Managing the impact of high market growth and learning on knowledge worker productivity and service quality

Abstract

Many high technology firms in the information technology, engineering, and internet content industries experience exponential growth but are also dependent on knowledge workers requiring extensive periods of training or apprenticeship. Under these conditions productivity management becomes a critical yet dynamically complex issue. This paper uses control theory techniques to dynamically solve this staffing problem at a strategic level. The novelty of this paper's formulation of the staffing problem lies in the use of time-discounting in combination with a special cost structure. The resulting optimal policy reflects the influence of both capacity shortfall and salary penalties. Under most real-world conditions, it will drive capacity and employment levels asymptotically towards a constant fractional shortfall. An illustration is presented using enterprise requirement planning (ERP) project implementers. One important managerial implication is that the interaction of extensive training requirements with market growth can cause firms to under-perform by delivering low levels of service at a high cost. Further this underperformance will escalate with increases in either market growth or training requirements. Finally, the paper puts this research into a framework with the experience curve and technology supply chain literatures to outline possible directions for future research.