31Jan

Insight: The “hidden cost” of not hiring


Over the past decade, many managers have mastered the art of doing more with less. Digital evolution, re-engineering  longer working hours and right-sizing initiatives have resulted in unparalleled gains for local and international organisations. But the long-standing mantra of running “lean and mean” is resulting in more costs that could ever have been anticipated. In many instances, under-staffing has become a real threat to future prosperity, particularly in the B2C world of eCommerce. It may be time to start considering what under-staffing is really costing your company and rethinking your organisational strategy?

Penny-wise, pound foolish

Rather than replacing staff, management more often than not reasons that they can share schedules and pay a little overtime to get the work done with remaining staff and unqualified vendors, but this approach leads to a plethora of painful business mistakes, lost revenue and overworked, stressed, resentful employees So, what is seemingly a boon to short-term profitability, under-staffing may expose your organization to unforeseen and unacceptable long-term risks, including the following:

1.     Redistribution of work: When organizations attempt to force more work through already constrained production processes, attention to detail tends to suffer. As a result, error rates typically rise.

2.     Late deliveries and failure to complete projects on time: Staff shortages affect production capabilities, which impair your ability to meet production and project schedules.

3.     Increased Stress: As employees are stretched to meet job requirements, their stress levels rise and they become incapable of maximizing their performance.

4.     Customer Dissatisfaction: Usability, delivery and quality issues invariably result in decreased customer satisfaction and user experience, which may be compounded by poor service from over-worked and over-stressed staff.

5.     Increased Personnel Costs: Stress increases expense. As tension in the workplace rises, so does absenteeism, workers’ compensation claims, and the need for more management.

6.     Increased Turnover: Burned-out employees don’t stay complacent. Even the best compensation packages may not make up for the decreased quality of life. Dissatisfied employees aren’t likely to stay around for long.

7.     Inability to Capture New Opportunities: A company hard-pressed to meet its current commitments cannot hope to undertake strategic endeavours successfully.

8.     Competitive Disadvantage: Without the capacity to ensure exceptional quality and service and to explore new business opportunities, organizations place themselves at a significant long-term disadvantage, compared to competitors that do not operate understaffed.

Don’t be fooled into believing that running lean always saves you money. The costs associated with lost business, reduced productivity, and increased workplace stress are often far greater than the cost of hiring. Research indicates that the total cost of understaffing can lead to a minimum of 1.5 the total costs of replacing team players in a one year period. So while it may cost your organisation £100,000 to replace a middle to senior-level team member, it would cost your business £150,000 in damages if you don’t. Plus, 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.

Intelligent People can help you.

For most managers hiring is not a core competency no priority. Spending time finding and screening job candidates, diverts your attention from critical business responsibilities, strategic thinking and decision making which in turn can be detrimental to your performance. Intelligent People can help you determine your hiring needs, suggest a number of alternatives to satisfy those requirements and ensure the talent recommended is not only of the highest caliber skills-wise, but is a cultural shoe-fit within your organisation too . If you haven’t given us a try yet, what are you waiting for?

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