AMBO UNIVERSITY WOLISO CAMPUS

COLLEGE OF BUSINESS & ECONOMICS

Article Review
On
Prescriptive Analytics for Human Resource Planning in the

Professional Services Industry

School of Postgraduate Studies Department of Management

Course Title: Human Resource Management
Course Code: MGMT6020

Submitted (Reviewed by) By

Addisu Amdisa ID 028/15

Submitted To
Getachew M. (PhD)

Submission date :
One week before final exam

Jan, 2023

Woliso, Ethiopia
 Table of Contents
Contents Pages

I
Introduction
Human resource planning is critical to maximizing profits and servicing client needs.
In addition to the uncertainty inherent to the human resources planning problem, there
is a dynamic aspect: hiring decisions must be made with appropriate lead time, while
contractors can be brought in at short notice.
To model this sequence of decisions, we use affinely-adaptive robust optimization,
which is a tractable extension of robust optimization for dynamic settings (Ben-Tal et
al, 2004; Bertsimas et al, 2010; Bertsimas and Goyal, 2012).

Human Resources Planning with Known Needs

Consider a human resources planner who receives from each client a request for
resources from particular geographies and skills.
The deterministic human resources planning problem can be stated as max x s.t. The
objective (1a) represents the profits gained from the hiring and staffing decisions.
Constraint (1b) enforces that no client is assigned more workers of geography g and
skill s than were requested.
Iterating through the requests in order of highest to lowest bill rate, first see if
someone of the appropriate geography and skill is available on the bench.
If nobody is available on the bench, and if a new hire would be profitable, make a
new hire in the appropriate geography for the relevant skill.
This procedure is presented more formally in Algorithm 1.
Robust Human Resources Planning
Robust optimization problems of the form (2) are suitable for static settings, where all
decisions must be made before the uncertainty is realized.
Returning to the human resources planning problem, we assume that the requests d
are forecasts of demand for workers, which will be realized at a later period.
Where σ =i∈I represents the noise around the estimates d, and we set p = 1
The interpretation of this uncertainty set is that the realized needs are able to vary
around their forecasts within a standard deviation, but the aggregate deviation is
controlled so that all do not simultaneously hit their worst-case deviations.
If we restrict the second-stage variables so that they do not vary with demand, setting
y(u) = y, z(u) = z, and w(u) = w, we recover the pure robust formulation of the human
resources planning problem.

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Case Study
Sapient Corporation is a large marketing and technology consulting firm with over
$1.4 billion in revenue and 13,000 employees across offices in North America,
Europe, and Asia.
For the transfer costs t, we modeled each cost ti,j as the sum of a travel cost plus a
training cost, to account for the different geographies and skills that could be required
in each request.
The travel cost was modeled as the cost of flying a worker from their home geography
in request i to that of j once a month over the course of the quarter, this could be
adjusted depending on how much workers are expected to travel at particular
companies.
We separated the client requests into three different business units by location: North
America (NAm), Europe (EU), and India.
Each of these business units could be expected to operate without transfers between
them, and so we solved the optimization problems for each business unit separately.
The deterministic method hires the number of employees needed to exactly fulfill the
forecasted needs.

40 Deterministic Robust Adaptive

Prise approximately 60%1 of the forecasted needs, and the remaining 40% is made up
of bench assignments.
In addition to reflecting greater stability in firm operations, we expect that the lower
volatility in the robust profits would be useful for financial departments that need to
make profit forecasts based on future client contracts
Another benefit of the robust method is that its conservatism generally mitigates the
impact of the worst case, as shown by the minimum and CVaR of the profits.
The adaptive method shows lower standard deviation and improves worst-case profits
as compared to the deterministic method, but it does so without as much of a cost to
the expected profit.

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This can be seen qualitatively, where the profit distributions are generally shifted
higher from the robust to the adaptive methods.
Notably, the mean profit increases from $12.66 million and $12.76 million under the
deterministic and robust methods to $14.05 million under the adaptive method

Findings Data and Methodology

The researcher assumed that contractors are more expensive than new hires. The
adaptive method is less conservative than the robust method, but is still more
conservative than the deterministic method, with hiring in the first stage comprising
20 − 40% of the forecasted needs.

Method Deterministic Robust

The researcher believed that this is due to two primary differences between India and
the other two business units.
Author, recommend the number of new hires to make and partially fulfill project
staffing needs in the first stage, and bring on contractors and complete the project
assignments in the second stage.
The formulations are general, and we believe these improvements due to robust and
adaptive optimization could be attainable by other firms in industries where staffing
needs are volatile and depend critically on an uncertain sales pipeline.

The Indian business unit does not show as marked of a difference between the
deterministic, robust, and adaptive method performances. We believe that this is due
to two primary differences between India and the other two business units.

comparatively low cost to making second-stage decisions means that there are less
savings involved in modeling those decisions, reducing the value of the robust and
adaptive formulations.

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Synopsis
Human resource planning decisions made at firms that sell contract-based
consulting projects, and how they can be improved to increase profit.
Berk and colleagues (2018) described prescriptive analytics for human resource
planning in the professional services industry. Human resources planning is critical to
maximizing profits and servicing client needs. Hiring decisions must be made with
appropriate lead time, while contractors can be brought in at short notice. To model
this sequence of decisions, they use affinely-adaptive robust optimization. In addition
to the uncertainty inherent to the human resources planning problem, there is a
dynamic aspect: hiring decisions must be made with appropriate lead time, while
contractors can be brought in at short notice.

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