Cost balance and organizational development "Companies mistakenly operate in CPU overload"

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FAULHABER Drive Systems

Wuxi InfiMotion Technology Co., Ltd.

Employees who are utilized 100 percent are counterproductive for companies. The analogy to the PC demonstrates why this is the case.

You know the feeling when a computer is utilized to 100 percent: Working with it becomes very cumbersome, keyboard inputs are forgotten, reaction time is high, and the computer is just annoying!

For my work, I need a system that responds quickly and is available when I need it. That's what I expect from companies too! Companies want to act fast and skillfully respond to market trends. Instead, fully loading employees is the prevailing optimization strategy. Like an overloaded CPU, they fall short of their potential.

What surprises me at this point is that this is deliberately aimed for and there seems to be rarely a counter-concept to increasing utilization in practice. Many developers groan under this – be it due to too many projects or too many tasks within a project at the same time. Yet, it can be done differently!

The workload must be planned and monitored like with a CPU

System administrators plan their servers so that the CPU utilization does not exceed an average of 50 percent. This keeps the system responsive and usable. With a simple model of thought [1], in which utilization is juxtaposed with costs, this can be applied to knowledge work.

• Idle capacity costs: An employee without work incurs 100 percent idle capacity costs. At full utilization, 0 percent idle capacity costs are incurred.

• Delay costs: These are very low at low and medium utilization. From about 60 percent, this curve rises exponentially because too much work in the system creates losses (task switching).

A common optimization strategy is to keep utilization as high as possible to eliminate idle capacity costs. The unobserved delay costs therefore rise extremely, and the same behavior occurs as with the overloaded CPU.

Good management finds the cost balance

The ideal full cost curve follows these two curves and results in an optimum, which is often at about 70 to 80 percent utilization. Employees who are not 100 percent utilized? Intuitively, this seems wrong to a manager who can no longer understand the complex overall system and, therefore, often only has utilization as the sole means of control. Good management takes both costs into account – and can also document them.

As you walk by, all employees look tense, nobody is sitting, heads are smoking everywhere. Good, then everyone is doing the right thing! Thanks to the return to the office, employees can be monitored again. Do you recognize this?

Rather, I would be pleased with statements like: Our company is most responsive when our developers are only 80 percent utilized! We have realized that innovation occurs when unplanned flashes of inspiration are allowed. This has made us an even better partner for our customers.

Are you able to evolve your company in addition to your products? How can understanding delay costs help you make optimal use of your CPU?

Reference

[1] "Economic Value of Slack Time" by Pawel Brodzinski, January 2015

Link: Fabian Biebl at Colenet GmbH (external link)

Link: Organizational development for Agile in Hardware (external link)