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When leaders talk about capacity and utilization they want to know how many widgets are possible and how many widgets are being produced relative to that number. They aren’t usually discussing capacity and utilization in the context of human potential and output even when talking about labor utilization. Here’s what they’re missing.

Ask core employees if they could produce more and they say they’re working as hard as they can. Ask them if the organization is getting everything core employees have to offer and the answer is a resounding “no!” In other words, they see how things can be improved, but, for a variety of reasons, aren’t doing anything about it. Ask the same question to supervisors about their core employees and they say most employees work reasonably hard, but they know they can do more. Essentially, both workers and bosses have no trouble recognizing that human potential is underutilized in their organizations.

In any workplace, excess human capacity is waste pure and simple. If, under existing conditions, an employee could produce more, streamline a process, or scrap fewer materials, there is capacity that’s not being used.

How do we know employees could do better? Because performance rarely remains constant. When performance improves—all things being equal—it’s apparent that employees were not previously operating at full capacity. When performance drops, utilization follows suit and it’s obvious that employees are not performing as well as they could.

Nevertheless, few organizations ever get close to maximizing core employee performance without outside help because most operations leaders are so overwhelmed trying to keep up with daily process utilization demands that they’re happy just to keep employees performing at the norm. That’s what they get held accountable for and everything outside of that becomes a distraction.

Even so, capacity utilization is only half of the equation. Add to that the possibility of actually expanding the capacity of the workforce, and the potential for increasing performance is staggering. Considering the amazing inventions of the automobile, electricity, the computer, and the internet, it’s pretty tough to argue that human capacity isn’t limitless. And some leaders get it.

Take, for example, companies making it on the Best Places To Work lists put out by Fortune magazine, Great Place to Work Institute, SHRM, Business Week, and others. Many of them have become expert at utilizing human potential effectively and building human capacity. In some businesses, core employees and their spouses attend retreats together to review company financials and strategic plans. Others share details of financial performance, business prospects, and other essential data through mailings to employee homes, roundtable discussions, and pre-shift meetings. Leadership training for all employees to expand fundamental decision making, organization, and accountability skills is not uncommon. And, flat organization structures with lots of latitude for core employees are the norm.

Given the possibilities, isn’t it time that we expanded our understanding about utilization and capacity and stop neglecting their application to the workforce? Take a minute and account for human capacity in your organization: What’s the gap and where’s the cap?

Trying it on for fit: Research organizations that appear in best company lists. Look for ways they increase their utilization of employee ingenuity and build the capacity of employees to contribute at a higher level. Make a list of ways you currently try to increase people utilization. Examine how many items on the list pertain to trying to motivate and how many actually increase the latitude employees have to do the work and make decisions. Make another list of ways you increase the capacity of your employees to contribute. Are they all related to formal education programs, or are there methods for expanding employee understanding of the business including strategy, finances, operations, and success indicators as well as increasing technical skills?

Send an email and let me know what you learn from your experiences. I would love to hear from you!