A phrase that keeps on cropping up with me and my discussion buddies is the term ‘critical mass’. Of the different interpretations we have for this term, I think the best one means that it is the size of technical resources that results in a quantum leap of company income, better control over the projects and activities staff work on, and a perceived breakthrough of barriers that will allow better rates of return. (Never mind that a quantum is the smallest change a system can undergo).
Now, is there a minimum number which is considered critical mass? I would propose that it depends on the following factors:
-
Is the company privately or publicly owned? I know of a flow assurance consultancy where the number of technical staff is … one. The owner (and chief grunt) seems happy, so I suppose that he is at his critical mass.
-
On the other hand, there are companies that are undergoing acquisitions and mergers, so that they have access to a bigger (and possibly more sympathetic) money pool to allow for expansion, and have instant branch companions and name recognition around the world. A recent presentation by Expro/ Petrotech bring this to mind.
-
From an engineering management perspective, I would posit that critical mass is the level of resources required such that the departure of personnel does not require a large reshuffle of work delegations. In this period of high demand, it seems that every engineering office should be powered by engineers joining and departing through a rotating door. Critical mass should be sufficient that you are happy with the revenue derived from a work base-load, and are solvent enough to have some engineering fat to perform work to that meets quality standards while waiting for new troops (read: new hires) to replace the workplace casualties.
Wata - Malaysian Oil and Gas Engineer 
critical mass of a company is veeeery subjective and it shouldn’t go by number of people… some company uses “average years of experience” indicator.
example:
engineering consultant company needs a relatively high average years of experience (say 10 years) as the client needs a comfort feeling that the work churned out is somewhat experience-worthy
as opposed to a fast food company, say, which probably could live with a low average years of experience (i don’t know, 10 months maybe?) as the operational procedure is somewhat “automated”
my 2 sen worth… which will only be worthy till 1st April 2008
The market requirments also play an important role on the ‘critical mass’ target hence making the actual target technical staff a variable. So as the critical mass for a company changes from week to week according to market forces, how does one create a target ‘critical mass’ for a company? Or does one just have a whole lot of contract staff on hourly rates?
Generally, there is a methodological approach to answer this. I will reply based on a typical engineering company operation.
A company critical mass is fixed based on 3 main criteria, i.e.;
Target profit.
Market share.
Resources.
A target profit and market share generally is a moving variable, which by no means would give an impression of a company reaching critical mass. However, resources, which its performance can be tracked by using “cost accounting” methods to assume manhours as stock.
Based on Re-order calculation, you will be able to define you optimum time to reorder, and the reorder quantity (translated to hiring period and no of personnel). When this cannot be met, I believe this would be your critical mass.
However, if it were a one man show, the owner would arbitarily fixed his target profit and market, hence, the critical mass criteria would not apply to him.
I’m from Dorin, Vietnam.
In the new oil and gas sector, many companies are investments from international companies. I believe the company will hit critical mass upon stopping of investment in hiring new engineers.
But I agree with your comment.
The critical mass is actually a business constant set by management. This is supported by volume of sales, and turnover rate.
In China, the debate on critical mass is starting to drive sales volume.
critical mass analogy in economics term is the profit density x sales volume. Where the profit density is calculated by the charge out rate over the employee internal cost. If we can get a high chargeout rate (profit density) and have the critical mass defines the sales volume. hence, critical mass is actually a define company target by top management, and the marketing department will need to achieve corresponding sales volume