10 Strategies for Controlling Costs with Staffing-Week 2: Eliminate overtime and under-staffing


Looking to improve operating margins in your business? Then take a look at your staffing strategy. From  the assembly line to the executive  office, effective staffing is essential. Professional Staff Group has the  tools you need to maximize profitability. 
 

In this series, you will learn ten practical strategies for using staffing to reduce overhead, manage operating costs and improve organizational performance.

This is Week 2 in the series. Click here for Week 1

Strategy #2: Eliminate overtime and under-staffing                                                            

Overtime is an extremely expensive way to get work done. Using temporary employees in place of overtime can reduce labor costs by 20% or more.

Chronic overtime expenses could be a sign that your company is understaffed. Below is a case study outlining the risks involved with understaffing.

Case Study: Fairfield Print and Graphics

Owned and operated by Richard Stafford, Fairfield lost two experienced graphic designers at the end of June. Rather than replace them, Mr. Stafford reasoned that he could juggle schedules and pay a little overtime to get the work done with his remaining staff. He calculated that he would save thousands of dollars.

Missed Opportunities

During July, First Community Bank, an existing customer, requested that Fairfield redesign and print an updated mortgage form. Likewise, Josef’s Fine Dining wanted a series of new coupon flyers produced. A potential new customer, Sky Hi Tech, was interested in having an employee handbook printed. Because Fairfield’s staff was already at maximum capacity, Mr. Stafford had to turn down the work – a revenue loss of $5,200.

Not only was Fairfield forced to turn down work, it also had to pass on a strategic business opportunity. Ideas On-Line, creator of Fairfield’s Web site, finally had the time to design a new on-line ordering page. However, no one at Fairfield had time to work with Ideas On-Line, so Mr. Stafford had to postpone the project.

Painful Partings

Fairfield’s creative director and office supervisor, Cathy Lynn, always did more than her share. However, the added stress she felt during July proved too much. Cathy accepted a position with another company that offered her a comparable salary and a less demanding working environment.

Adding It Up

At the end of July, Mr. Stafford added up the “savings” that resulted from understaffing and compared them to the cost of hiring two new employees.

The decision to limp along short-staffed during July cost Fairfield $2,360 more than hiring two new employees. Over the course of a year, the company stood to lose almost $30,000. As disturbing, it took only one month to lose a valuable team member, several customers, and an opportunity to acquire e-commerce capability.

Realizing his mistake, Mr. Stafford reconsidered and decided to hire three graphic designers (one to replace Cathy) and a part-time administrative assistant.

Risks of Understaffing

Fairfield’s story may be fictitious, but the costs of understaffing are real. Don’t be fooled into believing that running lean always saves you money. The costs associated with lost business, reduced productivity, and increased workplace stress are often far greater than the cost of hiring.

A well-staffed business allows your employees to do their best work. Professional Staffing Group can help you build a team that will give you the best chance of remaining successful in today’s competitive marketplace.

Contact us today at 601.981.1658 or info@prostaffgroup.com.

This is the second in a series of 10 Strategies for Controlling Costs with Staffing. Follow us on Twitter and Facebook or subscribe to our rss feed or newsletters for more updates on this topic.