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