever they are, we are making sure we are closer to

their needs, aspiration, and affordability and after sales hope.

2011

Master Poly Plastic Industries (Pvt) Ltd is established, involved in commercial production of
world class PPRC pipes and fittings, the first of its kind in Pakistan.

2012

Master Sanitary installs CNC Spindle Machines which increase production and improve quality.

2013

Traditional Manual Mould casting process is replaced by state-of-the art Automatic Mould
casting CNC machines which confirm 99 per cent production success.

2014

In-house Plastic Chrome unit increases quality and precision. High-quality Chrome Chemicals
imported from Germany.

2015

New Press Shop is created and Laser Printing introduced.

2016

It’s a year of revolution as latest Lathe Machines are introduced from China which will increase
accuracy and perfection of Master Faucet.
New Master Sanitary Plant with latest and advanced technology is under construction with
following advancements:
a) 50 per cent increase in production and quality
b) Automated units and processes

2018

Master Beverages

Master Beverages & Foods limited focuses on providing quality products to their consumers
made at a state-of-the-art facility, using cutting edge technology while maintaining high levels of
hygiene. Their new portfolio of beverages will be available in PET bottles of 500ml, 1000ml and
1500ml at present and further expansions in packages will also happen in due course of time.

Nature of the Organization:

Master industry is continuous to make innovative and glorious products for the people

over three and half decades. They are involved in technologically advanced products with a view

to provide an ease and betterment of the society. Their endeavors have resulted in bringing

greater heights of luxury in every body’s range with affordable prices. According to a research

launched by them in 2002, a large gap was in the demand and supply of quality flooring and

facing materials in Pakistan. With the increase in economic development in the country, the gap

was widening further day by day. They took it as a challenge and were all out to face it with

commitment to make investments in terms of material and human resources and filled the gap

with not only the quality but also with the affordability.
Our MISSION

Adapting to rapidly developing technologies and meaningful investment in human resource

training, Master will strive to maintain an edge through provision of unmatched products and
services to its customers at a competitive price.

Our VISION

Master’s vision is to lead the market with innovations in product development to improve the
quality of life and lifestyle of its customers, while ensuring quality production and meaningful
after sales support.
Products:

There are following few products which are being manufactured by the Master Tiles.

1. Wall Tiles

2. Floor Tiles

These products are available in different sizes.

 Glazed wall tiles

 Glazed floor tiles

 Granite floor tiles

 Homogenized Porcelain tiles

 Other products

o Strips

o Trims

o Motives

o Mosaics

Management structure:

Management structure of Master industry’s head office:

Chief Executive officer (CEO)

 Sheikh Mahmood Iqbal

Directors:

 Sheikh Muhammad Akbar

 Sheikh Muhammad Asghar

Company secretary:

 Sheikh Muhammad Asghar

Personal Secretary Administration:

 Muhammad Sarwar

General Manager PPRC-Marketing

 Siraj Rafi Junaidi

General Manager Sales Sanitary

 Fawad Asaghar

Deputy General Manager Production

 Abdul Razzaq

General Manager HR & Admin:

 Mr. Sameer Amjad

Departmental functions of the organization:

The departments of the Master Tiles are working at two different locations, one at the

main head office of the Master group of industries and one at the main factory site of Master

Tiles. The main head office is located at GT Road main city area Gujranwala, while the factory

is located at Main GT Road near Moore Eminabad Gujranwala.

1) Departments at factory site:

1. Production department

2. Designing department

3. Dispatching department

4. Architecture department

5. Display center

2) Departments at head office:

1. HR and admin department

2. Finance department

3. Sales and Marketing department

4. Customer services department

5. Legal department

6. IT department

7. Media and advertisement department

8. Tax department
 Departmental functions:

The functions of each department are different. Master Tiles has employed the best

people for these jobs. Their success is due to the good functioning of these departments. The

following are the functions of the departments working in Master Tiles.

1. Production department:

The production department is responsible for converting inputs into outputs through the

stages of production processes. The Production Manager is responsible for making sure that raw

materials are provided and made into finished goods effectively. The manager production makes

sure that work is carried out smoothly; supervise procedures for making work more efficient and

more enjoyable. At Master Tiles the raw material is purchased by the production department, the

raw materials used in the manufacturing of tiles are different types of clays. Some of the clays

are named as KD9 clay, ceramic clay, granite stones, phosphorus, feldspar and other additives.

The production department in Master tiles is headed by Italian; the General Manager of

production department is Andrew D Rosa. He has been employed in the Mater Tiles from the last

14 years. The production plant of Master tiles is imported from Italy so they have hired

foreigners to operate that plant and for the repairing of the plant.

Sir Geo is the head of electric department in Master tiles, Sir Geo belong to Brazil. The local

production manager who supervises the production is Mr. Anwar Khan.

There are production sub-functions:

2) Production and planning:

The production department set the standards and targets at each stage of the production
process. The quantity and quality of products coming off a production line is closely monitored.

The raw materials which are to be used for the production of tiles are first sent to the lab, after

the lab test the raw materials are passed for the production. If the raw materials are not up to

marks then they are not used for the production.

3) Purchasing department:

This department will provide the materials, components and equipment required. An

essential part of this responsibility is to ensure that stocks arrive on time and are of good quality.

The raw materials used in the production are easily available in Pakistan. The raw materials are

being purchased from the areas of Kohat, Mianwalli and other northern areas of Pakistan. These

raw materials are mined from the northern areas and are easily available.

4) The stores department:

The stores department is responsible for stocking all the necessary tools, raw materials

and equipment required to service the manufacturing process. The raw materials are stocked in

the factory site in their ware house for raw materials. The store department checks the stock

available for the production and report to the purchasing department.

5) Designing department:

The designing department at Master Tiles is responsible for the designing of the tiles. The

new designs have to be introduced to the market so that the customers should be attracted

towards the new product.

The designing department checks the designs of the tiles which are being manufactured; they

monitor the computerized system through which the designing of the tiles is being controlled.

6) Dispatching department:
 The role of dispatching department in Master Tiles is to store the final product which is being

manufactured. The product after passing through the process is then sorted according to the

grades and then is stored in the ware houses. The product is then dispatched to the

customer/dealers and the inventory is controlled by the dispatching department.

7) Architecture department:

Architecture department is set at the factory site; this department role is to design the new

projects of the Master Group of Industries. This department designs the new factories, head

offices, display centers and other buildings of the company. They have hired 3 architects for this

purpose.

Master tile is also providing the facility of interior decoration to the customers, the interior

designer is provided to the customers to design or decorate their buildings with the different

styles of floorings and other furnishing items.

8) Display center:

Display center is also located at the factory site; all of the designs which the company is

currently manufacturing are placed in their display center. They have displayed their products in

different designs so that customer can choose the product according to their need and styles. The

dealers of Master Tiles visit their display center to check out the new designs and styles and

place an order for the product.

Mr. Waqas is heading the display center; he deals with the customers and dealers visiting the

display center. Price list is also given to the dealers and customer upon their visit to the display

center.
 Departments at head office:

1. Human Resource and Administration department:

The HR and administration department at Master Tiles is providing with various functions.

The HR department has sub departments which are working under this department and the

functions are being reported to the head of the HR department.

Payroll department

IR department

Administrative department

The main function of the HR department is as follows:

2. Manpower Planning:

It involves the planning for the future and finding out how many employees will be

needed in the future by the business and what types of skills manpower planning should they

possess.

It depends on the following factors:

 The number of people leaving the job

 The projected growth in sales of the business

 Technological changes

 Productivity level of the workers

3. Job analysis and Job description:

HR Department is also involved in designing the Job analysis and Job description for the
prospective vacancies.

A job analysis is the process used to collect information about the duties, responsibilities,

necessary skills, outcomes, and work environment of a particular job.

Job descriptions are written statements that describe the: duties, responsibilities, most

important contributions and outcomes needed from a position, required qualifications of

candidates, and reporting relationship and co-workers of a particular job.

4. Determining wages and salaries:

HR Department is also involved in conducting market surveys and determining the wages

and salaries for different position in an organization. These decisions are taken in consultation

with top management and the Finance department.

5. Recruitment and Selection:

One of the most important job HR departments is to recruit the best people for the

organization. This is of crucial importance as the success of any organization depends on the

quality of its workforce. Recruitment takes place in a systematic process, although they also hire

the employees on reference base.

The recruitment is done through a proper channel

6. Performance Appraisal:

Once the employees are recruited, the HR department has to review their performance on

a regular basis through proper performance appraisals.

The focus of the performance appraisal is measuring and improving the actual
performance of the employee and also the future potential of the employee.

On the basis of performance appraisal the HR department set up an action plan for each

employee.

7. Labor management relations:

For the smooth operation of organization, it is crucial to have good labor management

relations. HR department ensures that these labor unrest relations are cordial. In case of any

labor-management conflict the HR department plays a vital role in bringing both management

parties to the negotiation table and resolving the issue.

8. Implementing organizational policies:

HR department has to coordinate with line manager and see that the organizational

policies are being implemented in a proper manner. Disciplinary action can be initiated against

employees who are not following organizational rules and regulations. All these actions are

conceived and implemented by the HR department.

9. Dismissal and redundancy:

HR Department has to take firm actions against employees who are not following the

organizational code of conduct, rules and regulations. This can result in the dismissal of the

employee.

Sometimes, an organization may no more require the services of an employee. The

employee may be made redundant. HR Department has to see that organizational and

government regulations are being followed in this process.

 10. Sub departments to HR:

Payroll department:

The payroll department in Master tiles is working under the HR and Administration

department. Function of this department is to calculate the attendance of the employees. Daily

attendance is being saved in this department and at the end of the month the attendance sheet is

evaluated and then sends to the finance department. The salary sheet is again send to the payroll

department, payroll department checks the salary sheets and approve the attendance sheet and is

sent to the finance department. After this process the salaries of the employees are calculated and

deposited to their bank accounts. Salaries of high official are deposited in the bank while laborers

are given cheques which they can withdraw from the concerned bank.

Administration department:

Administrative department at Master Tiles is being head by Muhammad Sarwar. The role

of this department is to complete the local recruitments, control the staff, managing the daily

purchasing of the goods being used in the head office, managing the food for the whole staff and

laborers. Drivers and waiters are also being controlled by this department; there duties are

assigned by the administration department.

The food is given free of cost to each and every employee of the organization.

IR department:

IR department at Master Tiles is concerned with the government local bodies; they are in

contact with the Gas department and GESCO (Gujranwala electric power Supply Company).

Any issues related to these departments are being resolved by the IR department. Dealings with
 environmental department, issues concerning labor laws and social securities are also being

resolved by the IR department.

13) Finance department:

The finance department at Master Tiles is being headed by Mr.Amir Bashir. The finance

department is dealing with different functions such as financing through banks, deals with LC

(letter of credit), preparing financial reports, approving the bills of company; deals with the tax

department, expense vouchers are being checked. Mr. M Yousaf deals with the letter of credit

opening.

Master Group of Industries is a big group it can not only work on its capital so it has to

finance loans from the bank. They are financing from different banks, they pledge their

properties for financing loans to run their industries.

The other major duty of finance department is to prepare the budget of the company, the

expenditure and income of the company is also being controlled by the finance department.

The finance department of Master Tiles also prepares the financial reports and manages

financial accounts of the company; the annual reports are presented by the department.

The taxation department is also being operated in accordance with the finance

department, the taxation department prepares the tax returns of the company and the documents

are then sent to the finance department, the finance department approves the tax documents and

the required amount is then submitted.

The finance department another main function is to check the expenditure bills of the

employees and the expenditure bills of their head offices and factories. The bills after being

reviewed are then pass and amount is then given to the required person.
Our Main Customers
Competitors of Master Tiles:

Master Tiles is the pioneer in the tile industry. They are producing the largest number of tile in
Pakistan, so they only have few local competitors and they are competing the international
competitors in this industry.

1) Local competitors:

 Shabbier Tiles

 Sonex tiles

 Other local manufactures

2) International competitors:

 R.A.K ceramics

 Chinese manufactures of tiles

 Spanish tile manufacturers

Chapter 2

Employee Utilization and Optimization

Definition

A utilization method that attempts to maximize the

efficiency of a company's employees. This can be
accomplished by a variety of methods, including
training an employee in multiple areas so that they can
switch from one role to another depending upon where
they are most needed at a given time. This way,
employees are not wasting time on less-profitable
tasks.

Workforce Optimization Definition

Workforce optimization (WFO) is a series of business strategies that focuses on improving
employee efficiency. Companies implement these strategies by monitoring a specific position’s
activity and then assigning the appropriate number of employees to meet the forecasted activity.
Industries that most commonly adopt workforce optimization practices include retail,
manufacturing, and financial services, although WFO originated in call centers.

Benefits of Workforce Optimization

Workforce optimization has several advantages; most notably, the benefits aren’t merely for the
employer, but also for its staff. WFO provides insights that enable employers to provide the
tools, training, and support employees need to achieve goals and exceed expectations. This, in
turn, boosts your company’s reputation. When your business becomes known as a company that
values and empowers its workforce – a “Great Place to Work,” for example – it’s easier to attract
top talent when it’s time to expand your team.
Other benefits include:

 Improved customer service

 Increased visibility
 Increased customer retention
 Reduced compliance risks
 Increased employee productivity and efficiency
 More cost-effective operations

Companies that employ workforce optimization best practices, strategies, and solutions find that
they reduce operating expenses, save time and money with automated processes, improve
communication, and gain actionable insights, and increase productivity and performance.

Importance of Employee Utilization

Tracking, monitoring and measuring utilization rates can help your company address a number
of different business challenges:
 High employee turnover rates (especially of top performers) and over- or under-
worked employees.
 Dissatisfied employees due to unrealistic estimates
of deliverables or project completion dates.
 The inability to manage customer expectations.
 Poor decision making, especially during economic
downturns.
 Help support decisions regarding pricing increases or
decreases and contribute to customer, segment and company-wide profitability analysis.

 Improve business planning, especially with regard to resource management.

 Boost revenue by increasing billable hours.

 Help employees see how their individual goals (like increasing their utilization rate) tie
directly into corporate goals (like increasing profitability).

 Help identify workflow inefficiencies and steps that can be taken to correct them.
It’s important to remember that improving your utilization rate is not about working more total
hours — it’s about working more hours that can be billed to your clients. Or in other words, it’s
about working smarter rather than longer. Also remember that striving for 100% employee
utilization probably isn’t realistic: There are always going to be tasks employees have to perform
that cannot be billed to your clients, including customer service duties and administrative tasks
such as billing, recordkeeping and HR functions. You can gauge your utilization rates both
corporately and at the individual employee level in order to measure different areas of your
company’s performance. At the corporate level, monitoring and measuring utilization rates will
tell you how efficient and productive your entire workforce or a particular department is. Using
this data, you can determine whether steps should be taken to improve overall productivity and
what these steps should be.

At the employee level, utilization rates will give you a good idea of the efficiency and
productivity of each of your team members. This way, you can easily identify employees who
may need some help or additional training to increase their productivity, as well as “star”
employees whom you can reward and incentivize to be even more productive and profitable. If
layoffs are ever required, tracking utilization rates will give you hard data you can use to
determine which employees are the least efficient, productive and profitable and thus probably
the ones who should be let go first.

IMPORTANT For Utilization

It’s important for service businesses to monitor the time employees spend working that can be
billed to clients a measurement that’s known as the employee utilization rate. The higher the
employee utilization rate, the more efficient a company is in generating billable hours and
increasing revenue and profitability. Therefore, it’s critical that service businesses track and
strive to improve this key performance indicator.
Chapter 3
Secondary Data on Employee Utilization and Optimization

Workforce optimization supports the business with key insights into how its workforce is
performing. In the closely related area of workforce management, the emphasis is on improving
operational efficiency and managing the workforce effectively while keeping overall costs at a
minimum. Workforce optimization, in addition, takes this one step further by using analytics to
tie workforce management to key business concepts such as growth, profit and the customer
experience. Workforce optimization is concerned with enabling businesses to take control of all
aspects of their staffing, and helps staff understand how they affect the business's performance,
with an emphasis on improving this incrementally over time.
Workforce optimization solutions tie together vertical workforce management systems and
provide bridges between three main stakeholders, namely, HR, Operations and IT. The approach
is business driven and involves automating entire processes, making key data more visible at
more levels in order to support better decision-making, ensuring compliance with a wide range
of relevant legislation, and solving business problems related to staff.
Workforce optimization is best viewed as the next logical step in the move to optimize the
performance of staff and to understand and manage the overarching impacts of staff on both
operational efficiency and the customer experience.
Importance
In many industries people are one of the main costs to the business. Yet, much less attention has
been focused on optimizing processes, costs and issues related to staff than has been focused on
other aspects of operations (such as inventory or supply chain). This area also has a much lower
level of deployment of technology and automation than many other parts of the business. In
highly competitive but people-intensive industries such as retail, workforce optimization is
therefore seen as the next battleground for commercial differentiation and advantage, as the
benefits from optimizing other main cost areas such as inventory are exhausted.
The role of mobility
Workforce optimization employs mobile (wireless) technologies more extensively than was the
case with workforce management. The aim of using mobile technology is to improve the
productivity and effectiveness of staff. Among other things, mobile technology delivers access to
key information wherever staff is located, m-learning opportunities, and improved
communication with staff.

Case Studies

Five Steps to Optimizing Human Capital

The right employee in the right position at the right time and location for the right cost

The War for Talent is not a looming crisis for which we must prepare; it is upon enterprises and
organizations of all sizes right now. The New Reality is that we are in the midst of talent
management challenges at all levels of management.
This reality requires organizations to use human capital information in a purposeful, precise and
proactive way to optimize the work force. At its most basic level, workforce optimization means
securing the right employee in the right position, at the right time and location for the right cost.
More specifically, it can mean minimizing outsourced or unproductive workers, maximizing
retention of critical workers through reorganization or downsizing, or minimizing time and costs
associated with vacant positions. Unfortunately, most organizations lack not only a consistent
and holistic view of the work force, but also the necessary analytics to perform workforce
optimization. Human capital management software can help managers optimize their work force
by providing relevant, holistic and predictive human capital information that drives strategic and
tactical decisions. A recent human capital study by IBM notes, “Companies that successfully
leverage human capital information provide key metrics that can improve workforce productivity
and performance; they also enable their HR personnel to translate human capital data into
executable strategy.

Optimization software takes the next step by helping to create workforce decision plans that
make the most of this information. With this insight, foresight and guidance, organizations can
better address workforce demands at every stage of the talent lifecycle while supporting critical
business decisions.
Reallocating personnel after an acquisition
Sixty-six percent of CEOs plan to use mergers and acquisitions as part of their global integration
strategies, according to IBM’s Global CEO Study. Naturally, organizations completing an
acquisition will often need to reallocate personnel among a network of existing and newly
acquired sites. Given the skills, location and mobility of this work force, how should these
resources be allocated most effectively? The answer is “it depends.” The best way to allocate
resources depends on the nature of the resources, the constraints at hand and the organization’s
mission.
In less than 3.5 seconds, the management team can calculate, simulate and
determine the optimal career path for approximately 100,000 employees.
Workforce distribution optimization case study: A leading energy company
In an effort to cut costs, this company set a goal of replacing only one worker out of every two
retiring. Reallocating existing employees would allow the company to save money and reduce
the number of external hires. With a growing number of retirees and high employee turnover
costing millions of Euros each year, the company wanted to find a way to utilize the internal
mobility of its employees. By combining workforce analytics, forecasting and optimization
software from SAS, the company was able to address complex workforce issues by:
 Analyzing the career path of individual employees.

 Modeling the probability of mobility between job positions and locations.

 Calculating associated costs and time involved.

 Building optimization models to synthesize this information into recommended

actions.

Given the objectives, data inputs, decision variables and constraints, managers have been able to
act on recommended actions from the optimization model. Putting the proposed plan in action
has delivered impressive results. Metrics show that employee turnover and cost per employee
have been dramatically reduced. Furthermore, in less than 3.5 seconds, the management team
can calculate, simulate and determine the optimal career path for approximately 100,000
employees – representing 3,000 employee segments and 3,000 possible career paths.

Management now focuses primarily on intelligence for its decision making, thanks to the SAS
solution’s ability to define what actions are needed to achieve goals based on a rational and well
supported hypothesis.
Applying optimization principles
Employees are not the only resource that can be optimized. Optimization principles apply
equally as well to any type of resource – for example, money and technology. We tend to use the
term “optimization” generically or broadly; but in simple terms, optimization involves designing
a system or process to perform as well as possible in some defined sense.
It’s the “defined sense” that makes things murky. What’s optimal for you with your goals and
values – could very well be suboptimal for the next organization.
Every performance management paradigm, every mission statement could point to a different
definition of success and therefore, to a different way to optimally allocate resources. How do
you optimize resources in poorly defined decision-making environments or in cases where
scenarios are well defined but ineffective? Effective resource optimization requires a certain
rigor, consistency and agreement on processes. Whether you are explicitly developing a
mathematical model or just trying to drive more effective and efficient resource usage across the
organization, all resource optimization models should be based on objectives, decision variables
and constraints that are relevant for your organization. Within this framework, you will select a
key performance metric that you want to optimize. The advantage of optimization is that it
delivers a solution that will work within your constraints and the decisions you can reasonably
make. The following five steps will guide you through this optimization framework and apply to
any resource optimization scenario whether you are optimizing your work force or any other
resources.
Optimally allocating resources in five steps
Step 1: Define the objective to reflect organizational mission and strategy.

The resource optimization model must reflect not only well-defined, often narrow departmental
or divisional objectives, but also the objectives that are most important to the organization as a
whole. For example, HR needs to be cognizant of the skills/talents needed to support long-term
organizational objectives. There also needs to be an understanding of how activities will support
these objectives, and how success or failure will be measured.
Workforce example: Optimize workforce productivity via distribution to reduce or eliminate
hiring need.
Step 2: Get buy-in and foster accountability.
It’s not enough for executives to agree on the goals, business rules, constraints and decisions that
will be made. Putting the best choice for each decision variable into action requires
accountability and commitment from implementers and executives.
Workforce example: Ensure managers are willing to relocate personnel to different sites or
departments in order to support overall organization wide goals.
Step 3: Define the conceptual resource optimization model.
To define the model (see Figure 2), you first need to determine what input data is available. It’s

best to use the cleanest, most accurate data that’s available. In addition, the data should have

historical depth and relevance. Next, identify variables that can actually be changed and

decisions that can/will realistically be made in your organization within the given time frame.

Workforce example: Gather historical data from employment data sources to account for

required skills, position, salary, experience and location. If possible, seek out ways to gather

qualitative, subjective data from surveys to help identify variables (e.g., willingness to relocate,

family and desired salary considerations). Identify decisions that can be made (e.g., how many

people at which salary/position can be allocated, for what cost, at which locations).

Step 4: Formulate the resource optimization model.

This step is the translation of your conceptual model into an analytic model with more rigor and

detail represented in mathematical terms. In this step you begin to formally code the key

elements of the optimization model – objectives, constraints and decision variables (see Figure

2). There is no single right way to use mathematical expressions to represent the elements of a

decision problem. Every formulation represents a compromise because no mathematical

representation can (or should) reflect every detail of a real-world scenario. Good modeling

balances realism and workability. Workforce example: See Figure 1–Sample Workforce

Distribution Optimization Model.

Step 5: Implement and update the analytical model.

Using analytical software such as SAS, build and implement the model.
Its output can provide recommendations for the best decision-variable values to support the

objective, given the constraints and available data. Test the optimization model for suitability.

Training and experience will help you to choose the best model. It’s important to understand how
well the model works in the real world and to incorporate the knowledge from previous versions

of the model into future ones. Analytical models must be validated and continually updated. Best

practices for resource optimization are tied to performance management by answering questions

such as: “Were recommended decisions put into action?” and “Were those decisions effective for

driving improved alignment with organizational goals?” If the results were not what you would

expect, revisit the model to determine whether the identified objectives, decisions, constraints,

resources and other elements reflect your current reality. Make changes and updates as needed,

according to the available data. Workforce example: Add relocation costs to an existing model to

better account for their influence on cost oriented decisions.

Committing to resource optimization and remaining focused

Changing conditions will warrant corresponding changes in your resource optimization models.
Periodically cycling through this five-step process will help your organization highlight areas to
improve as you update your models to generate insights that continue to be relevant and
valuable. A commitment to resource optimization will help ensure that your organization
remains focused and productive in an ever-changing competitive environment.
 2nd Case Study
Workforce Planning and Optimization

CASE STUDY

Workforce
WorkforcePlanning and
Planningand Optimization
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analytics.

BENCH OPTIMIZATION
Determining optimal bench size to minimize cost and maximize revenue
Bench
[Bench] noun
1. Sports: The seat on which the players of a team sit during a game while not playing.
2. Business: the competence and number of employees ready to fill vacant positions.

For many organizations, a bench of available employees serves as a valuable asset. A bench
provides the necessary flexibility to react quickly to new business opportunities. Having a
bench, for example, enables project-driven businesses such as construction companies and
consulting firms to quickly staff new projects; airlines to rapidly respond to disruptions in crew
schedules due to bad weather; military organizations to quickly deploy full combat units;
hospitals to respond better in emergency situations; schools to respond to unforeseen teacher
absences; etc.

The bench, however, comes at a cost, so the number and skills of employees on the bench (bench
strength or bench size) must be carefully evaluated in order to balance the cost of paying
employees while they are not generating revenue, with the opportunity cost of lost revenue from
having unfilled positions in the near term. The following case study describes a set of insights
and actionable recommendations that emerged from the analysis performed in a business unit of
a large professional services firm.

The business unit, made up of close to 10,000 employees, operates in many countries around the
globe, delivering technological solutions and services to large clients. During recent years, the
unit has experienced shrinking profit margins, partly from increasing levels of unfilled or
delayed staffing requirements in client projects. The head of Workforce Analytics was interested
in identifying solutions to this problem, among other workforce planning and optimization
issues. The firm enlisted the help of Opt Tek Systems, developers of OptForce, to assist its
internal staff.

Employee data, financial metrics and forecasts, and historic and future project pipeline data were
assembled from various sources. The data were analyzed and a workforce demand forecasting
model was developed for each role, by location, competency, skill level, and pay grade. In
addition, a model of the opportunity costs associated with unfilled demand was developed. The
models were tested with real data for validity, and then used for the ensuing analysis. The
following is a summary of the analysis and results for a strategically critical role in the
organization.

The workforce demand forecasting model uses business development data to create project
pipeline metrics; it also uses financial data to create revenue expectations for the future;
furthermore, the model uses an optimization-based multivariate predictive approach. The model
was able to predict – with accuracy above 97% – the demand for the role for one, two, and three
months into the future, an improvement of more than 30% over existing methods.

Insight #1
There exists a severe misalignment between the number and skills of employees on the bench
and the number and skills of employees necessary to fill open positions in upcoming client
projects. In fact, it was observed that, on average, the firm needed to keep two employees on the
bench to fill one open position each month. In addition, time to fill a position in this strategic
role was about 120 days.

Recommendation #1: Implementing OptForce demand forecasting

The improved demand forecasting model in OptForce showed that the firm would able to reduce
the misalignment between their current talent and their predicted staffing requirements. Aside
from a reduction of the bench size, this would also result in better communication to the talent
acquisition function about the number of employees and specific skills needed in the near term,
which in turn achieved an overall reduction in the average time to fill.
The improved accuracy of the short term demand forecasts helped the firm reduce the
misalignment between their talent acquisition pipeline and their staffing requirements. This, in
turn, permitted the firm to reduce its bench from 8.8% of total headcount to 6.6%, a savings of
about $1.1 million per month.

Insight #2

Opportunity costs related to unfilled positions in new client projects are cutting into this business

unit’s profits. Currently, the business is experiencing a level of 4 to 5 unfilled positions per

month in this strategic role – positions that could be bringing in as much as $400 per hour in

revenue. Furthermore, the business is carrying a relatively large number of employees on the

bench – about 9% of total headcount in this role.

Recommendation #2: Implementing OptForce cost optimization

The unfilled demand cost model takes into account the fact that there are increasing marginal
costs as the number of unfilled positions grows. This is supported by the argument that as the
number of unfilled positions grows so does the cost of each additional unfilled position, since
project completion times, the quality of the work delivered and, ultimately, client satisfaction
will all suffer. To model this, we use an exponential scaling parameter, although the model can
be easily modified to accommodate the nature of the cost for any other type of service. The cost
model can be viewed in Figure 1.
 Unfilled Demand Cost Model
𝑻𝑪𝒕 = 𝐶𝑈𝑡 × 𝑈𝐷𝑡 × 𝑊𝑡

Where 𝑾𝒕 = (𝑃)(𝑂𝐷𝑡 −1), and

TCt = total cost of unfilled positions in period t; Figure 1: Unfilled demand

CUt = Cost per unfilled position in period t;

costs

UDt = Number of unfilled positions in period t;

P = Scaling Parameter

For this business unit, we used a conservative value for P of 1.2, representing the nature of the
impact of unfilled positions on project cost. Figure 2 illustrates the cost implications of various
scaling parameter values if we assume a cost per unfilled position of $100. As the figure
shows, the higher the scaling parameter value the sharper will be the increase in marginal cost.

To
tal
Co Unfilled Demand Costs
st 9000
of 8000
Un7000
Scaling
fill 6000 Parameter
ed
De
5000 1.2
ma4000 1.5
nd 3000 2.0
($) 2000
1000

0
1 2 3 4 5

Unfilled Demand (# of positions)

Figure 2: Unfilled demand cost graph
A thorough grasp of the nature of optimized – in the true sense of the costs associated with
unfilled word – in order to minimize total demand allows the model to be cost. The goal is to
find the optimal bench size for a position while minimizing the total cost. This model is
formulated mathematically in Figure 3.

There is an obvious trade-off between bench cost and opportunity costs arising from unfilled
demand. A higher bench will result in a better service level, and vice versa.

The key is to find the bench size that will result in the optimal balance between bench costs and
unfilled demand costs. By performing the cost optimization analysis, OptForce was able to
recommend an optimal bench size that achieved minimum cost. The final recommendation was
to increase the bench size of 6.6%, as recommended in Insight #1 to 8.1% of total headcount
(still smaller than the original 8.8% before using OptForce), so that service levels could be
improved. This resulted in unfilled positions to be reduced from an average of 4.7 per month to
just 0.3 per month after implementing the model.

By implementing this model, the business was able to reduce the opportunity cost of unfilled
demand by $400K per month by better aligning the skills of employees on the bench with
predicted requirements of future client projects. Total savings from better demand forecasts and
optimized costs were estimated at $800K per month.

Future Work
As this project was carried out, we identified other areas of focus where future performance
could be improved. More customized demand forecasting and opportunity cost models can be
developed for other parts of the business, turnover costs can be added to the model, etc.

As this project evolves, more and more roles will be analyzed for potential savings, thus
maximizing the ROI of the initiative. It will also deliver a platform for HR to more deeply
engage its finance and operations partners, thereby enhancing strategic planning and business
performance.