Capacity building includes any activity that is used to increase the amount of productive ability that an organization has. Every organization produces something, whether a product or service, and their ability to deliver those offerings to their customers is called “capacity.”

Improving capacity is an ongoing process that can make an organization stronger and longer-lived. It can also give an organization greater power to fulfill its mission. (Community capacity building can similarly help groups of people survive and get ahead.)

Capacity building should lead to measurable gains in productive ability. Types of capacity building can include improving an organization’s collective skills, equipment, processes, location, access to resources, governance, and more.

What Are Capacity-Building Activities?

Some examples of capacity-building activities include:

  • Hiring new executives
  • Finding new board members
  • Retraining leaders and managers
  • Offering advanced training to front-line employees
  • Improving employee workspaces
  • Upgrading retail locations
  • Purchasing and installing equipment to increase productivity
  • Creating new processes to improve inefficient workflows

As an example, imagine a factory in which some downtime is ordered and used to implement new inventory-management software. This capacity improvement could lead to later increases in the amount of product delivered along with a decrease in lost items.

Why Is Capacity Building Important?

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A capacity building synonym could be “strength building.” Or think of it as “advantage building” or “gathering more ability to produce.” The importance of capacity building is similar to the importance of a savings account: your investments in it prepare you for tomorrow, giving you more options and abilities.

Capacity building does more than help organizations survive; it can help you grow. Is your organization earning less profit than leadership would like? Running a capacity-building program may give it new abilities that can make it better able to serve customers in the long term, along with allowing time and space for people to innovate on new products and services the organization could offer to its customers.

What Are the Benefits of Capacity Building?

For organizations, the general benefits of all capacity-building strategies include to the following:

  • Realize greater success
  • Last longer
  • Adapt better to marketplace changes
  • Continue serving customers under changing conditions

Increased capacity can also improve your organization’s ability to recognize new opportunities for profit, analyze and understand its potential, and take timely and decisive action to capitalize on opportunities. It can also help the organization overcome barriers to change and action. In general, improving your organization means improving its power to achieve objectives.

Capacity building can also help you avoid the pitfalls of stagnation and decay. If an organization spends 100% of its resources on simply providing its products or services, eventually some of those resources will deteriorate. Equipment may suffer damage and lose productive capacity. Employees can grow fatigued. Leaders may stop communicating with frontline workers. And the group may stop pursuing its mission.

Certain capacity-building activities, such as employee and leadership training, can help you reassess key aspects of your strategy and/or objectives. This can help you assess which tactics and programs were more relevant in the past and decide how to retool them so they are more effective for the current business climate.

What Is Human Capacity Building?

Many companies do not primarily rely on equipment to produce value for their customers. Even if they do, their employees’ creative innovations may improve the effective use of that equipment. That’s why one of the most widespread capacity-building strategies is to train and otherwise improve employees through the following means:

  • Offering training and workshops
  • Engaging in one-on-one consultations
  • Providing tips to help employees better use their resources
  • Improving the teamwork and synergy between individuals and groups

Leadership-development programs are also very important. Promoting from within can prevent stagnation, produce leaders who truly understand your business, and lead to innovations that unlock more of your company’s potential.

How Is Capacity Measured?

Capacity can be defined as the greatest level of output your organization can achieve while providing a product or service. However, no business can run at 100% continually. Regular downtime is needed for equipment maintenance—and for employees to rest. Realistic figures should therefore be used, rather than simple maximums.

Most equipment has an optimal productive range rather than a set limit. A hypothetical factory machine, for example, might be rated to run for 600 to 700 hours per month. Therefore, the overall manufacturing capacity of the company would also be expressed as a range, not a single maximum number.

Many businesses would not measure their capacity in terms of equipment production hours, however. Some would express it in terms of their ability to mobilize their human resources, the average work their employees can complete in a given timeframe, the monetary return of certain investments, or other measures.