How to Show You’re Working at Capacity

Is there anyone who could help me build a business case that we are working at capacity?

That question came in August 17. I sent it along to Richard Newsom for an answer. Richard is leading a discussion about “Managing Req Loads” at the Fall conference in Florida. He also wrote a killer article for the Journal of Corporate Recruiting Leadership a year ago (short version here).

Here’s the question about working at capacity (cut down a little), and Richard’s answer.

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I have subscribed to ERE for years now and have enjoyed your articles immensely. This is the first time I am reaching out to anyone and am looking for some guidance.

I manage our company’s recruiting organization. We are a 4 billion dollar company, publicly traded, and employ 4,000+ employees. I have a team of seven full-time recruiters and just recently brought on two contract recruiters. Here is my challenge.

I am being asked to show that my team is at capacity, and what it would take to complete the recruiting team to address the business needs (requisitions). When I joined the company two years ago, we had 15 recruiters. In the last two years we have had three reductions in force, hiring freezes, etc. It made sense for the company to decide that we could downsize the recruiting organization. Since December 2009, our requisition load has been a consistent 100+.

Last year with seven recruiters, we filled 774 requisitions. This included moving internal resources to fill the requirements and then backfilling them and also converting temporary employees to full-time. If I remove the latter two, then we are down to 700 external hires. This indicates an average of 100 hires per year per recruiter. Two-thirds of our hires are technical, billable, client-facing, and implementers. Some require Microsoft certifications or Cisco certifications. The last third of our hires are a combination of telesales, finance, and marketing roles.

Is there anyone who could help me build a business case that we are working at capacity?

I appreciate your assistance.

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Hi Linda. Great question, and one that is getting more and more attention now. It sounds as if your recruiting team has been very busy. Nearly 800 hires for a team of seven recruiters appears to be a productive group. As you mentioned, the workload your recruiters are dealing with greatly depends upon the types of roles being filled (e.g. senior technical role vs. telesales agent). It also depends upon the recruiting process at your organization, the legal and compliance aspects your company follows, the current marketplace, and dozens of other factors. As you’ve recognized, simply having a “feeling” that your team is overloaded is no longer good enough. We must be able to accurately justify their capacity and current workload.

There are many different ways to approach this, and not every solution works for every company. I’d like to discuss one particular approach. It is not a new concept, as it has been used in manufacturing industries for years. However, it hasn’t been used as much in the services industry or in recruiting. David Szary has been pushing this concept hard for while now and it has a lot of merit. The concept of Materials Release Planning is an approach that could help you in this situation.

Materials Release Planning (or just-in-time hiring) considers the required process inputs to determine the size of the workforce needed. Using your example of 774 hires (and making some broad assumptions that you’ll need to validate)…

Assumptions:

We need to hire 774 people in 2011
90% of the offers extended result in a hire
25% of the interviews conducted result in an offer
80% of the candidates submitted to a hiring manager get interviewed
It takes 1.5 hours to source a candidate worthy of submitting to a hiring manager
Each recruiter has 2.5 hours per day dedicated to sourcing candidates for submission
There are seven recruiters dedicated to recruiting throughout 2011 — thus seven recruiters X 2.5 hours per day for sourcing = 17.5 sourcing hours per day total

Calculations:

774 hires needed/90% acceptance rate = 860 offers need to be extended
860 offers/25% offer rate = 3,440 candidates need to be interviewed
3,440 interviews/80% interview rate = 4,300 candidates who need to be submitted to hiring managers
4,300 submissions X 1.5 hours per candidate = 6,450 sourcing hours needed
6,450 sourcing hours needed/17.5 hours per day = 369 business days to source all candidates (516 calendar days)

Using these assumptions, it would take your team of seven recruiters nearly a year and a half to fill all 774 positions. Keep in mind that this model assumes that all hires are spread evenly throughout the year. Any cyclicality of the hiring would increase the resources you need.

Obviously you’ll have to verify the data in these assumptions to create your own bottom-line results; however, using these assumptions, you would be understaffed by nearly 50%. While your team of seven was able to handle this volume in the past, if understaffed, they did it at the expense of other things (employee engagement, quality or work, risk and compliance, etc.)

One final thought to consider: the simplistic example above treats all positions equally. Thus, it takes the same amount of time to source a Cisco-certified person as it does to source a telesales agent. To account for this you can simply segment your hires into whatever logical buckets you have (sales vs. non-sales, technical vs. non technical, etc.) and run the model separately on each of those segments, using different assumptions for each segment.

I wish you the best of luck in your journey.

Sincerely,

Richard Newsom

Vice President of Recruiting Operations

Fifth Third Bank