Maintaining Personnel Resources

There are limits to what one can infer from a qualitative model.

There are limits to what one can infer from a qualitative model.
Ajax Consulting has two levels of consultants, [Pros], who they bill out at $15k/month, and [Rookies], who they bill out at $5k/month. They have 60 [Pros] and 60 [Rookies]. Being a unique fictitious company their consultants are 100% billable every month and they want to stay at 120 employees.
Adding pieces to the puzzle to be able to keep track of [number of employees] and [revenue] the model looks like this.
Notice that when we run this model it's about as interesting as watching paint dry. Accounting is often like that. Sorry it's a bit busy though the consultants scale is on the left and the revenue is on the right. Take a minute to ensure you can see where each level is. Some are on top of each other.
While the model is in a steady state it is appropriate to realize that 10 [Pros] quit every month and 10 new [Rookies] are hired to replace them. Also, it takes six months for a [Rookie] to get promoted to being a [Pro]. This situation has been pretty much in a steady state for so long that nobody pays much attention to it, mostly because it has become dull and boring.
One day in month 17 someone happens to note there seems to be a lot more [Rookies] around than normal. As they do some checking they find there are actually 90 [Rookies] and only 30 [Pros]. How could this happen? The hiring policy was supposed to take care of the [Pro] quits every month. What's even worse, they found that monthly revenue had dropped from $1.2 million/month to $900k/month.
Sounds like somebody's head is about to be on the chopping block. Everyone is scurrying around trying to figure out what the problem is, and where do you think they're looking? In the 17th month of course. The natural tendency is to look close in time and space to where the problem is, or at least where it is perceived to be.
As it turned out the real influence on this situation happened in month ten where a new management policy so annoyed many of the [Pros] that the [quits per month] effectively jumped from 10 to 15 per month and stayed constant. This step change, because of the six month development time for a [Rookie] to become a [Pro], set of a six month transition to a new stable state for the organization. A stable state that no one was particularly pleased with.
Russell Ackoff often claimed that the cause of the problem being experienced is generally located somewhere in the organization other than where the problem appears. Reality seems to agree with him. Change the parameters and run simulations a few times until you get a feel for the interactions.

View the model in Insight Maker