Q: How many nonprofit employees does it take to screw in a light bulb?
A: Probably just one, but we can never really tell how many people it takes to do anything around here.
Okay, it’s not the funniest light-bulb joke. But it makes a point: Mission-driven service organizations often find it nearly impossible to assess their human resource capacity. Which makes it hard to know how productive or efficient employees are, hampers managers’ ability to justify new expenses and exposes the organization to board members and others who assume staff can absorb new initiatives without doing less of something else.
The problem is that the output of a nonprofit is usually intangible and difficult to quantify. While having more staff (more capacity) most certainly leads to a greater ability to serve a mission — it’s more difficult to determine the minimum level of staffing needed to successfully serve the mission and remain sustainable.
Why capacity planning is so hard
Meaningful guidance on the problem can be hard to find. For one thing, human resource “capacity planning” tends to get confused with “capacity building” in the nonprofit world (the latter refers to the ability of an organization or community to build the infrastructure it needs to become self-sustaining).
Other sectors, such as software development or manufacturing, have less difficulty planning for capacity: It’s much easier to derive the incremental cost of producing a tangible object. But in the nonprofit world, capacity planning usually comes in the form of “enterprise resource planning,” a human resources concept that tends to focus on the individual staff member — hiring, retaining and motivating employees — rather than figuring out how much staff it actually takes to run an organization.
Peter F. Drucker, whose 1990 Managing the Non-Profit Organization is considered canonical, has only this to say on the matter: “An effective non-profit manager must try to get more out of the people he or she has,” Drucker wrote. “The yield from the human resource really determines the organization’s performance. And that’s decided by the basic people decisions: whom we hire and whom we fire; where we place people, and whom we promote. The quality of these human decisions largely determines whether the organization is being run seriously, whether its mission, its values, and its objectives are real and meaningful to people rather than just public relations and rhetoric.”
Drucker’s right in the sense that an organization must first clear lower hurdles on the HR maturity scale before undertaking data-driven capacity planning, such as having clear job descriptions with regular performance appraisals, hiring people who are willing to pitch in wherever they’re needed, and having a clear strategic plan with measurable goals for each department within the organization (we’ve written about much of this in previous posts).
But his advice is more haranguing than helpful to a nonprofit leader whose board is already pressing her to do more with fewer resources.
Start with a baseline
Fortunately, in today’s data-driven age, nonprofit managers have new abilities to measure, at least somewhat accurately, how many people it takes to perform all of the necessary activities in their organization.
The first step in capacity planning, and the hardest for most nonprofits, is to determine the current state of your human resource capacity. This requires gathering and actively managing data about your employees’ roles and responsibilities. I recommend choosing a recent point of time as a baseline (say, end of year 2017) and declaring it a moment of peak performance, efficiency and staffing for your organization. (Of course, it probably wasn’t, but you will challenge that assumption later.)
Using that baseline staffing and program level, survey all your employees to determine what percentage of their typical workweek is devoted to 1) performing services that help the enterprise as a whole (shared services, such as finance, marketing, accounting, etc.), 2) work dedicated to a specific program (have them identify the programs, of course), and 3) new or other initiatives that are neither shared nor part of an existing program
If you can get that pie chart from each employee, you’ll have enough baseline data to begin roughly figuring out how many people are currently being used for each type of work.
That brings you to your second step, resource capacity planning: determining how many people are actually required, for how long, to carry out a piece of work.
Your baseline exercise likely will reveal areas that appear over- or under-resourced. It will also reveal how well your staff’s duties are aligned with your organization’s strategic goals, as well as your business needs (return on investment) and user needs (return on mission). Validate your assumptions with some business analysis, staff interviews and guidance from a trusted board member and stakeholder or two. Fairly soon you will be able to more confidently determine where efficiencies can be gained in your current operations, as well as what you might need to trade off to pursue new, more strategically important initiatives. This will allow you to reassign tasks, usher out the low performers and give you the “extra” capacity you need to take on new initiatives without adding budget.
Capacity planning is worth the effort. It will give your strategic goals strength and meaning — and make you an expert on the cost of meeting each objective.
It also will help to explain capacity restraints to overly ambitious but miserly directors and officers. So the next time a board member wonders aloud “what do these people do every day?,” while loading up staff with new un-budgeted initiatives, you’ll be armed with the data you need to provide a straight answer.