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Opening:
A financial services company in the arbitrage business is facing a labour and staffing optimization issue. The company has a profitable business model with no competition but is struggling with how to best allocate the tasks among its staff. The company currently has 4 senior analysts, 3 junior analysts, and 1 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 is looking 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 percentages together, we can see that the junior analysts are responsible for a total of 57% of the work. With only 3 junior analysts currently on staff, this means that each analyst is responsible for 19% of the total work for the firm.
Recommended Conclusion:
To bring the junior analysts to 100% capacity, we would need to add 2 more junior analysts. With 5 junior analysts on staff, the new constraint would be time management.
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Frequently asked questions
What is the staffing challenge faced by the arbitrage firm?
The firm has a solid business model but lacks staffing optimization. Senior analysts are spending too much time on tasks junior staff could handle, limiting their availability to focus on higher-value, client-facing activities like selling new work.
How is work currently divided among the staff?
Senior analysts do 60% of the initial stage, 20% of the core, and 80% of recommendations. Junior analysts handle 30%, 70%, and 20%, respectively. The admin supports 10% of initial and core stages but doesn’t contribute to recommendations.
How much work are the junior analysts currently handling?
Junior analysts handle a total of 57% of the firm's work: 6% in the initial stage, 49% in the core, and 2% in recommendations. Divided among 3 juniors, each is at 19% workload, nearing full capacity.
How many junior analysts should the firm hire?
To optimize staffing and free up senior analysts, the firm should hire 2 additional junior analysts. With 5 total juniors, each would carry 11.4% of the firm’s total work, allowing better role distribution and capacity unlocking.
What is the benefit of reallocating work to junior analysts?
Reallocation allows senior analysts to focus on high-value tasks like business development and client strategy. This boosts the firm’s growth potential while maintaining efficiency and maximizing team utilization.
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