Organizational capacity is the capability of the people in your business to get stuff done. In this episode of The Lazy CEO Podcast, Jim, Schleckser, host and CEO of The CEO Project, talk about Organizational Capacity.
Basically, if you have a pile of work, size of X, you have X capability to get that work done. The raw capacity to execute and the capability to execute are really two things. We will get into each of these in a little bit. One is just how many people you have in the company. More people means more work, mostly, although not always. The second is the capability of the people in your organization to take on work, their ability to do stuff for you and not get their heads all stressed out and crazy. So the capability to people is really important as well. So first, let's talk about is just as you're growing your business, people do go through a cycle of growth emotions.
There are two researchers by the name of Kelly and Connor that came up with what's called this emotional cycle of change model. When you begin a change and, and growth is change, as you are growing your business, things are changing. How much work I have to do, the scope of my job, my title, and the way we do things are changing all the time. So the first stage that Kelly and Connor thought people went through, is uninformed optimism.
Over time, as we begin to make the change, we begin to go down into the valley of despair. And the first stage of the valley of despair is uninformed, or informed pessimism. In other words, I've now begun to see this and it's ugly and it's messy and it's confusing and it's stressful and this is not working. That's informed pessimism because I've now gathered enough data to know it's not going to work. They can possibly check out mentally. They're no longer engaged, they're no longer participating, and they're no longer giving their best effort. And checking out privately then can lead to checking out publicly. And this is where your turnover happens. In other words, during informed pessimism is when people check out your organization, that's when your turnover happens. So you have to be really attentive to this and be giving people signals that things are going to work out. Then they move to what they call hopeful realism. We thought it was going to be perfect before when we were in uninformed optimism. We are now hopeful, hopeful realism, it's going to be okay. It's better than it was, it's not perfect, but that's okay. And then stage four informed optimism.
It turned out it's as about as good as we thought it was going to be awesome. And then completion. So that cycle, everybody goes through and, a related rule called Cantor's Law, another researcher that says everything can look like a failure in the middle. As you're going through change, realize that in the middle, no matter how successful it is in the future, it looks like a failure in the middle.
Country Club vs Stress City
Two triangles basically stacked on top of each other. When you have more organizational capacity to execute than you do work, I call that country club. We're kind of chill, we're hanging out, and we have stuff to do, but plenty of time to have coffee and talk about the football pool. Now, to the other side, which is we've got more work to do than we do have the organizational capacity to execute. That's stress city. And as leaders, we're always wiggling around that middle line. Sometimes we're in country clubs, sometimes we're in stress city. And actually, I have to say most organizations are always in stress city. The only question is how close do they get to the line?
Do we have the right amount of capacity, people, and talent versus the amount of work we've got. And the signals you'll hear are stress and work-life balance. Now you have to be careful who you're listening to because of that standard distribution. There will people be people that always chirp on that issue. Doesn't matter how much work there is, there will be others that never say a word.
Buy, Build, or Borrow
Let's say you've diagnosed your organization. We've got more work than we can handle. And you'll probably know when this exists. You have a couple of options. Buy or build or borrow. Those are your options. Borrow, I'll just talk about it quickly. That's finding a third-party staffing company that can help you or a partner that can help you. But fundamentally we've got to build or buy. I'm going to hire somebody in the organization to increase my organizational capacity. When you do this, you want to tick two boxes. One is particularly when you're growing, one is you need the person in the job, right as defined. So that's an increased organization, organizational capacity just because there's a human in position. But more than that, you need to hire ahead of your curve.
If you're a growing organization, you're 20 million or 40 million or a hundred million or 200 million and you're underway to double that number. If I hire somebody that is just competent to do the job, no more just able to do the job, but fully competent as I double, they are going to go to incompetency potentially unless they develop, which I'll talk about in a minute. And so ideally you hire somebody who's over your current capability, over your current size. If you're 40, they've done it at a hundred. If you're a hundred, they've done it at 200. They already know what it looks like where you are going.
For more about organizational capacity, listen to the full episode of The Lazy CEO Podcast.
Resources mentioned in this episode:
- Jim Schleckser on LinkedIn
- The CEO Project
- Great Ceos Are Lazy: How Exceptional Ceos Do More in Less Time by Jim Schleckser
Sponsor for this episode…
This episode is brought to you by The CEO Project. The CEO Project is a business advisory group that brings high-caliber, accomplished CEOs together. Our team of skilled advisors is comprised of current and former CEOs who have run both public and private sector companies across multiple industries. With our experience and expertise, we guide hundreds of high-performing CEOs through a disciplined approach that resolves constraints and improves critical decisions. The CEO Project has helped high-performing, large enterprise CEOs with annual revenues ranging from $20M to over $2 billion to drive growth and achieve optimal outcomes. If you are an experienced CEO looking to grow your company, visit www.theCEOProject.com.