Overstaffing? How to spot the signs before it becomes a problem

Overstaffing can be a big problem for small businesses, especially when seasonal spikes drop and things return to business as usual. So, how can you put a stop to overstaffing without jumping to layoffs? Well, start with forecasting, scheduling, cross-training, and Homebase to help you through it all.

Read on to learn more about the symptoms of overstaffing, how to solve it, and how to keep your employees happy: and most importantly, working. 

What is overstaffing?

Overstaffing is when there are more employees than necessary to meet the demands of a business.

Essentially, it’s too many workers for the workload.

Overstaffing can be an expensive problem for many types of small businesses. From landscaping to vet clinics, it’s important for a business to assess its staffing and workload needs on a regular basis to ensure it they’re avoiding overstaffing.

What causes being overstaffed at work?

Let’s not underestimate the causes of being overstaffed. There can be a lot—especially when you’re too busy managing your business to fully and continually assess business demands and their impact on your staff.

Let’s take a step back from your desk or wherever you might be reading this article, and think about the reality of your business. Think about the staff you have working for you, and the tools you’re using to manage their time. Be realistic about your current ways of working: no judgment here, just solutions.

Not using online tools to track time and schedule your employees

If you’re asking, “Tools, what tools?”, this might be one reason that you’re overstaffing your workplace—even if you don’t know it. 

Consider scheduling and time tracking. If you’re using outdated tools, like paper timesheets and spreadsheet schedules, you might be missing out on key metrics of success, or lack thereof. For instance, it’s Thursday morning at the shop and you have four people working the sales floor, plus two cashiers—all for a shift that hasn’t been busy since the holiday rush.

But nobody has told you this. Why? Maybe it’s because they assume you know—you are the business owner after all. Or perhaps it’s because working a relaxed shift on a Thursday is exactly what your team wants. Hey, if they don’t make a commission, what’s the difference?

Now imagine you could automatically sync your store sales with schedules and bring your staff, their hours, and their sales all together in one place to uncover the who’s and what’s of your day and how much each brings in. That type of information could give you a better understanding of your schedule, and whether or not it makes financial sense to staff up or down during certain shifts.

This is the power of modern-day time tracking tools. Not only do they let you know who’s clocked in and out, but depending on the type of time tracking tools you’re using, they can work with other software that you’ve put in place. For example, a tool like Homebase lets you integrate with other systems to track sales, schedule staff, and complete payroll to help you identify where there may be labor leaks in your business—i.e. overstaffing. 

Overhiring a team due to improper forecasting

Next up, we’ve got overhiring: the act of hiring more employees than necessary. This is’t uncommon for businesses, especially when you’re anticipating peak periods, like summer patio season or the holiday shopping rush.

However, if not forecasted correctly or if employees stay on the job longer than needed, overstaffing can occur. And although having a surplus of workers doesn’t seem like a totally bad idea, it can cause a decrease in productivity and workplace satisfaction.

Here’s how: when workers don’t feel like they have enough meaningful work to do—even if that work includes unloading the dishwasher for hours on end—your employees can feel undervalued. This creates distance from themselves, the work they’re doing, and ultimately, the customers you’re serving. 

A lack of research on business needs

Research isn’t just for your business plan. When it comes to reducing overstaffing, it’s necessary to conduct research on an ongoing basis. This helps you understand the flows of your business, the scenarios your employees are faced with, and who responds best to what environments.

Research also allows you to better plan and go with the flow in a way that makes financial sense. Because let’s face it: there’s lots of unexpected changes in business. Without knowing what’s worked before and what could work again, you might be left with the costly mistake of overstaffing. 

The symptoms of overstaffing

If you’re spending your time working on admin tasks, like making next week’s schedule, coordinating shift swaps, or processing payroll, you might be missing key indicators of overstaffing at your work. Here are four that you need to keep track of. 

1. Unwanted time off 

There are two types of unwanted time off when it comes to overstaffing. The first is the “unwanted time off” that your employees may take without warning. For example, if a teammate is feeling like they’re not needed at work, they might start to get bored and start calling in sick for shifts. Or, they might feel burnt out and just not show up.

Yep, you read that right. Burnout can come from not doing enough work and feeling undervalued—not just by working too much. Sometimes, this is called boreout, which can happen when people feel disconnected from work and the tasks they’re doing, or in this case, not doing.

The next type of unwanted time off happens on behalf of the employer. It’s when you realize that a shift has too many people on for the work that needs to be done, so you send employees home early or notify them that their shift is canceled. Doing this comes at a cost for not just your workers, but for your business as well.

Here’s what we mean: depending on where your employees are working, labor laws might entail you to pay them a minimum amount, even if they’re not working. So, if you cancel someone’s six-hour shift, you might still have to pay them for three hours. Yes: even if they’re lounging on the couch binging on their new favorite Netflix series. 

2. An overstaffed workplace reduces morale

Overstaffing doesn’t just look bad on your business—it can feel bad, too. Especially for employees who don’t have the amount of work they used to because too many workers are on a shift.

So, how can you tell if you’ve got a case of reduced morale?

First, you might notice workplace absences, like workers calling in sick for their shifts, swapping with other people, or simply just not showing up. You might also notice another type of absenteeism in the form of a lack of engagement. This could look like employees who aren’t motivated in the work they’re doing and don’t communicate with other workers or act like they’re a part of a team.

Next, you might see a negative attitude forming, even in your most chipper of employees. This can look like a teammate who’s always been the cheerleader of the crew, but now dismisses tasks, or worse—their coworkers. A negative attitude could also grow overtime, turning from once in a while to a persistent vibe that impacts other employees. 

3. Overstaffing problems lead to productivity problems

One might think that overstaffing could be good for productivity, but unfortunately, that’s not the case. Overstaffing can actually lead to reduced productivity: where workers aren’t working as much or as hard as they should be.

This can happen in a workplace that’s dealing with overstaffing because employees can feel disengaged without the proper or right amount of work to do. Instead of picking up extra tasks to accomplish, like cleaning the backroom or coming up with a new window display, workers might ask themselves, “what’s the point”, and stop working altogether. 

4. Needing to layoff employees

The job that no business owner wants to do: laying off employees. Unfortunately, this isn’t just the case for big tech and huge corporations. Layoffs happen to the best of us—even the small businesses.

How to solve overstaffing problems

Take a look at your past

No, not your highschool sweetheart—your past sales and project targets.

By looking at your past, you can see where you’ve excelled and where you’ve needed support. And sometimes, like in the case of overstaffing, you might find out that you’ve had too much support.

Reviewing your past records and comparing them to the actual demand and workload of your business can help you identify patterns and indicators of overstaffing, which can assist with future scheduling decisions. If you have a digital cloud-based scheduling software, like Homebase, going back and reviewing records is easy. Plan for the future by ensuring your data is easy to access—and to review.

Use a scheduling tool to better place employees for shifts

If you’re not sure who’s needed and when, a scheduling tool can help prevent labor leakage problems like overstaffing.

These tools are ideal if you’re looking to build out schedules that are in line with your sales forecasts and labor targets. For example, if your business isn’t meeting your milestones on any given day, a scheduling tool or app will help you coordinate shifts based on those numbers. Because everything is organized in one space, you’ll also be able to better track who’s working on such days. 

That makes it easier to start connecting the dots and answer questions like:

  • Who’s best for what shift?
  • How many employees are needed for each shift?
  • Do you need better training for new and existing workers? 
  • Do workers need to know what to do during slow periods? 

Hire seasonal staff to keep regular staff lower during low times

Hiring seasonal workers is one of the best ways to serve your business’s needs during peak periods, and keep numbers steady in regular times.

By hiring seasonal employees for a temporary amount of time, you’re avoiding the costs that come with permanent workers, which can include salaries and benefits. You’re also keeping your permanent employee count at an appropriate level for times that are more regular, like post holiday-season or during cooler months when patios are closed. 

Use a time tracker and time clock to track hours in real time to be flexible with scheduling

Think that time clocks are just for clocking in and out? Think again. These days, time clocks come with all sorts of perks that help your business stay in control of staffing needs. For example, some time clocks offer attendance and labor distribution reports that can help you spot absenteeism and under or overstaffing.

You can also use time clocks and trackers to add more flexibility to your scheduling. By using a time tracker, you get real-time visibility into the hours your employees are working. Not only can you see who’s currently on shift, who’s breaking, and who’s clocked out, but you can use this visibility to make better business decisions, including scheduling adjustments based on the current workload.

Sometimes clocks and trackers can help with overstaffing by acting as a self-serve tool for your workers. This lets them ask for time off or make changes to their availability, so they can manage their own schedule—with your approval, of course. With this level of autonomy, they can see and communicate any changes or trends that you might want to be aware of, like too many people on one shift, then suggest changes.

“Hey, you’ve got three of us on the morning shift. It’s pretty slow during that time—mind if I take it off? I can be on call if you need me.”

Overstaffing solved. 

Cross-train employees 

One way to reduce overstaffing is by cross-training employees. This means training or teaching employees extra skills or responsibilities that fall outside of their regular job description. For example, training a pastry baker on cash, or showing your yoga instructors how to work the frontdesk in between classes.

Cross-training employees helps you cover several roles with one employee, and prevents over-hiring in the first place. Just make sure you’re transparent in your job descriptions, so future employees know what’s expected of them. You’ll also want to ensure onboarding allows for full-training of each task, so workers don’t feel put on the spot when they’re asked to roll the perfect croissant but they’ve only ever made a frothy flat white. 

The last resort: layoffs

We know: nobody wants to resort to laying off employees. But sometimes, it’s a necessity. Especially if overstaffing is a problem.

When you’ve hired more employees than you need, you’ll start to incur higher labor costs. If these don’t match up to your targets or the workload, you’ll have to reassess your staffing needs, which can mean turning to layoffs so your employee base aligns with the demand of your business.

Solve your overstaffing issues with Homebase

Overstaffing doesn’t have to be a problem, especially when you partner with Homebase.

Designed for small-but-mighty businesses like yours, Homebase provides the tools you need to prevent overstaffing.

Let’s start with scheduling.

Our free scheduling software moves you from paper and spreadsheets to an automated way to coordinate shifts and store your team schedules in the cloud, making it accessible by your workers anywhere and anytime—specifically, real time.

Our real-time scheduling capabilities enable you to make changes on the go. This way if you show up to the shop on a beautiful summer day and notice construction blocking all pedestrian access to your front door, you can make the necessary changes to the calendar so you don’t have a team of 10 for zero customers.

Plus, with Homebase’s connected time clock, getting the full picture of your labor costs is easy. Check out employee’s performance, sales targets, which time slots have the highest sales, and more, so you can plan for increased productivity and reduced costs. Win-win.

And if you need to get a better handle on HR policies, Homebase can help with that, too. 

Use Homebase to accurately track hours, including breaks and overtime, then store your time cards to ensure you’re complying with federal, state, and city rules. It might feel like a lot, but that’s where Homebase comes in.

Homebase has a team of HR Pros ready to help with your toughest HR questions, like how to deal with overstaffing or—if you’re at that point—how to legally lay off employees. You can also have an HR expert review your policies, plus get access to Homebase’s extensive HR resources library, full of templates, guides, and training.

This can help you prevent layoffs from overstaffing by supporting tasks like onboarding and cross-training, job descriptions for temporary or seasonal employees, and more. 

Think you might be overstaffed? Wondering how to prevent the problem before it goes too far? Get Homebase for everything you need to keep your business on track and your employees working when they need to be—all in one app. Get started for free. 

Overstaffing FAQS 

What is overstaffing?

Overstaffing is defined as having more employees than necessary to meet the demands of a business. In other words, it’s too many workers for the workload. 

How does overstaffing happen?

Overstaffing can happen for a number of reasons. One reason is a lack of awareness of the demands placed on staff, which can be normal—especially for business owners who are busy running their business.

Outdated tools and methods for scheduling and time tracking can also contribute to overstaffing. Without access to key metrics and real-time information, it’s hard to determine how many staff should be on each shift. 

Another cause of overstaffing is overhiring. This happens when businesses anticipate peak periods but fail to forecast correctly. It can also happen when they do staff up for busy periods, they keep employees on the payroll longer than necessary. 

What is the problem with being overstaffed at work?

Overstaffing in your business results in an uneven distribution of work. This can leave some employees with too little work to do, or a type of work that’s unsatisfactory for their talents and expertise. This causes a number of problems, like unwanted time off for employees, reduced morale, and reduced productivity. Or the worst case scenario: having to lay off employees.

Do I have to lay people off if I am overstaffed at work?

You don’t always have to lay people off if you’re overstaffed at work. This is often a last resort for businesses. Instead, you can explore alternatives like reducing hours, cross-training, implementing hiring freezes, or consolidating roles and responsibilities for your workers.

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