Hidden Costs of Understaffing

Hidden Costs of Understaffing

While you may see yourself as an expert at doing more with less, that doesn’t always apply to running a business. In many instances, understaffing can limit your ability to serve your clients & grow your organization. From decreased productivity to increased turnover, the costs of being understaffed can really pile up causing major losses in your workplace.

Why Are Companies Understaffed?

35% of small businesses report being understaffed, & only 21% have plans to hire new employees in the coming months.[1] When facing all of the negative concerns that come with a staffing shortage, why aren’t companies hiring employees when they should? The survey found that some of the top reasons for this trend include:

  • Worries about rising healthcare costs
  • An inability to find qualified workers
  • Concerns about the economy & future cash flow

These are legitimate reasons to hesitate when it comes to bringing on a new team member, but businesses really should consider the hidden costs of running an understaffed organization.

 

Risks of Understaffing

Employee Burnout

In the U.S., 85.8% of males & 66.5% of females work over 40 hours per week.[2] When companies are understaffed, the staff they do have is often overworked, & the likelihood of them becoming stressed, or sick grow rapidly. Employees covering for an understaffed shift are working longer hours, & they’re at a higher risk of burning out and developing a range of health issues, including depression.

Increased Employee Turnover

No matter how great your benefits package or company culture is, burnt out employees are unlikely to stay if they’re overworked. As a result, turnover rates often spike when overwhelmed & dissatisfied workers quit in the face of increased workloads for the same salary.

Decreased Quality

Understaffing will affect your service & production capabilities, which impairs the ability to meet your work demands. When fewer employees are forced to work faster & longer to handle a higher volume of work, attention to detail is definitely lost, errors increase & quality drops significantly. Poor quality can diminish your company’s reputation & will drive away your customers over time.

Higher Labor Costs

Understaffing your workplace often requires employees that are already on the clock to work overtime. The financial costs of overtime immediately affect your bottom line. It costs more for a business to pay overtime than to correctly staff a shift. Furthermore, stress also increases expenses, as tension in the workplace rises, so does absenteeism & workers’ compensation claims.

Additional Operating Costs

Another area that suffers due to understaffing is the upkeep of your facility and equipment.  Preventative maintenance and repairs are often skipped or put off due to employees lacking the time to perform these tasks.  It doesn’t take long for equipment, machinery and your facility to start showing signs of neglect and can add significant costs to your operating expenses.

 

Running your business too lean can cause long-term problems that can take months to overcome.  Be thoughtful in your staffing decisions and think how it affects your business in the long term.  We at Career Personnel can partner with you to maintain the proper balance of employees throughout the year.

A well-staffed business allows your employees to do their best work, which gives you the greatest chance of remaining successful in today’s competitive marketplace. Whether you need a temporary employee to help with a project or an entire team to hit the ground running, we can help you build an optimal & cost-effective workforce. Call 903-236-4243 to learn more.


Career Personnel is a recruiting & staffing agency located in Longview focusing on full-time employment for industrial, clerical, oilfield service & CDL drivers.  Keep up with Career Personnel online at cpjobs.net, & make sure to check us out on FacebookTwitter, & LinkedIn.

Sources:
  1. https://mediaroom.tdbank.com/2012-07-30-More-than-One-Third-of-Small-Businesses-Are-Understaffed-But-Fewer-Plan-to-Hire-in-Upcoming-Months-TD-Bank-Survey
  2. https://unstats.un.org/unsd/demographic/products/indwm/

 
%d bloggers like this: