Hello,
I was going through the case as a whole, noticed the part of the math where it calculated the 2000/250working days.
I am not so sure why and how am I supposed to divide the number of “Total Days Saved” by the number of working days? I still didn't get the “8” that we got out of that answer.
Thanks.
Hi there!
Happy to clarify as I'm the author of the case.
Feel free to comment on my answer if something is left unclear and I'll get back to it.
In that particular exercise, we are aiming to find out what is the net effect of the program i.e., if the client should go for it or not.
There is a cost element to the program, which is the amount that the company will need to pay out to its employees for the referrals.
And there is also a benefit for the referrals. The benefit consists of the productivity time saved by being able to hire for those currently vacant positions.
In the process of figuring out this latter point, we find out that this initiative will lead to 2000 working days saved, which if we translate in FTEs (that's why we divide by 250 days which is the average number of working days for an FTE once you take out the weekends). The resulting number is 8 FTEs.
Now, the amount it would've cost us to hire that FTE outside of referrals is 15K, which is why we then multiple 8 by 15k to figure out how much we saved as a consequence of the referral program. This is how we get to 120k.
Hope this clarifies your question.
Good luck with casing!
Cristian
Hi there,
Great question!
Just to follow-up with Cristian's answer, it's totally ok to clarify with the interviewer and make sure you're clear on why something is done a certain way.
Curiosity, done with high IQ/processing comes across well.
Number of working days saved: 2000
Number of days a person works: 5 * 50 = 250
Number of people “saved”: 2000 / 250 = 8 people
Expert case by
One thing that is still vague for me is the 2000 Working Days, those 2000 as a whole, is considered for the yearly basis right? so we're saving 2000 working days on the company's total working days (for all employees)? or in what sense so I can connect the dots..
Thanks!
Btw, if you find yourself in a position where this sort of stuff doesn't make sense in a case situation, trigger a discussion with the interviewer. The more the interview resembles a conversation, the better. Plus it shows that you're thinking through the problem and that you really care.
It depends on what you are trying to assess. In this case, we are assessing the performance of the referral program and thus comparing its effectiveness in terms of how much money it saves.