While you may see yourself as an expert at doing more with less, this talent doesn’t always pay off when it comes to running a business. In many instances, understaffing can limit your ability to serve customers and grow the organization. From decreased productivity to increased stress and turnover, the costs of being understaffed can add up to major losses in your workplace.

Why Are Companies Understaffed?

A recent survey of small businesses found that 35 percent report being understaffed, and only about 21 percent have plans to hire new employees in the coming months.[1] In the face of all the negative consequences that come with a lack of staff, why aren’t companies hiring new employees when they probably should be? The survey found that some of the top reasons for this trend include:

  • Concerns about the economy and future cashflow
  • An inability to find qualified workers
  • Worries about rising healthcare costs
These concerns are certainly legitimate reasons to hesitate when it comes to hiring, but businesses would be wise to consider the hidden costs that result from running an understaffed operation.
Infographic showing that 35 percent of small businesses report being understaffed.

Risks of Understaffing

Employee Burnout

In the U.S., 85.8 percent of males and 66.5 percent of females work more than 40 hours per week.[2] When companies are understaffed, the staff that they do have is often overworked, and the likelihood of them becoming stressed, tired or sick grow exponentially. When employees have to cover for an understaffed shift or work longer hours, they are more at risk of finding themselves burning out and developing a range of health issues. In fact, one study by the American College of Occupational and Environmental Medicine found that employees who work long hours with high job demands are more likely to develop depression.[3]

Increased Stress

When employees have to stretch to meet their job requirements, stress levels rise and performance levels plummet. A reduction in staff often makes existing employees responsible for more work, and that increased workload adds stress makes it difficult to meet performance expectations. Increased stress also lowers morale and employee job satisfaction, takes a toll on an employee’s mental and physical health, and can increase the need for time off.

Increased Absenteeism and Tardiness

Employees who find themselves constantly having to pick up others’ slack or work longer hours are likely to call out more often. It’s easy to get tired of covering co-workers’ responsibilities if you’re not recognized or rewarded for it, and it’s common to just need a break when you’re overworked. Not only will employees take more unplanned days off, they may start coming to work late either due to a lack of respect for their employer or extreme exhaustion from the previous day’s work.
Picture of a male worker feeling overwhelmed at work by contstant demands.

Increased Employee Turnover

Burned-out employees aren’t likely to stay complacent. An excellent compensation package won’t always make up for the decreased quality of life that comes with being overworked. As a result, turnover rates are likely to spike when overwhelmed and dissatisfied workers quit in the face of increased workloads for the same salary.

Decreased Quality

 

Understaffing can affect your service and production capabilities, which limits or impairs your ability to meet your work demands. When fewer employees are forced to work faster and longer to handle a higher volume of work, attention to detail is lost, errors increase and quality drops. From late deliveries, to printing mistakes to an overall failure to finish a project by the deadline, poor quality can diminish your company’s reputation and drive away customers over time.

Missed Growth Opportunities

 

A company hard-pressed to meet its current commitments cannot realistically undertake new endeavors successfully. Inadequate coverage for work shifts can lead to missed opportunities to grow the organization. Even if your management team decides to take on new clients, without the capacity to ensure exceptional quality and service, it’s nearly impossible to explore new business opportunities. This is why “lean and mean” organizations often place themselves at a serious competitive disadvantage, compared to companies that do not operate understaffed.
Picture of a male worker screaming at the telephone because his company is understaffed and he is overworked.

Diminished Customer Satisfaction

When service levels start to deteriorate, you’re bound to lose clients. Not only does an understaffed company miss opportunities for growth by failing to meet customer needs, it may lose the clients it already has. If you’re not there to answer a phone call, or you’re delivering poor customer service or low-quality products, there’s always a better solution out there for your customer to find.

High Labor Costs

 

Understaffing your workplace often requires employers to push employees already on the clock into overtime. Overtime requires a company to provide at least time and a half to employees, immediately driving a wrench into your bottom line. It costs much more for a business to pay overtime than to correctly staff a shift. Furthermore, stress also increases expense. As tension in the workplace rises, so does absenteeism and workers’ compensation claims.

The Benefit of Forecasting Staffing

Forecasting your staffing needs is critical to a solid business strategy. Too many employees drive up overhead and directly affect business profitability, while too few limit the ability to serve current customers and grow the business. Understaffing may seem like a way to save money, but it will cost you in the long run.

At TPG Staffing, we know that a well-staffed business allows your employees to do their best work, which gives you the best chance of remaining successful in today’s competitive marketplace. Whether you need a temporary employee to help with a project or a team from the ground up to hit the ground running, we can help you build an optimal and cost-effective workforce. Call 732-246-7100 to learn more.