If you had to choose between the best candidate for AWF’s fund manager open position, and the 2nd best plus X $/year in donations to AWF, and both these candidates had the same impact if they did not join AWF, and were only available for full-time work, how large would X have to be for you to be indifferent between the 2 options?
One way to BOTEC this is by looking at how much time it saves us and what can be done with that time. Let’s assume the 2nd best candidate is half as good as the 1st and therefore saves us half as much time. Instead of saving us 35h per week (40h − 5h management, meetings, review etc.), they save us 17.5h (requiring much more management and oversight to get the same results, which I actually think is conservative), for the same up to $120k spent on salary and benefits.
In the first case, we get 35 × 52 workweeks in a year = 1,820h, and in the second 910h. The cost-benefit analysis is $65 per hour for the first candidate and $131 per hour for the second, with a difference of $66 per hour.
As discussed in our room for more funding post, we currently believe we could conduct more active grantmaking to a value of $2M. If we assume that with 15h, a more senior staff member whose time we saved by hiring can generate an active grantmaking opportunity that costs $200k, and assuming its cost-effectiveness is $1.4 per DALY ( I took the RP CCM DALY estimates (which you helpfully listed here in DALY/k$, and I reversed to be $/DALY), where the Cage-free Chicken Campaign was $1.4 per DALY.), that means 142k DALYs difference. In the 66h difference between candidates, we get 4.4 such opportunities, so 624k DALYs are lost due to hiring the 2nd best candidate. At $1.4 per DALY, that’s ~$873k.
Therefore, if the 2nd best candidate is half as good as the first, we would need $873k more to offset it. This could be a conservative estimate, because a half-as-good staff member might simply not generate as good evaluations no matter how much management time they get. Or it could be liberal because we may need more than 15h to generate the next marginal active grantmaking opportunity, or the 2nd best candidate could be more than half as good as the first. I think a range of $500k-$800k is reasonable.
That was a fun exercise; thanks for your question!
[...] In the 66h difference between candidates, we get 4.4 such opportunities, so 624k DALYs are lost due to hiring the 2nd best candidate. At $1.4 per DALY, that’s ~$873k.
Why did you assume hiring the best candidate would save senior staff 66 h/year instead of the 910 h/year (= (1 − 0.5)*35*52) you seemingly estimated above? This would allow for 60.7 (= 910⁄15) additional active grantmaking opportunities per year if there was an unlimited supply of these, but there is only 10.0 (= 2*10^6/(200*10^3)) for 2 M$/year of active grantmaking. In this case, there is only room for saving 150 h/year (= 10.0*15) to senior staff, which could be achieved by hiring a candidate at least 8.24 % (= 150/(35*52)) as good as the best. So, if the 2nd best candidate was 50 % as good as the best, AWF would not save anything by hiring the best. In reality, hiring the best candidate would still save AWF money because there would be more opportunities for active grantmaking, but your calculations referred to the savings resulting from AWF’s room for additional funding of 2 M$/year. What am I missing?
Why did you assume hiring the best candidate would save senior staff 66 h/year.
The number, is the difference between the first and second candidate in $ cost per h saved (given their salary and how much time they save). The difference would be $66 per h. Later, I accidentally omitted the $ sign in the text, and that indeed created a mistake in further calculations. It turns out that making BOTEC late in the evening is not a good idea, in my case. :) Thank you for catching that error!
To refine the calculations by fixing the error you spotted and adding more considerations:
I say earlier. “Let’s assume the 2nd best candidate is half as good as the 1st and therefore saves us half as much time. Instead of saving us 35h per week (40h − 5h management, meetings, review etc.), they save us 17.5h (requiring much more management and oversight to get the same results, which I actually think is conservative), for the same up to $120k spent on salary and benefits.
In the first case, we get 35 × 52 workweeks in a year = 1,820h, and in the second 910h. The cost-benefit analysis is $65 per hour for the first candidate and $131 per hour for the second, with a difference of $66 per hour.”
I was aiming to calculate the difference between the first and second candidates. The first would save 1820h (35h × 52 workweeks in a year), the second 910h (35h x 52 workweeks in a year). The cost-benefit ratio of that time saved is: for the first, $65 per h ($120000/1820 hours saved per year), and for the second, it is $131 per h ($120000/910h saved), so the difference is $66 per h. 1820-910=910h difference in a year And each hour, for the 2nd candidate, cost us $66 more than for the 1st. 910h difference, at $66 per h, the difference in cost is $60060. Indeed, in that time, a senior fund manager could in theory, create 60 active grantmaking opportunities (910h/15h) at a cost of $60060. So $60060/60 = $1001 difference in cost between candidates for generating one opportunity.
But you are right; we cannot generate 60 active grantmaking opportunities in a year, no matter the time spent. If we had an unlimited time (something I didn’t assume in the RFMF estimate), I think we could generate more than $2M estimated in the RFMF post, but indeed not 60 opportunities. My guess would be somewhere around 20-30. If we take those numbers and follow your reasoning, there is room for saving from 300h (=20*15) to 450h (=30*15), which could be achieved by hiring a candidate at least 16.4% (=300/(35*52)) to 24.7% (=450/(35*52)) as good as the best. While we have to remember to take into account the higher cost of generating that opportunity in the case of the 2ns candidate.
A significant limitation to that estimate is that we assume no increase in time when generating the next marginal opportunity. In fact, I expect that each marginal opportunity we generate will require a higher time investment to generate, simply because it will be harder to come up with ideas, find the right people who are not already busy, etc. So let me introduce this refinement to our estimate. For example, the first 10 opportunities may take 15h per idea, the next 10 can take 25h, and probably the next 10 would take significantly more, like 40h. If we take those numbers and the range for the number of potencial opportunities (20-30), the total time to generate 20 opportunities would be 400h (=(10*15)+(10*25)), and the time to generate 30 opportunities would be 800h (=(10*15h)+(10*25h)+(10*40h)). So the potencial of saving 400h-800h is generated by hiring a candidate at least 21.9% (=400/(35*52)) to 42.9% (=800/(35*52) as good as the best. While remembering that generating those opportunities by the 2nd best candidates would have a worse cost-benefit ratio. We also have to remember that in this case, we may need more than $2M for active grantmaking, which further complicates calculating the “better candidate to more funding trade-off”.
However, I will stop this estimate now, because the time for the AMA is running out and I have to get ready for the beginning of the holiday that starts in Poland today. :) If you have any comments about the calculation above, let me know. If I happen to have some free time after the holiday, I may swing back to finish and further improve the estimate, but I cannot commit to that, especially if it would trade off against vetting and selecting the best candidates in the current hiring round ;) Thanks for this exchange and all your questions, Vasco!
So the potencial of saving 400h-800h is generated by hiring a candidate at least 21.9% (=400/(35*52)) to 42.9% (=800/(35*52) as good as the best.
This suggests AWF would not benefit from additional active grantmaking due to hiring the best candidate instead one at least 44.0 % (= 800/(35*52)) as good as them, because both would save enough time to senior staff for the 30 active grantmaking opportunities to be found. Assuming part-time work with a salary of 65.9 $/h (= 120*10^3/(35*52)), hiring the best candidate instead of one 50 % as good as them would save AWF 60.0 k$/year (= 910*65.9). So, at least under this toy model, earning to give may still be a good alternative for the best candidate.
However, I will stop this estimate now, because the time for the AMA is running out and I have to get ready for the beginning of the holiday that starts in Poland today. :)
I think the marginal cost-effectiveness of AWF’s spending on grants and salaries should ideally be equal. Under these conditions, if the 2nd best candidate is 50 % as productive as the best one, and the salary for full-time work is 120 k$/year, I believe the 2nd best candidate plus 60.0 k$/year (= (1 − 0.5)*120*10^3) would be as good as the best candidate.
If you had to choose between the best candidate for AWF’s fund manager open position, and the 2nd best plus X $/year in donations to AWF, and both these candidates had the same impact if they did not join AWF, and were only available for full-time work, how large would X have to be for you to be indifferent between the 2 options?
One way to BOTEC this is by looking at how much time it saves us and what can be done with that time. Let’s assume the 2nd best candidate is half as good as the 1st and therefore saves us half as much time. Instead of saving us 35h per week (40h − 5h management, meetings, review etc.), they save us 17.5h (requiring much more management and oversight to get the same results, which I actually think is conservative), for the same up to $120k spent on salary and benefits.
In the first case, we get 35 × 52 workweeks in a year = 1,820h, and in the second 910h. The cost-benefit analysis is $65 per hour for the first candidate and $131 per hour for the second, with a difference of $66 per hour.
As discussed in our room for more funding post, we currently believe we could conduct more active grantmaking to a value of $2M. If we assume that with 15h, a more senior staff member whose time we saved by hiring can generate an active grantmaking opportunity that costs $200k, and assuming its cost-effectiveness is $1.4 per DALY ( I took the RP CCM DALY estimates (which you helpfully listed here in DALY/k$, and I reversed to be $/DALY), where the Cage-free Chicken Campaign was $1.4 per DALY.), that means 142k DALYs difference. In the 66h difference between candidates, we get 4.4 such opportunities, so 624k DALYs are lost due to hiring the 2nd best candidate. At $1.4 per DALY, that’s ~$873k.
Therefore, if the 2nd best candidate is half as good as the first, we would need $873k more to offset it. This could be a conservative estimate, because a half-as-good staff member might simply not generate as good evaluations no matter how much management time they get. Or it could be liberal because we may need more than 15h to generate the next marginal active grantmaking opportunity, or the 2nd best candidate could be more than half as good as the first. I think a range of $500k-$800k is reasonable.
That was a fun exercise; thanks for your question!
Thanks for the quantitative answer, Karolina!
Why did you assume hiring the best candidate would save senior staff 66 h/year instead of the 910 h/year (= (1 − 0.5)*35*52) you seemingly estimated above? This would allow for 60.7 (= 910⁄15) additional active grantmaking opportunities per year if there was an unlimited supply of these, but there is only 10.0 (= 2*10^6/(200*10^3)) for 2 M$/year of active grantmaking. In this case, there is only room for saving 150 h/year (= 10.0*15) to senior staff, which could be achieved by hiring a candidate at least 8.24 % (= 150/(35*52)) as good as the best. So, if the 2nd best candidate was 50 % as good as the best, AWF would not save anything by hiring the best. In reality, hiring the best candidate would still save AWF money because there would be more opportunities for active grantmaking, but your calculations referred to the savings resulting from AWF’s room for additional funding of 2 M$/year. What am I missing?
The number, is the difference between the first and second candidate in $ cost per h saved (given their salary and how much time they save). The difference would be $66 per h. Later, I accidentally omitted the $ sign in the text, and that indeed created a mistake in further calculations. It turns out that making BOTEC late in the evening is not a good idea, in my case. :) Thank you for catching that error!
To refine the calculations by fixing the error you spotted and adding more considerations:
I say earlier.
“Let’s assume the 2nd best candidate is half as good as the 1st and therefore saves us half as much time. Instead of saving us 35h per week (40h − 5h management, meetings, review etc.), they save us 17.5h (requiring much more management and oversight to get the same results, which I actually think is conservative), for the same up to $120k spent on salary and benefits.
In the first case, we get 35 × 52 workweeks in a year = 1,820h, and in the second 910h. The cost-benefit analysis is $65 per hour for the first candidate and $131 per hour for the second, with a difference of $66 per hour.”
I was aiming to calculate the difference between the first and second candidates. The first would save 1820h (35h × 52 workweeks in a year), the second 910h (35h x 52 workweeks in a year).
The cost-benefit ratio of that time saved is: for the first, $65 per h ($120000/1820 hours saved per year), and for the second, it is $131 per h ($120000/910h saved), so the difference is $66 per h.
1820-910=910h difference in a year
And each hour, for the 2nd candidate, cost us $66 more than for the 1st.
910h difference, at $66 per h, the difference in cost is $60060.
Indeed, in that time, a senior fund manager could in theory, create 60 active grantmaking opportunities (910h/15h) at a cost of $60060.
So $60060/60 = $1001 difference in cost between candidates for generating one opportunity.
But you are right; we cannot generate 60 active grantmaking opportunities in a year, no matter the time spent. If we had an unlimited time (something I didn’t assume in the RFMF estimate), I think we could generate more than $2M estimated in the RFMF post, but indeed not 60 opportunities. My guess would be somewhere around 20-30. If we take those numbers and follow your reasoning, there is room for saving from 300h (=20*15) to 450h (=30*15), which could be achieved by hiring a candidate at least 16.4% (=300/(35*52)) to 24.7% (=450/(35*52)) as good as the best. While we have to remember to take into account the higher cost of generating that opportunity in the case of the 2ns candidate.
A significant limitation to that estimate is that we assume no increase in time when generating the next marginal opportunity. In fact, I expect that each marginal opportunity we generate will require a higher time investment to generate, simply because it will be harder to come up with ideas, find the right people who are not already busy, etc. So let me introduce this refinement to our estimate. For example, the first 10 opportunities may take 15h per idea, the next 10 can take 25h, and probably the next 10 would take significantly more, like 40h. If we take those numbers and the range for the number of potencial opportunities (20-30), the total time to generate 20 opportunities would be 400h (=(10*15)+(10*25)), and the time to generate 30 opportunities would be 800h (=(10*15h)+(10*25h)+(10*40h)). So the potencial of saving 400h-800h is generated by hiring a candidate at least 21.9% (=400/(35*52)) to 42.9% (=800/(35*52) as good as the best. While remembering that generating those opportunities by the 2nd best candidates would have a worse cost-benefit ratio. We also have to remember that in this case, we may need more than $2M for active grantmaking, which further complicates calculating the “better candidate to more funding trade-off”.
However, I will stop this estimate now, because the time for the AMA is running out and I have to get ready for the beginning of the holiday that starts in Poland today. :) If you have any comments about the calculation above, let me know. If I happen to have some free time after the holiday, I may swing back to finish and further improve the estimate, but I cannot commit to that, especially if it would trade off against vetting and selecting the best candidates in the current hiring round ;) Thanks for this exchange and all your questions, Vasco!
Thanks for the follow-up, Karolina!
This suggests AWF would not benefit from additional active grantmaking due to hiring the best candidate instead one at least 44.0 % (= 800/(35*52)) as good as them, because both would save enough time to senior staff for the 30 active grantmaking opportunities to be found. Assuming part-time work with a salary of 65.9 $/h (= 120*10^3/(35*52)), hiring the best candidate instead of one 50 % as good as them would save AWF 60.0 k$/year (= 910*65.9). So, at least under this toy model, earning to give may still be a good alternative for the best candidate.
Happy holidays!
I think the marginal cost-effectiveness of AWF’s spending on grants and salaries should ideally be equal. Under these conditions, if the 2nd best candidate is 50 % as productive as the best one, and the salary for full-time work is 120 k$/year, I believe the 2nd best candidate plus 60.0 k$/year (= (1 − 0.5)*120*10^3) would be as good as the best candidate.