Memory Nguwi
Overstaffing is a significant challenge for businesses, mostly due to the fact that it results in the waste of resources. If your company has more employees than are required for a specific task, you are said to have an overstaffed organization. When there are too many employees, there is a need for a larger space, additional machinery and supplies, and additional administrative staff to support the bloated workforce. The symptoms of having an excessive number of employees are usually easy to spot, but management has to be aware of how to address this problem before it brings the firm to its knees.
How do you know if you are overstaffed?
If you find yourself in a position where you cannot make timely salary payments to your employees, you may have taken on more workers than your company can support. When you find yourself in such a circumstance, you need to keep in mind that this is the most important and major symptom of an excessive number of staff members. When it comes to instances in which headcount and company success are being analyzed, the most important assumption is that there ought to be a significant positive correlation between the two. Put another way, it indicates that the workers you already have are not generating enough revenue to cover salary dollars timely.
Failure to pay people competitively; If you are always finding yourself in a situation where you have high staff turnover due to low salaries, this could result from overstaffing. In this situation, it means you are spreading your salary dollars over a large number of employees. The same headcount is not productive enough to generate enough income to pay competitive salaries. The best way out of this situation is to slash your headcount after carrying out an objective assessment of your headcount versus output. The good news is that when you are optimally staffed, you rarely run out of salary dollars to pay your staff competitively. I know rightsizing your staff is not an easy task, especially when you have to lay off some staff. Unfortunately, businesses will have to make some of these tough decisions for businesses to survive.
High turnover: High turnover may be a symptom that employees find it difficult to effectively contribute to the firm since too many people are treading on each other. This might be the case if too many people are in the same space. When there are too many people to handle, it might be difficult for managers to split up the tasks. When something like this happens, vital employees in your team who are also highly talented quit because they want to work elsewhere where their responsibilities are assigned appropriately.
Frequent staff layoffs could be another indicator of overstaffing. When the headcount is properly planned in line with anticipated business volumes, it is rarely necessary to cut staff. When was the last time you systematically reviewed your headcount?
What causes overstaffing
There are many different factors that contribute to firms having an excessive number of employees. One of these issues is uncontrolled hiring, in which managers have the mentality that every performance issue can be fixed by adding more employees to the workforce. It is not helpful to recruit even more incompetent individuals so that you may assist those who are already inept. If you are taking in new people and your business indicators are not responding positively, it could mean there is a significant and positive relationship between headcount and business indicators.
Most managers believe that increasing their workforce gives them more power and influence. When left uncontrolled, developing an empire can result in bloated structures. As part of the power struggle inside the organization, managers are frequently in a hurry to bring on more staff members. This is one of the primary reasons why so many different firms have too many people on their payrolls. People are typically picked for their dedication to the hiring manager rather than to the business when they are recruited under this arrangement.
Staffing Levels and the organization’s performance
The choice of staffing level in organizations has occupied the minds of researchers for a long time. There is debate over the effect of overstaffing and understaffing on organization performance.
A large portion of the research shows a relationship between headcount and business performance. There is no consensus on the relationship between staffing levels and organization performance at a broader level. According to some studies, employees working in understaffed settings are more likely to experience burnout and emotional tiredness than those working in overstaffed situations (Rochefort and Clarke, 2010).
As a result, individuals have less motivation, poorer levels of productivity, and poor performance (Rafferty et al, 2007). The same study concluded that a certain level of overstaffing is required to allow the organization to deploy staff in times of shortages.
A study examined the effect of staffing level and workers’ compensation packages on the financial performance of Kuwaiti banks over the period spanning 2008 to 2018. Results showed a statistically significant direct relation between compensation packages and bank’s financial performance measured by return on assets (ROA).
There is debate over the effect of overstaffing and understaffing on organization performance. Some argue that workers are likely to work more efficiently and experience higher motivation with a lower level of staff. Overstaffing can support an organization in absorbing any turbulence in its environment.
What you need to do to address overstaffing
It would help to do a thorough headcount analysis before labelling your organization as overstaffed. In such a study, you check the number of employees in relation to business indicators. You can even go deeper to check the relationship between staff numbers and business indicators at the role level.
The results of this analysis would be a starting point for a staff rationalization that would set your business on the path to success.
*Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm.Email:[email protected] or visit our websites https://www.thehumancapitalhub.com/ and www.ipcconsultants.com