“Doing more with less” has proven to be a successful strategy for many businesses. But it only works if you do it effectively – and that means right staffing, not understaffing.
Reducing head count may work as a Band Aid to stop short-term financial bleeding, but in the long run, it results in a net loss that can impact safety, quality and customer relationships, as well as profitability.
The Story Ends Badly
Consider this example:
A printing company lost two graphic designers in June, and the owner reasoned that he could juggle schedules and pay some overtime to meet demands with his remaining staff. He might even save money – or so he thought.
Then, a new client contacted the printer to produce its annual report, due July 15. It was a complex job, so remaining employees worked a total of 120 overtime hours to deliver it on time. But there were errors that resulted in printing 5,000 inserts, plus a need to refund the client half of its original fee as compensation. Last but not least, the customer vowed never to use the printer again.
That same month, an existing customer asked the firm to redesign and print an updated form. And another potential client requested a series of flyers. Finally, the printing firm’s website vendor delivered the design for a new online ordering page. The printer had no choice but to turn down the work and postpone its own strategic business opportunity because of insufficient staffing.
In a final blow, the printer’s creative director/administrative assistant accepted another job – prompted by the added stress.
The bottom line:
- The staffing reduction decision cost the company almost $2,400 more than it would have to hire employees to replace the original two who resigned.
- The company lost one valuable full-time employee, several customers, and the opportunity for e-commerce capability – not to mention sustaining a potentially irreparable blow to its reputation.
And when all was said and done, the owner hired three full-time employees.
Don’t let the risk of understaffing:
- Employees in an understaffed environment typically must take on additional work, which can be stressful, distracting and tiring.
- Working under stress can not only cause long-term mental health conditions, but also lower awareness of potential workplace hazards.
- Lapses in following industry regulations or machine safety precautions can arise when employees are overworked.
Increase Personnel Costs
- As workplace tension and fatigue increase, so do absenteeism, worker’s compensation claims, and health insurance expenses. Healthcare costs are nearly 50 percent higher for workers who report elevated stress levels.
- Burned-out employees are flight risks. Even the best compensation packages don’t make up for a balanced quality of life.
- Studies have shown that using overtime causes productivity to increase at first, but after approximately eight weeks, it plummets to a point where all previous gains are erased.
Cut Into Your Competitive Edge
- A company hard pressed to meet current commitments has no little to no hope of successfully undertaking new business endeavors.
- Lacking the capacity to ensure high quality and timeliness of service, your organization places itself at a long-term disadvantage compared to competitors who are fully staffed.
If you need an experienced business partner to help you avoid the stress and cost of understaffing,contact the team at Alternative Staffing today.