Not every case is about markets and margins. This management consulting case study is a capacity puzzle: a firm with plenty of demand and no competitors simply needs to work out who should be doing what, and how many more people it takes.
Opening
A financial services company in the arbitrage business is facing a labour and staffing optimisation issue. The company has a profitable business model with no competition but is struggling with how best to allocate tasks among its staff. It currently has four senior analysts, three junior analysts and one admin. The activities involved in the business include an initial stage (20% of the work), a core stage (70% of the work) and a recommendation stage (10% of the work). The company wants to find out how many junior analysts need to be added to free up capacity among the senior analysts, so they can focus on selling additional work.
Background
The senior analysts are currently responsible for 60% of the initial stage, 20% of the core stage and 80% of the recommendations. The junior analysts are responsible for 30% of the initial stage, 70% of the core stage and 20% of the recommendations. The admin is responsible for 10% of the initial stage and 10% of the core stage but is not involved in any recommendations.
Analysis
To determine the amount of work being done by the junior analysts, we can calculate the percentages as follows:
- 30% of 20% (initial stage) = 6%
- 70% of 70% (core stage) = 49%
- 20% of 10% (recommendation stage) = 2%
Adding these together, the junior analysts are responsible for a total of 57% of the work. With only three junior analysts currently on staff, each analyst is responsible for 19% of the total work of the firm.
Recommended Conclusion
To bring the junior analysts to 100% capacity, the firm would need to add two more junior analysts. With five junior analysts on staff, the new constraint would be time management.
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