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Employees are crucial assets for every company. And having employees with the right talents and at the right levels is essential to having a productive, efficient workforce that contributes to a company’s success. But having overstaffed your small business works against your success.  

The Results of Being Overstaffed 

When a company is overstaffed, it is paying more wages than is necessary so its profitability decreases. Staff members become underutilized, productivity decreases, employees feel disengaged, and morale suffers. 

When Can Overstaffing Occur 

A company can be overstaffed when a company experiences a surge in business followed by a decline or when there just isn’t enough work for the existing number of employees. It can happen when hiring takes place without adequate long-term staffing planning, or when staffing is done in a reactionary way instead of strategically. 

10 Signs You’ve Overstaffed Your Small Business 

Consider these signs that you’ve overstaffed your small business: 

  1. You see or hear evidence of low morale because employees aren’t being challenged by their work. Overstaffing often results in laziness and sloppy work. Employees appear to be bored or unmotivated.
  2. Your turnover rate has increased significantly because employees don’t see the value of their work or their contributions to workplace success have decreased.
  3. You are experiencing rumors and gossip because employees have too much free time.
  4. You see evidence that employees are spending far too much work time on social media.
  5. It appears that there are too many layers on the org chart impacting efficiency.
  6. Communication has slowed down and decisions take too much time.
  7. Your human resources costs are consistently over budget, adversely affecting your profitability.
  8. Employee absenteeism has increased.
  9. Productivity metrics show that employees are underutilized.
  10. You are not achieving the results that you desire. 

The Advantages of Correct Staffing Levels 

It is important for every business to recruit effectively and then maintain good staffing levels. That starts with carefully identifying your company’s staffing needs, creating solid job descriptions, carefully evaluating staff performance, and planning ongoing staffing needs. The results include helping you to control your labor costs, and contributing to better profit margins. It can also lead to improved customer focus and improved customer service. 

How to Address Overstaffing 

To avoid the problem of being overstaffed, it is important to develop a comprehensive staffing plan. That will help you to determine the right skill sets and the right number of employees to achieve staffing effectiveness and efficiency. Inherent in that planning is an evaluation of where you have excessive resources and where you have staffing gaps. If your business is currently overstaffed, you can reallocate employees, cross-train employees, and you can selectively decide who to lay off without impairing the company’s mission. You can also reduce employees’ hours and temporarily furlough some employees.  

Choose an Expert Payroll Service  

Choose an expert payroll service to help you retain satisfied employees. Palmetto Payroll has offices in Columbia and Charleston and serves over 300 business owners statewide. We help you thrive and grow by offering tailored solutions to save you time and money. Our services include payroll, tax depositing and filing, management reporting, timekeeping services, and Human Resource Services.