Capacity Manager Concepts & Assumptions

Scoring System

The tool uses a simple traffic light system. This system is there to advise you of areas of potential strengths and weaknesses.

We anticipate that many organisations will have a significant number of "amber" scores and "red" scores. This is fine because the aim of the tool is to be aspirational rather than either congratulatory or overly critical: ultimately we want you as a senior manager to make your own decisions, since all expenditure depends on your resources, and where you decide to target them.

Red scores are therefore not a criticism; they are either a call to action, or a reminder that areas may need addressing, and such reminders can help you as a senior executive to manage difficulties and delegate the right jobs to the right staff and departments.

It should be remembered also that the scoring system is to some extent incidental. We consider that the REAL value of this tool is in the process - the thinking that goes into completing it - and the learning that arises from it.

Structure of the Tool

The Tool is based on a qualitative rather than quantitative methodology.

This is firstly because it enables the tool to cover broader ground. In addition, organisations share underlying process elements, no matter how different in culture or size they are.

We believe from our extensive experience in capacity building that simply counting individual costs, or your staff numbers, would be a very blunt and uninformative tool, and would make real comparisons between non-homogenous organisations difficult.

Whilst numbers and percentage comparisons can be useful, the key question for us as developers has been not so much “how much” money is being spent; rather it has been about “how well” it is being spent. It is about getting value for money, about judging the effectiveness of each area, and thereby enabling CEOs to better manage the key areas of capacity.

Definitions

Please note that the term 'Staff' refers to both staff and volunteers.

Also note that organisations may use a range of terminology to describe their senior paid employees including CEO, Director, Manager, Co-ordinator etc.

Note on Percentage Overhead Expenditure

Each chapter heading asks a standard question regarding percentage spend on that particularl overhead in comparison to direct service expenditure. Please note that the percentages quoted are 'average' figures from the 'average' organisation that from our experience indicate appropriate levels of spend. BUT it may well be perfectly acceptable to spend more than say 15% on one overhead if you are a specialist provider in that area, or there is significant organisational change.

Note that this question refers to both revenue and capital expenditure, which may be particularly important when considering areas such as premises and Information Technology.

Based on our experience, the average organisation's total overheads will be up to about 50% in comparison to its direct service (or "front-line") expenditure, but as we all know, different overheads cost different amounts.

Our working assumption, reflected in different percentages under different headings, is that:

• the highest percentage spends are likely to be on - finance, fundraising and facilities
• the medium percentage spends are likely to be on - management & leadership, ICT, human resources, and communications
• the lowest percentage spends are likely to be on - governance, strategic planning and training

This is a broad assumption that needs to be considered in context. It must also be remembered that the rates at which different overheads increase in cost as an organisation grows can vary significantly; for example you may be making a significant investment in fundraising or ICT.

It may be considered, for example, that in general terms, finance and fundraising costs tend to increase at a more proportional rate to direct expenditure as an organisation grows, than possibly say governance or communications. Organisations also have a high degree of autonomy in terms of choosing which overhead to invest in and when to invest. Increases in costs are therefore likely to reflect both major step changes as well as minor marginal increases.

Finally, this index is primarily aimed at organisations with a turnover from £250,000 per annum (approximately 5 staff) to £5 million per annum (approximately 100 staff). It can still be of significant use for organisations outside this range, but we expect that more organisations above or below this range will be outside the norms on which this index is based.

In organisations with less than £250K turnover there is likely to be significant overlap between job responsibilities, so that, for example, the senior managers themselves may be undertaking a significant level of overhead activity such as fundraising, communications etc. But in larger organisations, say with over £5million turnover, whicho can afford specialist staff, there may also be economies of scale.