Capacity planning is the process of assessing upcoming projects in the short and medium term and identifying the physical resources and skills you need to complete them. But what happens when you identify something you don’t have?
Capacity building is the process of developing these missing skills and obtaining the necessary physical resources. This can be a difficult process, especially when the skills and materials you seek are highly sought after and/ or in short supply.
This article will explore 4 ways to build capacity in your organization. But before we get to those, there are 3 things you need to do first.
3 Steps to Set Yourself Up for Capacity Building Success
1. Take Stock
Ask yourself the following questions:
- Do you have any internal processes for capacity building?
- How do you currently build capacity within your organization? Do these methods work?
- Are there any capacity-building methods you don’t do, but think you should?
2. Establish Goals
Determine what you want to achieve when you build capacity. Do you want to remove your reliance on freelancers? Do you want all your suppliers to offer a direct shipping route?
Stay realistic. Consider SMART goals as your model—instead of what you want to achieve, what can you achieve? So, for example, rather than going straight for the goal of completing all aspects of your project internally, aim to field out only 20%. And set a goal to find as many suppliers as possible with locations that will reduce your lead times. But take into account that you will have to source further afield for certain materials, and might be at the behest of geopolitical tensions, too.
You might want to aim high, but setting SMART metrics that acknowledge complexity will be more convincing for your stakeholders. (And if you exceed expectations, more impressive.)
3. Get Sign-off on Re-skilling
The business case for re-skilling employees is 1.5 - 3 times better than for hiring.
But, do you have the decision-making power or the budget to authorize training days and re-skill your employees? If not, bring your case to the person who does.
And, consider if you have a framework in place that allows you to effectively re-skill your staff. If you’re unsure, ask yourself the following:
- How do you initiate the re-skilling process?
- Who decides which employees to re-skill?
- What criteria should employees meet to become candidates for re-skilling?
- How much time can an employee dedicate to training?
- Should the re-skilling result in an official certification?
- When an employee finishes their re-skilling, what are the next steps?
- What if you need the new skill, but not in the re-skilled employee’s current location?
- Can an employee turn down the opportunity to re-skill?
4 Capacity Building Methods
We’re going to look at the 4 main ways to build capacity, though there are others. Remember, not all will be suitable for every organization.
1. Upskill Your Employees
Here, we’re talking about 2 types of upskilling.
- “Blitz” upskilling requires your employees to go off and take a sustained amount of time out for development. This could mean weeks, months, or even years.
- Part-time upskilling. This is for organizations (and employees) who prefer a less radical approach. This could involve them attending programs or apprenticeships one day a week, for example. And, for the rest of the time, they can continue to work for the company.
Alongside these types, there are also different learning approaches you can take for upskilling:
- Formal education. This is only relevant to those tackling long-term goals, as specialized certifications such as those for chartered accountants and specific software fields can take a long time to complete.
- Hands-on training. Whether it’s a staff mentoring program or consultant-led training, many people find practice more effective than passive learning. It also encourages self-learning, and thus engages and motivates individuals who are truly interested in improving their skill sets. Plus, the organization benefits too, as employees can execute less complex tasks while they learn.
- Job-shadowing. Is knowledge siloed in one or two resources? Job shadowing enables those who don’t have the skills to learn from those who do. However, training employees isn’t as easy as people think. If the person being shadowed isn’t a natural teacher, they won’t pass on their skills effectively. As such, you need to plan how to implement the job shadowing to ensure they transmit as much knowledge as possible.
2. Use Outside Resources to Upskill
This method can work for organizations that don’t have the means to fill skills gaps internally.
Here’s an example from the environmental sector. Shoal, a global partnership with the aim of bringing together organizations interested in conserving fish or freshwater environments, lacked the time and institutional support to realize its goals. So, a more established environmental organization, Synchronicity Earth, stepped in to act as a host, helping Shoal build capacity by providing:
- A place for Shoal’s Executive Director on Synchronicity Earth’s site
- The time of Synchronicity’s staff
- Financial resources to support Shoal’s development
- Administrative, logistical and organizational support
Startup incubators are one of the most well-known examples of using outside resources to upskill. These organizations foster new companies through their early stages until they have the resources to function on their own.
3. Outsource Temporary Resources
Consider the skills shortage in the IT sector. In the US, for example, there are only 5 qualified workers for every cyber security role. Outsourcing might be the only option for organizations that need to fill positions quickly.
This might mean sourcing freelancers on a project-to-project basis, or even just for specific deliverables. Or, you can secure the services of an agency who will embed consultants in your team, often for years at a time. This option is particularly popular in software development, where you can get access to offshore or nearshore resources who will work remotely.
Outsourcing can be the answer to capacity overflow. And, it can be the quick answer to finding long-term team members, even as you continue your search for permanent staff.
The key issue with outsourcing is to determine when it makes sense compared to hiring or developing internal resources. There are several factors to take into account—cost is the primary concern, but there is also opportunity cost and the time it takes to get the resource up to speed with the project. For instance, when you need someone with specialized skills—especially when you won’t need these skills often—it makes more sense to outsource that part of the work, rather than invest in developing these skills internally.
There are companies that may have to determine the right direction for their capacity building each time they take on a new project. Some project management solutions have dedicated tools to help with the decision-making by surfacing all the relevant information and making the calculations.
4. Build Capacity Through Partnerships
This is where 2 or more organizations share resources to build capacity. This can be to address skills shortages among workforces, or to gain better access to raw materials, physical infrastructure and processes they need for their projects. As such, some organizations might choose to share factory space, or collaborate over a shared network to innovate products, business models, and supply chains.
Haier, the China-based manufacturer of appliances and electronics is an organization with no traditional bosses, and no middle management. Instead, thousands of independent microenterprises collaborate over their digital platform, COSMOPlat, to accomplish their goals.
What’s most intriguing about Haier’s business model, however, is that they make this platform available to external enterprises too.
In August 2020, the Haizhi Chem Cloud platform cooperated with the Tianyuan Group to build China’s first industrial internet platform for the chlorine alkali industry. This enables chemical SMEs in several ways, such as sharing knowledge and data, managing operations, and sourcing chemical resources. As a result, together they successfully established an ecosystem linking upstream and downstream chemical resources.
Megaprojects are another area where we can see capacity building through partnerships. These are large-scale, complex ventures that typically cost more than 1 billion US Dollars.
Take the Guggenheim Museum Bilbao as an example. The architect Frank Gehry knew which elements were essential and prioritized them as such. To support his vision, all partners, including IDOM and the Guggenheim Foundation, worked together and made sure they delivered the project on time and on budget. Now, The Guggenheim Museum Bilbao is a stand-out example of a mega project. In fact, its success spurred on transformation in the city of Bilbao that’s called “The Guggenheim Effect”.
But, consider the Eurotunnel, and how they went over capacity. Because France and the UK decided on the size of the project many years before operations began, the partners involved, among them the French-English consortium Transmarche Link (TML), built roughly twice the amount of capacity than they needed.
The keystone of building capacity well is to accurately estimate the skills and physical resources you need in both the medium and long term. This is a very complicated calculation to do mentally, but one you can greatly simplify if you’ve got a PPM tool. This is because it provides a single source of truth for past, present and future projects—both from the management perspective and the resource perspective (as long as you implemented it). It will tell you what resources you need, as well as when, so you can make more data informed decisions.