What are Staffing Levels?

Life is about balance. And so is workforce management, as an imbalance in staffing levels can wreak havoc on productivity, client outcomes, and business profitability.

If your business is falling short of its goals (frustrating), staff are twiddling their thumbs (boring), or unplanned absences are on the rise (concerning), it’s likely you have a problem with staffing levels.

But what are staffing levels? And what steps can you take to effectively manage staffing levels? Let’s find out!

• What are staffing levels?
• Benefits and challenges of maintaining staffing levels
• What factors influence staffing levels?
• How do you manage staffing levels?

What are staffing levels, and why do they matter?

Staffing levels = the number of people working at your organization. It’s a simple enough term to understand, but this definition doesn’t get to the crux of why staffing levels are so important.

Understanding your ideal staffing levels involves determining the number of employees a company needs to effectively manage workloads and achieve peak performance.

This metric is taken into consideration during pretty much any activity associated with strategic staffing, which aims to equip businesses with the right number of employees with the skills they need to reach their goals.

But before we dive deeper into the specifics of managing staffing levels, let’s explore why having too many or too few employees can be problematic for businesses.

Risks of inadequate staffing levels

When your staffing levels are too low, workload demands exceed your workforce’s capacity, resulting in:

• High stress levels. Good workload management can only do so much when resources are spread too thin. And we all know that regularly working overtime due to demanding workloads leads to stress. Long-term workplace stress invariably triggers burnout, which shows up as absenteeism, low employee engagement, and decreased productivity.
• Reduced productivity. When employees are overwhelmed, overall output and work quality suffer. Yes, busy people maintain momentum - but when the whole workforce is overrun, no one can manage their tasks effectively.
• Poor work quality. Overburdened employees are more likely to rush tasks, risking compromising the quality of their work. Plus, workforces that lack the skills required to deliver top-quality work will always fall short.
• Dissatisfied customers. Over time, poor employee engagement and substandard outputs will impact business-client relationships, tanking customer satisfaction and business growth.

Risks of overstaffing

Having too many workers can also be problematic, as overstaffing can lead to:

• Wasted resources. Overstaffing means there isn’t enough work to keep the entire workforce busy. If these resources aren’t redirected toward high-value work, they’ll likely fill their time with low-value tasks or, worse, engage in boondoggling.
• Reduced productivity. Ever heard of Parkinson’s Law? This concept says work expands to fill the time provided to complete it. If your employees aren’t fully utilized, they’ll take much longer to complete tasks than is necessary, purely to fill their time.
• Low employee morale. Burnout can also impact underutilized employees. No one wants to feel useless or bored, and these feelings can lead to poor morale.
• Inefficient cost management. To be blunt, you’re paying wages for employees who aren’t contributing to business growth. From a cost perspective, this is an unnecessary expense.

To summarize why finding an equilibrium is so important:

Not enough staff = stress, risk of burnout, and poor performance.

Too many staff = underutilized resources, bored workers, and wasted money.

Ideal staffing level = the right number of people with the right skills in place to meet business goals.

The benefits and challenges of managing staffing levels

If you’re thinking this all sounds pretty dire, you’d be right. But it’s more than possible to achieve and maintain appropriate staffing levels — when you take a strategic approach.

Before we talk about our recommended staffing strategies, let’s discuss the benefits of maintaining appropriate staffing levels and some challenges you may face along the way.

Benefits of maintaining optimal staffing levels

Maintaining optimal staffing levels offers a whole host of benefits to businesses and employees, including:

• Improve productivity and efficiency. Capacity management helps ensure staff levels and workloads are aligned, meaning there's enough work to go around without anyone being overworked. This supports greater efficiency, productivity, and employee satisfaction.
• Better quality work. Instead of rushing to get projects over the line, employees can focus on completing tasks to the best of their ability.
• Customer satisfaction. Better quality work = improved customer satisfaction. It’s as simple as that!
• Increased employee morale. Manageable workloads mean less stress, increased job satisfaction, happier employees, and better morale across the board.
• Reduced turnover. If you want to retain employees, you need to build a positive organizational culture and promise a manageable workload.
• Cost savings. Overstaffing leads to increased labor costs, so streamlining operations will help reduce unnecessary spending. Plus, when you factor in the gains to be made from reduced absenteeism and increased productivity, the cost benefits of maintaining staffing levels become clear.

Challenges of managing staffing levels

So, what road bumps may you experience in your journey to achieving ideal staffing levels? Here are four challenges to be mindful of.

• Forecasting demand. Maintaining staffing levels is all about accurately predicting demand and adapting accordingly. However, anticipating future demand for services and products isn’t easy, especially in fast-moving industries.
• Adapting to change. From peaks in demand to technological advancements, businesses have to be prepared for anything. Yet, without the right information available, adjusting staffing levels in response to change becomes time-consuming and challenging.
• Underestimating the impact of downsizing. Too often, many businesses downsize to cut costs without fully considering the direct impact this will have on remaining staff, who may struggle to keep up with an increased workload.
• Taking a top-level view. Managing staffing levels isn’t as simple as hiring more people when you’re busy and downsizing during quiet periods. It doesn’t scale vertically and requires an in-depth understanding of demands across business teams and functions, which adds complexity to the process.
• Flexibility. Hiring part-time or temporary workers allows you to scale your current workforce quickly. However, in reality, agile hiring practices can prove challenging to execute in large businesses.

What factors influence staffing levels?

If you want to excel in staffing management, you need to spot challenges or influencing factors a mile away. Here are several key factors that you need to be aware of.

Company goals. From upcoming mergers and growth targets to product launches and new client accounts, your company’s goals will determine whether staffing requirements will change and how.

Staffing budgets. Large staffing budgets open up opportunities to grow your most in-demand teams and upskill workers, while small budgets force you to be clever with your staffing strategy and may even require you to make economizations.

Market demands. The need for products or services fluctuates over time depending on factors like economic conditions, customer needs, and market trends, and your staff levels must adapt accordingly.

Operational goals. When improving operational efficiency, you may bring in technologies to streamline processes, making some roles and responsibilities redundant, while expansions will require increased staffing levels.

Labor market. Your ability to find and hire qualified candidates for open roles largely depends on the labor markets. High demand for certain skills can lead to labor shortages, meaning businesses must pay more for the best talent in competitive markets.

Employee satisfaction. Your organizational culture will have a huge impact on employee satisfaction and retention. As we’ve covered, happy employees tend to be more productive, while poor conditions can lead to high turnover and low staffing levels.

Client needs. Client needs and project workloads fluctuate from month to month. The loss of a big account can lead to overstaffing issues, while a sudden influx of business can leave employees overworked if you don’t upsize accordingly.

How do you manage staffing levels?

So far, we’ve covered the importance of managing staffing levels, the challenges you may face, and the factors that influence these levels. Now, it’s time to go over the five steps that will help you manage staffing levels effectively.

Step 1: Identify your business goals

The first step to developing a staffing strategy is reviewing the company’s goals for the year. There are countless goals that may influence staffing needs, requiring the company to onboard more employees, restructure teams, or make redundancies, including:

• Upsizing, e.g., mergers and acquisitions
• Launches, e.g., new services or produces
• Strategic initiatives, e.g., new offices
• Technological investments, e.g., implementing automation
• Project pipeline, e.g., taking on new accounts

Step 2: Develop a staffing plan

Next, you’ll use the information gathered to create a staffing plan. This strategic document outlines the correct number and type of employees the business needs to reach its organizational goals, therefore helping determine ideal staffing levels.

The goal is to estimate future demand and match resources accordingly, helping calculate the  levels required for success. Some of the questions you’ll need to answer include:

• What projects are in the pipeline? What capacity will this require?
• What roles are underutilized and need to be removed from the organizational structure?
• Are there any opportunities to upskill or redeploy staff members in order to align their skills with the organization’s needs?
• What roles and skill sets are overburdened?
• Who are our MVPs (most valuable performers), and how can we retain them?
• Does the workforce currently have the necessary skills to meet anticipated demand?

These are big questions that can’t be answered with guesswork. Instead, we recommend gathering as much data as possible on your workforce and project requirements. Keep reading to find out how.

Step 3: Analyze staffing needs

Anticipating future staffing needs isn’t a perfect science. However, you can improve your accuracy with these five methods of analysis.

Demand forecasting

Demand forecasting uses historical data and predictive modeling to forecast demand for a business’s services in the near future. It’s the best way to understand what each team's workload will look like moving forward, allowing you to balance workloads and adapt staffing strategies accordingly.

Capacity planning

Capacity planning is one of the most effective ways of evaluating staffing needs by matching resource supply to demand. 

We recommend you kick-start this process by generating resource utilization reports. These reports use employee timesheet data, planned resource allocations, and project pipelines to provide a clear overview of which resources are in demand, which roles are overburdened, and which are underutilized.

Strategic capacity planning is the key to understanding current staffing levels, predicting which roles and skills will be in high demand, and weeding out routinely underutilized resources that are undermining profits. When used together, this information will inform your staffing decisions.

Skill gap analysis

Skill gap analysis helps you compare the skills available in the current workforce to those required to deliver the company’s services and achieve business objectives. Any gaps identified will inform recruitment strategies.

FTEs

If you need help forecasting labor costs and staffing requirements when working with part-time employees, contractors, and temporary workers, you can use FTE to aid your calculations.

Full-time equivalent (FTE) is a unit of measurement used to make individuals’ workloads comparable across contexts by converting part-time work into full-time hours. This way, you can calculate what human resources are needed to complete a project within a specific timeframe and more accurately forecast their associated costs.

Workload analysis

Workload analysis is a method of calculating staffing requirements at a project level by assessing workload. As the name suggests, it involves drilling into each team's workload, allowing you to make adjustments to better suit project requirements and forecast future demand. 

When you know how each team’s workload will fluctuate, it makes it easier to adjust your staffing levels accordingly.

Step 4: Adapt staffing levels

Now that you’ve gathered all the information relevant to your workforce, anticipated demand, and the business’s goals, what’s next?

It’s time to create a staffing management plan, which will act as your guide when hiring, developing, and releasing staff. In order to reach adequate staffing levels, you may need to:

• Fill skill gaps by upskilling current staff, hiring workers with specific skill sets, or considering succession planning.
• Meet demand by building new teams and creating new job roles. Upskilling existing workers whose roles are redundant is a great way to develop the workforce without hiring new employees.
• Become more adaptable by hiring contracted workers and part-time employees or outsourcing tasks, allowing you to meet fluctuating demand.
• Retain your best staff by investing in their development and creating more healthy work environments.
• Reduce overstaffing by making redundancies. No one wants to deliver bad news, but if demand is slowing, the business is shifting focus, or workers can’t be redeployed, redundancies may be a necessary evil.

Step 5: Regularly review your plan

Managing staffing levels is an ongoing process. To succeed, you need to regularly run diagnostics and update your plan as demand shifts, workers leave, and external factors impact future performance.

Step 6: Invest in analytical tools

We’d all love to have a crystal ball (not only would it be super helpful, but it would make an incredible desk ornament), but you can’t make informed decisions without access to the right data. While magic can’t help you here, workforce planning tools are the next best thing.

Smart analytical tools, such as capacity planning software, make avoiding overstaffing and understaffing a breeze by providing access to valuable insights. By visualizing your current staffing situation and forecasting your future business needs, they simplify the process of predicting future utilization, allowing you to identify high or low staff levels and put an effective staffing plan in place before they become a problem. 

Trust us — your job will be 100 times easier with all the staff and project data you need at your fingertips.