Memory Nguwi
When an organisation is operating at optimum staff levels, it is likely to perform beyond expectation, provided there is a market for the services it offers.
Many organisations in Zimbabwe moved from hyperinflation carrying the same headcount into the multi-currency system. A few were very agile, and they adjusted their headcount to align with the new business realities. In the majority of cases, organisations take a long time to adapt to the new realities. Every business leader must ensure that the organisation is optimally staffed all the time.
The organisation should never carry too many people to too few. The consequences of both options are too costly for any business savvy executive. Below I list some of the signs that could indicate that your business is overstaffed.
Business performance – when your organisation is not doing well, check if you have the optimum number of staff or not. Depending on the nature of your business, headcount should have some form of correlation with key business indicators. This means that your performance should significantly increase as more people are hired.
No correlation between business indicators and headcount – When you analyse and find no relationship between business performance indicators and headcount, it could signify that your organisation is over or understaffed.
In a normal situation, there should be a correlation between headcount and some key business indicators. As an example, we expect that an increase in the size of a sales team should lead to more sales volume.
From my experience, in most cases where there is no relationship between headcount and critical business indicators, the organisation is overstaffed. In that case, a complete headcount analysis may be required to cover each role in terms of its output over time and the number of people in that role. Such kind of a report will be able to identify the optimum number of staff required in each position.
Failure to pay staff – When you get into a situation where you consistently fail to pay your staff on time. This could indicate overstaffing. In other words, this means that the volume of business is not aligned to the number of people producing such business. Take time to analyse your headcount. It’s very easy to know quickly whether you are overstaffed or not.
Too many industrial relations problems could signify too many people in the organisation who are not occupied therefore have time to engage in confrontation. Investigate further when you see too many conflicts in the organisation.
Inefficiencies – if you are experiencing frequent inefficiencies, you may also want to check if you are not overstaffed. When there are too many people above the required number doing the same things, they tend to get in each other’s way.
Low levels of employee engagement can also be another sign of understaffing. This disengagement will be coming from employees who are idle with nothing to do. Employees go to work to fulfil a specific purposes. When employees are hired and they have nothing to do, it affects their self-esteem and engagement levels.
Staff Turnover– Please note that this is not the only reason that could lead to staff turnover. High staff turnover could be a sign that employees have little to do or too many things to do. It is essential to investigate once you start seeing a trend up in staff turnover.
However, be cautious when interpreting over time in relation to over or understaffing. Too much overtime could be a sign that the organisation is understaffed. Research in Zimbabwe indicates that most of the overtime worked is not actual overtime due to workload. Employees, in some instances, have employed tricks to get extra income.
They slacken during normal working hours so that they get overtime.
The high frequency of workplace accidents could also be an indication of overstaffing or understaffing. If specific roles are understaffed, it puts pressure on the staff to complete the assigned task and take shortcuts. The same could happen when there is overstaffing; employees get in each other’s way as they try to complete the assigned tasks.
Empire building – When you see your managers in a race to bring more people to the business without solid business justifications, you must know you are headed for overstaffing. I firmly believe that most overstaffing cases emanate from managers trying to build empires that have nothing to do with advancing the mission and vision of the organisation. Be on the lookout for managers who are out to build empires that will sink your business.
Too many meetings could signify that the organisation is overstaffed as more and more people organise meetings to seek relevance.
Too many layers in the structures is another warning sign pointing to overstaffing. In an adequately structured organisation, you should never have more than five reporting boxes from the lowest person in the organisation to the CEO.
A wrong mix of people in operations/core business and those in support functions. The recommended ratio is 70% in core business and 30% in support functions.
The best way to assess over or understaff is to carry out a headcount analysis. In a headcount analysis, you analyse each role in relation to output/or key performance indicators. I recommend that a headcount analysis should also include an assessment of workload per individual employee. This includes physical and mental workload analysis.
Any headcount analysis that leaves out mental workload assessment will be incomplete. To have a complete overview, you may also want to do a time utilisation assessment.
In my experience, besides the results you find through headcount analysis, employee time utilisation reveals gaps in how employees are utilised.
**Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm. https://www.thehumancapitalhub.com email: mnguwi@ipcconsultants.com