In order to run your business smoothly, you need to make sure you address any staffing problems head-on. Having a plan in place can prepare you for these problems, if and when they occur. Here are 3 common staffing issues, and solutions on how to fix them.
Problem #1: Turnover
Having employees leave is bound to happen at some point. However, you do not want to be the company known for its high turnover rate.
Why do people leave? The reasons for people leaving are numerous. Turnover can be a result of internal factors, external factors, or a combination of both.
An example of an external factor is the status of the job market. If there are numerous job openings, employees that are not satisfied with their current place of employment may seek better opportunities.
On the other hand, internal factors may include things like perceived low wages or a negative work environment.
Since the reasons behind turnover rates are unique to each company, how can managers and small business owners outline a process to keep turnover low?
Solution: Focus on Communication
The number one way to prevent high turnover is to establish open communication before problems snowball. Most managers and business owners believe that they have an effective open-door policy for employees to voice their concerns. However, there might be an even better way.
An article published by the Harvard Business Review discusses how having managers ask employees for feedback on a regular and casual basis can be more effective than an open-door policy. Oftentimes, by waiting for the employee to approach you, the problem has already escalated to a breaking point.
However, if an employee decides to leave despite your best efforts, then it is very important to conduct an exit interview. At this point, the employee is more likely to be completely honest and communicate their real reason for leaving. This information is invaluable, and it can give you the opportunity to improve certain aspects of your organization so that turnover is minimized in the future
Problem #2: Overstaffing
Oftentimes companies do not realize that they are overstaffed until it is too late. Unfortunately, if you have to lay people off, it can have a negative effect on morale. However, before you proceed with any solutions to fix overstaffing, you need to figure out if you are truly overstaffed, or just experiencing a temporary slow-down.
Besides the obvious signs of workers appearing to have too much time on their hands, another great way to see if you are overstaffed is by looking at your financial statements. For example, if labor costs have increased, yet sales have remained the same or decreased, you need to figure out why.
Financial ratios are great for interpreting your numerical data. For example, if you want to see how your payroll figures compare to your industry’s standard, you can calculate the gross revenue to payroll percentage. The calculation is done by taking the gross annual revenue and dividing it by the annual payroll cost. Multiply the result by 100 to get the percentage for your company. You can then compare this percentage to other companies within your industry to see if your labor costs are excessive. Combining financial data with manager and employee feedback, you can quickly figure out if you have an overstaffing issue.
Solution: Rethink Your Workforce
You may notice that one department always seems very slow, while others do not. If this is the case, you can move employees to the busier departments and train them in new areas that will help the business grow.
Another option is to ask for voluntary hour reductions. Although you can reduce hours across the board, there may be employees that would be more willing to work reduced hours in order to have more flexibility–especially if you can continue to offer them full-time benefits.
If you plan on growing your business, you need to keep in mind that the overstaffing issue will only be temporary. Eventually, as the business expands, you will need more workers, and it’s best to have a group of employees that are already dedicated to the company.
Problem #3: Understaffing
Business owners may fear overstaffing so much that they always run a lean workforce. They may rationalize that they can always have their employees work overtime if business really picks up.
For the sporadic increase in business, this is a good strategy. Employees love the occasional overtime. However, if overtime becomes excessive and mandatory, employees may become frustrated at their lack of choice and personal time off. Having a severely understaffed workforce can lead to employee stress and burnout. In addition, it may be cheaper to bring another person on board than to keep paying for an excessive amount of overtime. However, what should you do if you’re still not sure whether you need another person or not?
Solution: Use a Temp Agency
Utilizing a staffing agency is a great way to address understaffing issues. Today’s temp agencies oftentimes focus on one industry, such as manufacturing or finance. By focusing on one sector, these staffing agencies become very skilled at recruiting the best talent for that industry. The temps that they find are tested and experienced in their field. These candidates are placed into positions based on their work history, and oftentimes have the know-how to start supporting your current staff immediately. In the long run, if you realize that you do need to hire someone long-term, you can always hire the temp.
For more information on temporary placements, please do not hesitate to contact us.