DDBA 8582 Week 9 Surge Trigger Memo Example

Memorandum

To: Chief Operating Officer

From: Director of Workforce Planning

Date: August 3, 2026

Re: Trigger for activating surge staffing before a large new client goes live

The Trigger

Arrangement to activate: release the pre-negotiated agency pool of up to 20 claims staff and 30 member services staff, and pause internal transfers out of claims and member services. Indicator: signed letters of intent from prospective self-funded clients, weighted by enrolled members, as reported weekly by the sales operations team. Threshold: 15,000 or more members under signed letters of intent with go-live dates within 180 days. Monitor: the workforce planning analyst, who checks the sales pipeline report each Monday. Decider: the Chief Operating Officer, who approves activation within five business days of the analyst's notice.

Why This Indicator

Signed letters of intent move about five months before claims volume arrives, since new clients go live after a contracting and implementation period. Claims backlog, the measure operations watches today, moves only after members begin using their new coverage, which is too late: agency staff need ten weeks of training before they are productive.

Lead Time

At a threshold reached 180 days before go-live, activation takes about a week, agency recruiting about four weeks and training ten weeks, leaving roughly ten weeks of margin. A later indicator would leave none. Numerical flexibility, in the flexible firm's terms (Kalleberg, 2001), is only as fast as the signal that sets it in motion.

What I Ask

Approval of the trigger, the threshold and the named roles, effective September 1.

Rationale: Where to Set the Threshold

Every trigger can err two ways. A false alarm activates the arrangement for a client who never signs a contract; a missed signal fails to activate it for a client who does. Swets et al. (2000) showed that the best threshold for a diagnostic decision depends not only on the accuracy of the indicator but on the base rate of the event and the relative costs of false alarms and misses, and that organizations often set thresholds without weighing those costs.

Here the costs differ sharply. A false alarm costs agency minimum fees and training for staff who may be released early: about $90,000 if 20 staff are trained and then not needed. A miss costs contract penalties of the kind estimated in the Week 8 model, about $1.2 million for a 38,000-member client. With a miss costing roughly thirteen times a false alarm, the threshold should be set low enough to accept several false alarms for each miss avoided. Over the past three years, about half of letters of intent at or above 15,000 members became contracts, so the 15,000 threshold accepts about one false alarm per real activation, a good trade at these costs.

Separating the monitor from the decider protects the trigger from optimism in either direction: the analyst reports the number, and the executive decides with the cost asymmetry in view. Kogut and Kulatilaka (1994) argued that flexible capacity is valuable only if the organization is prepared to exercise it when conditions call for it; a trigger is how that preparation is made concrete.

Pausing Transfers

Pausing internal transfers out of claims and member services prevents the plan from moving staff away from the units the surge will hit.

Limits

Letters of intent from new prospects may behave differently from past ones. The threshold should be reviewed after each activation.

References

Kalleberg, A. L. (2001). Organizing flexibility: The flexible firm in a new century. British Journal of Industrial Relations, 39(4), 479-504. https://doi.org/10.1111/1467-8543.00211

Kogut, B., & Kulatilaka, N. (1994). Options thinking and platform investments: Investing in opportunity. California Management Review, 36(2), 52-71. https://doi.org/10.2307/41165744

Swets, J. A., Dawes, R. M., & Monahan, J. (2000). Psychological science can improve diagnostic decisions. Psychological Science in the Public Interest, 1(1), 1-26. https://doi.org/10.1111/1529-1006.001