Being temporarily shorthanded usually doesn’t create long term issues in the business; being understaffed for an extended period of time, however, can result in a number of serious problems. Some of the things that can cause understaffing include layoffs, employee turnover, not being able to afford new staff, or slow hiring that does not keep up with labour needs.
While understaffing might make sense to management due to the reduced overhead expenses, it could severely limit the ability of your business to grow and serve its customers. Here are some of the problems that having an inadequate workforce for prolonged periods could cause (ref: Blue Collar People):
- Running an organisation involves completing tasks. It’s mandatory for these tasks to be completed regardless of the business being understaffed. This means that in addition to their normal workload, your employees will also have to take on extra responsibilities in order to keep the company running.
The extra workload could result in your employees working longer hours which increases stress levels and could increase the likelihood of employee burnout. This is especially true where the personnel are not familiar with the new responsibilities or when the new duties prove to be too challenging.
Additionally, some employees might feel that others are not pulling their weight which could lead to hostility among the employees and cause dissension – and consequently a dip in productivity.
- Poor quality products and services. Both the service and product quality willsuffer when you are understaffed as fewer workers are available to serve your customers or run production lines. The few employees will have to work faster to handle the high volume of work which will increase the number of errors. Employees could also be rushed through training or begin work without getting trained which will also diminish quality. Poor quality services and products will, over time, impact negatively on your company’s reputation and drive away customers.
- Lost business. A business that is understaffed will miss out on growth opportunities as it lacks the capacity to meet the needs of its customers. If a business takes on new orders or clients and then fails to deliver, the customer will be lost, and the company’s reputation will be damaged. When you lose business, you not only lose revenue, but you could also be missing out on the chance to enter new markets.
- Payroll cost. Often when a company is understaffed, employees will be required to work overtime in order to keep things running. This can add to your payroll expenses as overtime is more expensive than paying for regular work hours – and could even be more expensive than hiring another full-time worker.
- Increased voluntary attrition. Employees working in an understaffed company will eventually become stressed out, demotivated and disengaged. People will start resenting the organisation and start looking for other places to work. As a result, voluntary attrition will increase starting with your best employees and thenspread to the rest. This will send your company into a tailspin that can be extremely difficult to get out of.
Prolonged understaffing can have serious consequences for your business, which is why you need to consistently monitor your staff levels and make necessary adjusts to the staff number to ensure it matches your labour needs.