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SOP 179
Plan the workforce and map responsibility
What this page is for. Use it when the business is past 250 people, staff churn is climbing, and nobody can say whom the company needs in order to keep growing. It covers strategic workforce planning: the questions to answer, projecting the workforce the way you project the finances, one leader's color map of the organization, having managers rate their people, a matrix of who does, owns, advises on and hears about each task, for finding gaps team by team, and what churn costs at this size. For the stage this belongs to, see SOP 175 — Capitalize the business at 250 to 500 people.
SOP-179-Plan-the-workforce-and-map-responsibility.md
1. The constraint and what graduates it
Human resources is how you decrease the likelihood that employees and regulators sue you.
| Item | At this stage |
|---|---|
| The constraint | Churn increases, and you do not know whom you need to grow. Restated at the end: nor do you know how to add people to the organization to achieve your goals |
| To graduate | Implement strategic workforce planning |
Strategic workforce planning, it is said, is essentially a nice word for organizational design. It is also called a fancy word for forecasting the people side of growth.
2. Start from the what, then find the who
Workforce planning looks at the company's objective and then works out the who that makes the what happen. The what is where you are going: your objectives and goals as a company. Then the questions come, in this order:
- Who do we need?
- How many of them?
- How quickly do we need them?
- Whom are we going to need to move around?
- Whom are we going to lose, based on our churn rate?
- How are we going to backfill those people?
- Whom can we promote? Are there people we can move up?
- Where do we want backups, in case somebody leaves, gets pregnant or quits?
- Where will we need hyper-specialization in the future?
A second set of questions: what capacity will we have; whom do we need to backfill; where are the skill gaps in the company; what redundancies do we want, and what redundancies do we not want; and can we shift people around?
3. Project the workforce as you project the finances
Just as you do projections for your financials, you do projections for your workforce. One practice here is a workforce plan built out 12 to 18 months ahead: predicting who is going to leave, who is going to get promoted, and what rules will be needed.
The example given: right now there are 35 people, but in 18 months 500 will be needed to accomplish the goals. How are you going to get those 500, and where do they fit in the organization chart?
4. One leader's color map
One leader draws organizational design maps of what is going to happen next, using simple color codes:
| Color | What it marks |
|---|---|
| Green | Somebody you have internally whom you are going to promote |
| Yellow | There is somebody there, but they are weak |
| Red | There is clearly a department that should be here, and a whole team is routed to one person who is competent but really should not be leading that whole team; that seat needs filling |
The map's value, in this view, is that it is so simple. At a glance you see that there are a lot of reds, or that there are greens on one side but a lot of yellows on the other, so you need to upskill some of those people. Then the question is how many of them you can just train up, versus bring in, versus move around.
5. Allocate people like an investor
This is allocating resources. At this point you are a chairman, an investor, looking over what you hold: which assets and resources are mine, and how can I redeploy and combine them for the best return?
The catch is that at this size you do not know how everyone is performing. So give your managers a process for rating the people on their teams as red, yellow or green. Then use that to see what kind of resources you need to bring in, based on the feedback they have given you.
6. Map responsibility team by team
Another tool you can teach your team, one you have probably seen used in project management, is a matrix whose parts are responsible, accountable, consulted and informed. One practice here is to take it over for organizational design: a habit, not a rule.
| Part | Who it names |
|---|---|
| Responsible | The person who actually does the task: the one doing the job |
| Accountable | Whoever answers for the process, or for the task getting done: usually the direct manager of the person doing it |
| Consulted | People not directly involved but consulted, maybe because they are subject matter experts. The example: one person neither does recruiting nor sits right above it, yet is consulted on it as an expert in recruiting |
| Informed | Those who must be told what the task produced; this might be the whole leadership team, the CEO, the CFO |
When workforce planning within each team, one habit is to have the team build out a matrix for itself. When a team is trying to fill gaps, the gaps are easy to see once the matrix is laid out, for instance:
- there are all these people, but one person is responsible for all these tasks;
- a whole leadership team in which a single leader is accountable for all these things, while the rest are only consulted or informed, and so are underused;
- one person has too many direct reports.
It is a way of seeing how resources are deployed within one team. The suggestion is to try it with your teams. The view here is that it is not useful to do with the entire company, but it can help to have the teams use it and hand it to you, so that you can work out the entire organization, what it needs to look like, and plan.
7. What churn costs at this size
This also ties to growth: as human resources supports the huge amount of growth that one top hire can bring, churn is going to increase, and it works like customer churn. At 250 employees you might lose 5%, and you have to recruit 25 people just to break even on churn. So this becomes an issue, and you do not have the right people you need to grow. How many people are lost each month is under what this page does not decide.
From generalists to hyper-specialists. A lot of times you go from generalists, to some specialists before this stage, to hyper-specialization now. The reason given: in general, labor gets more productive the more specialized it is. But it takes a lot of volume before somebody can do one ticket all day long. That is not possible in the beginning; at scale it is.
8. The checklist
| Step | What to do |
|---|---|
| The what | Start from the company's objectives and goals: the what |
| The questions | Answer the questions in section 2 for them: who, how many, how quickly, who moves, who leaves at your churn rate, backfill, promotion, backups, hyper-specialization |
| Projection | Project the workforce as you project the finances (12 to 18 months ahead, as one practice) |
| Ratings | Have managers rate the people on their teams red, yellow or green |
| The map | One leader's practice: map the organization by color, then decide whom to train up, bring in or move around |
| The matrix | As suggested, have each team lay out the matrix for itself and hand it up |
| The gaps | Read the matrices for gaps: one person responsible for all the tasks, leaders who are only consulted or informed, too many direct reports |
9. What this page does not decide for you
- How many people a business of 250 loses each month. A 5% loss is 12.5 people; recruiting 25 just to break even implies losing 25, which is 10% of 250. Planning on the first figure recruits half as many people as the second needs. This page does not settle which reading is right.
- What "rules" means in the 12-to-18-month plan. Not established on this page.
- Whose headcount the 35-to-500 example describes. It starts below this stage's range, and no business or team is named. Not established on this page.
- What red, yellow and green mean when a manager rates a person. The meanings in section 4 are given for the map's seats; no separate meaning is given for rating a person. Not established on this page.
10. Where this sits
- Rating a person red, yellow or green as their standing on the way to a firing decision, and planning who covers the work, is SOP 153 — Fire without surprise and plan who covers the work. The colors there mark something different.
- A goal-progress tracker marked red, yellow or green by department is part of human resources at 100 to 249 people: SOP 168, section 8. It is a different tool from the map here.
- Seeing every team's performance in one system: SOP 173 — Choose a human-resource information system.
- Forecasting the money side from the run rate: SOP 151 — Budget and forecast.
- Having someone backfill themselves before moving to new work: SOP 165, section 9.
11. What this page does not cover
Employment law and pay are not covered on this page.
Terms defined on this page
- Hyper-specialization
- Roles narrowed so far that one person handles a single kind of ticket all day, possible only at large volume. Labor tends to get more productive the more specialized it is.
- Organization color map
- A leader's chart of seats: green for someone to promote, yellow for a weak holder, red for a missing department or a team reporting to someone who shouldn't lead it.
- Responsibility matrix
- A project tool that can also be used to design teams: who does the task, who answers for it (usually the direct manager), who is consulted as an expert, and who must be told the result. In one practice each team builds its own, which makes gaps easy to see.
- Strategic workforce planning
- Working out the people who will make the company's goals happen: how many, how fast, who moves, who leaves, backfills, promotions, backups and future specialists. Essentially organizational design.
- Workforce projection
- A plan made 12 to 18 months ahead, in one practice, predicting who will leave, who will be promoted and what will be needed, the way you project finances.