Our economy is slowly improving. In many industries – especially IT, healthcare, skilled manufacturing, engineering and green technologies – top talent is becoming increasingly difficult to find. Consistently recruiting the best and brightest requires more lead time and a proactive analysis of your hiring needs.
So, as your business picks up, how can you tell when it’s time to hire more employees? To determine your SRQ (Staffing Readiness Quotient), answer these questions from organizational diagnostic expert Robert Hoffman:
In the past sixty days, how frequently have you needed to extend deadlines, defer product deliveries, or revise schedules to meet commitments made to customers or employees?
b. Once a month
d. Almost daily
Analysis: The most obvious indication of appropriate staffing levels is the ability to meet deadlines. If recent projects have been extended, if products have not been delivered on time, or if more leeway has been given to development or service requirements, then it is likely that a contributing factor is the number of individuals on staff. Although many businesses rationalize that factors unrelated to the number of employees can cause changes in deliveries or schedules, lack of people is usually the primary reason.
Employees express complaints about working conditions:
a. Almost never
c. Almost daily
d. I don’t know
Analysis: An unusual number of employee complaints in comparison to historical norms – either on a casual basis or through a formal grievance system – is a clear indication of dissatisfaction that may be a result of overworked or inadequate staff. If you’ve overheard employees objecting to working conditions, or if people have brought to your attention more issues than usual, they may be experiencing stress induced on the job. Make sure you know the pulse of your employees.
What percentage of the employee population works on a consulting or temporary basis?
a. Less than 2%
b. 2 – 5%
c. 5 – 10%
d. More than 10%
Analysis: Although using consultants and temps can be a wise strategic staffing move for many companies, over-reliance on consultants is commonly a signal of understaffing. It is important to determine if transient workers are working on projects of a recurring or specialized nature. If consultants are working on repetitive tasks or projects that last more than six months, not only may the company be under-staffed but may also potentially be in violation of IRS regulations for contractual employees.
Overtime costs, or the number of employees working through lunches and/or late into the night in the past few months has:
d. Increased significantly
Analysis: If a baseline for overtime has been established and significant deviation is occurring, your company is probably understaffed. Similarly, if employees, regularly work through lunch periods, stay late, and/or arrive early, more help is probably needed.
The number of employees with issues related to declining job performance has:
b. Remained constant
d. Increased significantly
Analysis: A common metric to determine the effectiveness of staff is how many employees need counseling to improve performance. Since performance deficiencies can result from a variety of situations, in-depth analysis is necessary to determine whether an increase in work performance issues is a result of lack of skill. Often, limited staff or working in unfamiliar areas is the culprit. It is also possible that employees with idle time may become complacent and expect co-workers to complete available tasks since they give the perception of having so much time available.
How frequently are new solutions, methods, technologies or workflow enhancements embraced by the workplace?
a. Not at all
Analysis: If productivity enhancements have plateaued from historical levels, then workers may be overwhelmed. New methods to increase work efficiency may have stalled because people are focused on routine tasks and don’t have time for process improvement. Investigate to see if people are distracted from implementing new methods or are just not interested based on a focus towards production. A lack of time or interest is likely standing in the way of making things better.
No single staffing cue is indicative of the need to change staffing levels. Collectively, if you detect more than three or four of these issues in your workplace, then a staffing problem likely exists. Calculate and regularly monitor your SRQ as a key success factor and integrate this metric with your other business success metrics.
QUICK HR TIP: An easy overall metric to determine staffing levels can be staff/sales ratio. Take a close look at the relationship between the number of employees and revenue: is it constant or increasing? Benchmark industry and individual targets and work towards the appropriate ratio. Keeping on track will ensure consistency with corporate objectives. To a large degree, the sales/staffing ratio is a good predictor of potential income.
Excerpted from the article: “When is it Time to Hire More Employees?” by Robert Hoffman. Bob Hoffman and HR Advice.com specialize in organizational diagnostics to help businesses determine appropriate staffing levels by business size, industry, and objectives.