The Hidden Costs of Understaffing
Understaffing is more costly than you might expect.
Understaffing puts a strain on the entire company. Understaffing can occur for any number of reasons, but everyone working can feel its impact and will react to it differently. While there are those who work harder to fill the gap created by understaffing, if the problem goes unresolved, eventually it will lead to major problems throughout the company. When understaffing goes unresolved, the company will suffer these hidden costs.
The primary cost of understaffing is employee burnout. Employee burnout can lead to both decreased production and an overall higher turnover rate. People don’t work as hard when they are pushed excessively every day and don’t see any signs that the work will lighten up any time soon. Productivity is tied closely to a worker’s mental state, and feeling drained or overworked will lead to a drop in productivity.
Understaffing by default will make it more difficult to meet demands, because there are not enough people. This will either mean that every worker needs to work harder or working hours need to increase. Otherwise, demands will not be met. Attempting to remedy this by requiring overtime or enacting new productivity standards is not a sustainable solution.
After some period of time, when employees feel that their work isn’t amounting to anything, their productivity tends to drop. This generally results in a domino effect where, once one worker stops working as hard, everyone else begins to wonder why they have to work so hard, leading to an overall dip in productivity. The impact of decreased productivity is dependent on the gap between expected production and actual production, but any gap here could be a sign that changes need to be made to support the current workforce.
The cost of a high turnover rate
The cost of a high turnover rate can be as much as tens of thousands of dollars to two times the annual salary for each employee that is lost. A good chunk of this cost can be attributed to the cost of finding a replacement for that employee and training the new employee. Alongside this, the time spent where a replacement is not yet found feeds back into understaffing and once again yields employee burnout. This results in a dangerous cycle that can make turnover rates even worse.
No one wants to work for a company where they know that they’ll be overworked. People want to be paid adequately for the work that they do, so it becomes even more difficult to hire for a position that has a bad reputation. Word spreads quickly when a company has unsafe or strenuous working conditions, and a bad reputation isn’t something that can be easily mended. The cost of hiring each employee will rise as a result, as it will cost more to advertise and find people interested in working for the company. It can also raise overall cost per employee, because a boost in hourly wage could be an approach to solve for this problem.
Understaffing can be unavoidable if retention rate is too low or if there’s not enough budget to hire new people. When this becomes the case, it might be time to consider temporary staffing or an on-demand staffing solution. With both temporary staffing and on-demand staffing, you can fortify your workforce for a set amount of time, whether that be to keep you afloat through the peak season, or to help you better maintain the budget that you are working within. To maintain a strong workforce, it’s vital to address understaffing whenever it arises.
tilr is an on-demand platform that can fortify an understaffed workforce when necessary. tilr provides companies with people that are ready to get to work that have the skills necessary to start performing on day one. To learn more about how tilr can help your company, click here.