Is It Time to Let Your Employees Go? Here’s the Real Cost of Understaffing

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There’s value in lean operations, especially as your business tries to stay afloat amid a pandemic. But not all business environments can benefit from that “doing more with less” approach. You may think you’ve saved thousands of dollars by retrenching several employees or refusing to hire the required workforce. Understaffing, however, comes with a hidden cost that may be a real threat to the future of your business.

Scraps and rework

Imagine three employees working on tasks that are used to be assigned to a team of six. When the workload is heavier, attention to detail tends to suffer. Add tight deadlines to the mix, and you’ll have higher error rates at the end of the month. Though three workers could deliver the same number of deliverables your team of six used to complete, this doesn’t mean they could do it with the same quality.

Redoing work requires hours that should’ve been spent on working on a new project. So even if you’ve saved thousands of dollars by keeping a smaller team, rework can still hurt your bottom line. Plus, poor quality of product or service can lead to unsatisfied customers, which is something you don’t want when you’re trying to recoup losses due to being locked down for months and decreasing market demand.

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Unhappy customers

Implementing safety measures, introducing contactless payment, and asking shop for shops to outfit your store with racks that enforce social distancing can help assure your customers amid a pandemic. But as mentioned, you can quickly lose them if you fail to provide quality service or products consistently.

The impact of unsatisfied customers can be far-reaching. It could lead to lost loyalty. It could also result in negative feedback, which could hurt your reputation online and cause you to lose more potential clients.

Stressed employees

Customers fuel your sales, but employees drive your operations. If you’re short on employees, others will inevitably pick up the slack. And as your workers are stretched to meet their heavier workload, their stress levels increase, and they become incapable of maintaining peak performance. The quality and timeliness of the output delivery aren’t the sole problems; expect increased absenteeism, too.

Errors on the production floor can increase the risk of injury. Spending more than ten hours a day in front of a computer day in and day out can take a toll on your worker’s physical and mental health. Also, with stress comes tension. It can put a strain on colleague relationships and cause unnecessary disputes.

Calculate the costs of increased absenteeism, additional health benefits, possible workers’ compensation claims, and higher employee turnover to see the tangible impact of workplace stress.

Don’t be fooled into thinking that running lean is always good for your cash flow. The costs of lost customers, poor product or service quality, and stressed employees are often higher than the cost of hiring. In these trying times, a well-staffed company allows employees to do their best work. As your biggest asset, your healthy and happy employees are your best chance to survive and thrive today.

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