The U.S. Bureau of Labor Statistics announced that 4.2 million Americans left their jobs, the highest since 2000, and another 1.4 million people were laid off and discharged from their services.
This historically high employee attrition rate has resulted in an indefinite staffing crisis for businesses, negatively impacting growth, profitability, and other indicators. However, understaffing causes can also be due to budgetary restrictions, employees’ scheduled or unplanned absences, etc.
As a result, the existing workforce must pick up the extra workload, which is not sustainable in the long run. It leads to employee burnout, compromised project quality, etc. Therefore, organizations must manage the understaffing issues appropriately to maintain efficiency and productivity.
This article highlights some effective ways to manage understaffing issues in an organization and how Saviom’s resource management software can help streamline it.
So, let’s begin –
1. How does understaffing impact an organization?
An understaffed organization often witnesses a sharp decline in several metrics like production capacity, employee productivity, turnaround time, and profitability. This is because they will be unable to fulfil the standard workload and might overutilize their existing employees by allocating extra work to meet the project requirements. This causes physical exhaustion, stress, and burnout, resulting in reduced productivity.
In addition, due to the extra workload, employees might miss deadlines or fail to deliver quality products. If the situation persists for a long time, they might lose interest in their jobs and eventually resign. A high turnover rate is costly for businesses as it pays direct exit costs when an employee leaves and incurs additional expenses to recruit and train new workers.
A sudden decrease in the existing workforce could exacerbate the problem of understaffing. In addition, high turnover in an already understaffed workplace may halt operations in extreme circumstances, harming the company’s reputation and market value.
Now that the consequences of understaffing are clear, here is what you can do.
2. Ways to manage understaffing issues
Understaffing can significantly reduce organizational efficiency, affecting the firm’s top and bottom line. But one can combat some of its effects with appropriate measures. Here’s how:
2.1. Prioritize projects based on strategic goals
When a company’s resources are limited, it is vital to prioritize value-adding projects that promise a higher ROI. For example, if an organization has multiple projects in the pipeline but only a limited number of resources to work on, the most critical projects may be given preference.
This enables managers to allocate their limited resources to suitable projects and increase revenue margins. In addition, prioritizing projects helps them meet their long-term financial and strategic goals with a limited workforce.
2.2. Estimate resource requirements for every project
Estimating the required resources before starting a project is especially important when they are scarce. Failure to accurately assess the project requirements and the requisite skills will result in inadequate resource productivity, leading to substandard quality, client dissatisfaction, and cost overruns.
When the project managers estimate the resource requirements in advance, it gives the resource managers enough lead time to identify and allocate resources. This will also help them to implement resourcing treatments such as out-rotation backfill, training, etc., to mitigate resource shortages. This enables managers to deliver quality projects with limited availability of resources.
2.3. Optimize the profitable utilization of each resource
When organizations are understaffed, resources tend to be overutilized due to excessive workload, leading to stress and burnout. On the other hand, when employees are frequently requested to work on non-billable tasks, it leads to low morale and disengagement.
By implementing resource optimization methods, managers can ensure the uniform workload distribution of those resources that are overutilized. They can also mobilize underutilized resources from non-billable to billable projects to boost financial returns. This will enhance performance, boost productivity, increase revenue generation, and prevent boredom or disengagement.
2.4. Apply out-rotation/backfill strategy during project initiation
When a project requires critical resources to complete a task, but they are already booked, it may be challenging to fill these positions on short notice. To help fill these gaps, a resource manager can use out-rotation and backfill strategies. This happens only after determining if the project has achieved a steady state where the lack of a critical resource would not negatively impact it.
The resource manager negotiates with the concerned project manager to out-rotate the vital resource for the new project, and a suitable backfill is assigned to the vacancy. This allows the new project to acquire the necessary specialized skills without interfering with the existing one. Furthermore, this ensures that both project demands are fulfilled without hiccups or risks despite limited resources.
2.5. Share resources across the matrix boundaries
Organizations need to tap into the maximum potential of the existing resources to ensure project quality. However, this can be challenging when organizations work on a limited talent pool. One of the effective ways to do this is by implementing cross-departmental collaboration. This strategy enables employees to work on projects that do not fall under their respective departments but still require their talents.
This allows employees to diversify their portfolios and skill sets while providing new learning opportunities. In addition, when employees communicate and share their knowledge and experience, it will help them learn and grow. This way, businesses can intelligently utilize their existing workforce, deliver projects successfully, and enhance efficiency.
2.6. Invest in multi-skill building programs
One of the most effective ways to improve efficiency while understaffed is conducting multi-skill building programs. For instance, if a task requires resources with competence in two separate skills, multi-skilling ensures that instead of two different people, only one person will be equipped to execute the task.
Many employees are proficient at performing different tasks that demand varied competencies. As a result, organizations can leverage these resources and hone their skills to allocate them to diverse projects. Thus, organizations will not miss out on new opportunities and maintain efficiency even with a smaller resource pool.
2.7. Utilize contingent resources for short-term requirements
When a short-term project requires a specialized resource that is not currently available in the organization’s personnel pool, hiring a contingent resource can assist in getting things done. Organizations can acquire contingent workers such as freelancers or contractors through impaneled vendors, especially if this is a one-time requirement.
This way, they can avoid the extra overhead of hiring permanent employees or losing the opportunity altogether. This will also reduce training time, minimize unnecessary hiring and firing cycles, help form the right mix of permanent and contingent staff, and boost overall business efficiency
Let’s see how a resource management tool effectively addresses workforce shortage.
3. How can an advanced resource management tool help manage understaffing at an organization?
Saviom’s resource management software, with its centralized real-time visibility, enables organizations to manage understaffing at organizations effectively.
- The resource forecasting feature can identify resource demand ahead of time. This will allow one to take appropriate measures to bridge the demand vs. capacity gap and help reduce any future resource constraints and streamline resource allocation.
- The Forecast vs. Actuals report helps identify the time taken to complete the job against the estimated time. Thus, managers can evaluate if resources are taking more time to complete a task than anticipated, especially when resources are constrained or if there is any budget overrun, and take corrective measures to secure the project’s fate.
- The utilization reports and color-coded heatmaps allow managers to determine whether their limited resources are over or underutilized. Accordingly, they can apply appropriate measures to optimize the allocation.
All these resource management features help address the issue of understaffing.
In today’s fiercely competitive environment, it is imperative to take suitable measures to ensure businesses’ long-term viability and profitability. Even if your organization is understaffed, the abovementioned methods will keep you afloat and enable you to maintain your competitive edge. Moreover, if paired with the right resource management software, your company’s performance and efficiency will soar, propelling it to new heights of success.