Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Health care management
Reexamination Certificate
1999-11-01
2004-05-04
Hafiz, Tariq R. (Department: 3623)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Health care management
C705S002000, C705S007380
Reexamination Certificate
active
06732079
ABSTRACT:
TECHNICAL FIELD
This invention pertains to the determination of suitable, low cost mixes of different employee types, such as mixes of regular employees and contract employees, to accomplish varying estimated quantities of work over a substantial forecast period.
BACKGROUND OF THE INVENTION
There is a trend in business organizations toward purchasing services from outside suppliers (contracting out) since at least 1980. For example, the W. E. Upjohn Institute for Employment Research found that 44% of employers in the United States use independent contract workers. Many employers predict even greater use of contract employees and other flexible staffing arrangements in the future.
Most employers hire contract workers to handle workload fluctuations and absences of regular staff. Some employers blend full-time and contract employees for greater cost control, improved productivity, and improved customer service. Employers also turn to contract labor for specialized skills possessed by the outside contractors. For example, janitorial, machine maintenance, engineering and drafting, accounting, and computer skills are frequently obtained using contract employees.
In manufacturing industries like the automobile industry, engineering design departments are often faced with the need to blend the regular employees of the company with employees supplied by outside contractors. Engineering design departments typically operate under strict headcount limits for regular employees and contract with an engineer supply firm for the remainder of a temporary workforce. A manufacturing company limits its salaried headcount, in part, because of the tremendous long-term expense that a regular workforce represents. Such a company usually offers a substantial compensation package for its regular employees so as to be competitive with other industrial companies. Thus, its employee retention levels exceed those of other companies. The high retention level results in very long average work lives for salaried employees. A large salaried workforce with long average work lives and high compensation translates into huge future costs for the company.
The second reason to use contract employees is to keep employees “off the books.” Information about the number of employees at a company is widely disseminated and frequently mentioned by stock analysts. To achieve desirable levels, senior management often establishes a corporate headcount target. The corporate headcount target is broken down into targets for every group, division, staff, and department. Each department head is provided a headcount target and a dollar budget. Few, if any, limits are established for contract employees in the corporate budgeting process.
On the other hand, there are many important reasons to limit the use of contracting. Contract employees generally cost more per year than regular employees do. Contract employees also typically have significantly higher attrition rates, which disrupts projects and increases recruiting and training costs.
To limit these negative effects, engineering management sets goals for the maximum percentage of the engineering workforce that should be made up of contract employees (leveraging percentage). These goals are based on the strategic importance of each area of engineering. In general, management believes that areas where a company is creating new knowledge and areas that require critical skills should not rely on contractors. For instance, functions with few critical skills, such as data conversion, are 80-100% staffed by contract employees. Leading edge areas of a corporation's business and competitive interests should use a minimum of contract workers.
In some cases, the headcount limits set by senior management to limit liability and keep employees “off the books” are in direct conflict with engineering management's desire to use regular employees for critical areas. This conflict leads managers to ask the following questions. What is the optimal mix of contract and regular employees? How much do headcount limits increase staffing costs?
Accordingly, it would be desirable for organizations mixing contract and regular employees to develop a decision support tool that determines the minimum-cost staffing plan. It is an object of this invention to provide such a decision support tool within a framework of linear programming.
SUMMARY OF THE INVENTION
This invention provides a procedure to be practiced on a suitably programmed computer for determining a low cost mix of available different types of employees, for example, regular employees and contract employees, in an operation to produce the workload requirements of the concern.
Large engineering and manufacturing concerns, for example, may require hundreds or thousands of employees to fulfill their workload requirements. And the workload requirements may vary significantly over a period of months or years. Such concerns usually use workers having different employment arrangements such as those described above. It is a significant problem to determine a suitable balance of the different types of workers to achieve the varying work output of the organization at a minimum cost of hiring, training, using and terminating employees under such differing working arrangements.
This invention identifies long term workload requirements of an organization in combination with certain characteristics of different worker types and capabilities. The invention organizes the requirements and characteristics in a computer database suitable for linear programming analysis to determine an optimal number of each worker type for each period of months or years within the forecast time. In accordance with the invention, a method is provided that accomplishes such an analysis.
The subject method starts with the preparation of a long-term work forecast of an organization in which there are substantial changes in workload from month to month or year to year. The estimated work requirements by forecast period are entered into the database of a computer using a suitable application program such as, e.g., Microsoft Excel® or the like.
Each suitable potential worker type available to perform the forecast work, such as full time regular employee, part time regular employee or contract employee is identified. Preferably this analysis is undertaken for a single specific job, such as engineering designer. Data is entered into the computer database identifying each such worker type. If there are differences in productivity between worker types, productivity values are entered into the database. Data concerning the costs of supporting each type of worker are entered into the database. Examples of relevant costs include the training costs, the wages or operating costs, and termination costs of each type.
In addition to cost data, the process of this invention uses certain demographic data in order to estimate attrition rates for the worker types to be employed. This analysis is applicable to sufficiently large worker populations where attrition rates can be used with confidence. Accordingly, the process includes entering into the computer database (when known and if appropriate) demographic data comprising worker age demographic groups, worker length of service demographic groups, and the number of workers of each worker type in each said demographic group currently employed by the organization. Using these demographic categories, an attrition rate, based on the employment experience of said organization, is entered into the database for each combination of worker type and demographic group.
After entry of the worker type, cost data and attrition data, a linear program analysis is used to determine the low cost population combination of each type of worker to accomplish the work output for each work period. The analysis will produce the number of workers of each type that must be maintained, hired, trained or terminated during each period. Finally, a summary is prepared for each month or year under analysis stating such numbers of workers and the respective costs.
L
Feit Eleanor M.
Kintner Hallie J.
Bachner Rebecca M.
General Motors Corporation
Hafiz Tariq R.
Marra Kathryn A.
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