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Loss Capacity

Definition​

Loss Capacity is the total amount of selling capacity that has been lost to attrition (terminations, resignations) and temporary leaves during a measurement period. It represents the revenue-generating potential that departed or absent employees took with them.

Formula​

Loss Capacity = Σ (Departed/LOA Employee Annual Quotas)

Includes:

  • Voluntary resignations
  • Involuntary terminations
  • Leaves of absence (LOA)
  • Retirements

Excludes:

  • Future planned departures (not yet happened)
  • Internal transfers (capacity stays in company)

Worked Example: North America East Q4 2025​

Departures during Q4 2025:

EmployeeTypeDateAnnual QuotaCapacity Lost
TomResignationSept 30$1.4M$1.4M
JohnResignationOct 15$1.2M$1.2M
MikeTerminationNov 1$1.0M$1.0M
LisaResignationNov 15$1.4M$1.4M
SarahLOA (Parental)Dec 1$1.2M$1.2M (temporary)
Loss Capacity (Q4) = $1.4M + $1.2M + $1.0M + $1.4M + $1.2M = $6.2M

Note: Sarah's LOA is temporary loss (she's returning), but still counts as Loss Capacity for Q4.

Loss Capacity vs Other Metrics​

Loss Capacity vs Attrition Rate​

Loss Capacity = Total capacity lost ($6.2M)
Attrition Rate = Loss / Beginning Capacity
Attrition Rate = $6.2M / $11.0M = 56.4%

Difference:

  • Loss Capacity: Absolute amount lost
  • Attrition Rate: Percentage of starting capacity

Loss Capacity vs Unrecovered Gap​

Loss Capacity = $6.2M (what we lost)
Recovered (Backfills) = $0.9M (what we regained)
Unrecovered Gap = $6.2M - $0.9M = $5.3M (what remains lost)

Difference:

  • Loss Capacity: Total lost
  • Unrecovered Gap: Lost minus recovered

Loss Capacity vs Revenue Impact​

Loss Capacity = $6.2M annual quota
Quarterly Impact = $6.2M / 4 = $1.55M per quarter

But actual revenue impact depends on:

  • When in quarter they left (mid-quarter = partial loss)
  • Their actual attainment % (not 100%)
  • Whether backfills were hired

Measuring Loss Capacity​

Annual Loss Capacity​

Sum all departures across the full year:

Q1 Loss: $2.0M
Q2 Loss: $2.3M
Q3 Loss: $2.5M
Q4 Loss: $6.2M
────────────────
Annual Loss Capacity: $13.0M

Interpretation: Lost $13.0M of annual quota capacity over the year.

Quarterly Loss Capacity​

Focus on a single quarter to understand period-specific impact:

Q4 2025 Loss Capacity: $6.2M
Q4 2025 Beginning Capacity: $11.0M
Q4 Attrition Rate: 56.4% (crisis level)

Month-by-Month Loss Tracking​

MonthDeparturesCumulative Loss
Sept1 (Tom)$1.4M
Oct1 (John)$2.6M
Nov2 (Mike, Lisa)$5.0M
Dec1 (Sarah LOA)$6.2M

Insight: Loss accelerated in Nov-Dec (holiday season turnover spike)

Types of Loss Capacity​

1. Permanent Loss (Attrition)​

Voluntary:

  • Resignations
  • Retirements
  • Career changes

Involuntary:

  • Performance terminations
  • Layoffs
  • Restructuring

Impact: Permanent capacity loss, requires backfill to recover

Example:

Tom resigned: $1.4M permanent loss
→ Need to hire backfill to recover

2. Temporary Loss (LOA)​

Leave types:

  • Parental leave
  • Medical leave
  • Sabbatical
  • Military leave

Impact: Temporary capacity loss, employee returns

Example:

Sarah on 3-month parental leave: $1.2M temporary loss
→ No backfill needed, capacity returns automatically
→ But still impacts Q4 performance

3. Partial Loss (Mid-Period Departures)​

When employees leave mid-quarter, capacity loss is prorated:

Example:

John leaves Oct 15 (halfway through Q4)
Annual quota: $1.2M
Q4 quota: $300K
Remaining Q4 capacity lost: ~$150K (half the quarter)

For Loss Capacity tracking: Still count full annual quota ($1.2M), but note actual Q4 impact is lower.

Why Loss Capacity Matters​

1. Quantifies Attrition Impact​

"We lost 5 people in Q4"
→ How bad is that?

"We lost $6.2M of Loss Capacity in Q4"
→ Much clearer impact

2. Drives Hiring Urgency​

Loss Capacity: $6.2M
Average Quota: $1.2M
→ Need to hire 5-6 people to replace lost capacity
→ But with ramp, will take 5-6 months to fully recover

3. Justifies Backfill Budget​

To Finance: "We need to hire 5 backfills"
Why? "We lost $6.2M of capacity, need to restore it"
Cost: 5 × $120K salary = $600K investment
ROI: Recover $6.2M revenue potential

Year-over-year comparison:

YearAnnual Loss CapacityTrend
2023$8.0MBaseline
2024$11.0M+37.5% worse
2025$13.0M+18% worse

Insight: Attrition problem is accelerating, need retention initiatives

Tracking Loss Capacity by Segment​

By Role​

RoleLoss Capacity% of Total
Enterprise AE$3.8M61%
Mid-Market AE$1.8M29%
SDR$0.6M10%

Insight: Enterprise AE attrition is disproportionately high

By Manager​

ManagerLoss CapacityTeam SizeLoss Rate
Michael$4.0M6 people67%
Amanda$1.2M4 people30%
David$1.0M5 people20%

Insight: Michael's team has critical retention issue

By Reason​

ReasonLoss Capacity% of Total
Voluntary (resignation)$4.0M65%
Involuntary (termination)$1.0M16%
LOA (temporary)$1.2M19%

Insight: Most loss is voluntary turnover (retention problem, not performance)

Responding to High Loss Capacity​

Immediate Actions​

  1. Approve Backfills

    • Auto-approve backfill budget
    • Start recruiting same-day
    • Set aggressive start date targets

  2. Interim Coverage

    • Assign accounts to existing team
    • Prevent customer churn
    • Manager coverage for key deals

  3. Accelerate Hiring

    • Activate evergreen pipeline
    • Increase offer competitiveness
    • Expedite background checks

Medium-Term Actions​

  1. Root Cause Analysis

    • Exit interviews
    • Compensation benchmarking
    • Manager effectiveness reviews
    • Workload assessment

  2. Retention Initiatives

    • Compensation adjustments
    • Career pathing programs
    • Manager training
    • Work-life balance improvements

  3. Hiring Plan Update

    • Buffer capacity (over-hire)
    • Faster ramp programs
    • Evergreen recruiting

Best Practices​

1. Track in Real-Time​

Update Loss Capacity immediately when:

  • Employee gives notice
  • Termination occurs
  • LOA begins

Don't wait for monthly close.

2. Separate Permanent vs Temporary​

Total Loss Capacity: $6.2M
  ├─ Permanent (attrition): $5.0M
  └─ Temporary (LOA): $1.2M

Why: Different responses (backfill vs wait for return)

3. Report Both Annual and Actual Impact​

Tom left Oct 15:
  Annual Quota: $1.4M (Loss Capacity metric)
  Q4 Impact: ~$175K (actual revenue at risk)

4. Compare to Historical Baseline​

Current Quarter Loss: $6.2M
Historical Avg (last 4Q): $2.0M
→ 210% above normal (CRISIS)

Common Pitfalls​

1. Only Counting Headcount​

Mistake: "We lost 5 people"

Better: "We lost $6.2M of capacity (5 people)"

Why: Not all people have equal capacity (quotas vary)

2. Not Tracking LOA Separately​

Mistake: Treating LOA same as permanent attrition

Reality: LOA is temporary, employee returns, no backfill needed

3. Forgetting Mid-Period Departures​

Mistake: Only counting end-of-quarter headcount

Reality: Someone who left Day 1 has different impact than Day 89

4. Not Segmenting Loss​

Mistake: "We lost $6.2M" (no additional context)

Better: "We lost $6.2M: 61% from Enterprise AE, 67% from one manager's team"

Why: Reveals specific problems to address

Loss Capacity in Capacity Planning​

Beginning of Quarter (BoQ) to End of Quarter (EoQ) Flow​

BoQ Capacity: $11.0M
Less: Loss Capacity: -$6.2M
Plus: Backfills Added: +$0.9M (partial ramp)
─────────────────────────────
EoQ Capacity: $5.7M

Forecasting Future Loss​

Use Capacity at Risk to predict next quarter's Loss Capacity:

Q1 2026 BoQ Capacity: $5.7M
Predicted Q1 2026 Loss (13.5% rate): $770K

Plan for: $770K of Loss Capacity in Q1, need 1-2 backfills

References​

  • Standard metric in sales capacity planning
  • Also called: Capacity lost, attrition capacity, departure capacity
  • Key input to hiring plans and capacity forecasts
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