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The numbers game

How many employees do you need?


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It’s HR’s Goldilocks dilemma: Do you have too many employees? Not enough? Or are you just right? Getting your body count wrong can make work difficult for others who already think they’re overworked.

HR professionals need an often overlooked skill: knowing exactly how many employees each department needs to run at maximum efficiency.

Not knowing is a mistake, because your optimal number of employees can fluctuate for numerous reasons, and the fallout from having it wrong can be huge.

Whether your industry is retail, restaurant, customer service or hospitality, employees will tell you the same thing: There are too few of them to do the job effectively. Studies show that six out of 10 employees, regardless of the industry, believe they are overworked. Certainly, the "survivor burnout" that results from downsizing is very real—companies downsize for budgetary reasons, leaving the survivors with sometimes dramatically increased workloads. A few months down the line, people start to burnout, lose enthusiasm for the job and eventually their output erodes.

On the other side of that coin, companies with too many people on the payroll are wasting money, which is expensive at best and potentially fatal to the bottom line at worst. Too many people also leads to underperformance. You know what they say about idle hands.

Franchises that deal specifically with HR issues, like the Nextaff, Spherion and TRC Staffing, agree the right balance of employees is a difficult but necessary part of the process.

Steve Sanders, vice president of Franchising for TRC, explains that the optimal number of employees for your workplace isn't just about a number. Before thinking in terms of numbers of employees, you must think in terms of how productive they are. You need to ensure the employees already on the payroll have the skills, training and know-how to work at a high level of productivity and efficiency. Once everyone is running on full steam, it's easier to get to that magic number between "overwork" and "over budget."

"We work with our clients to ensure they have an effective number of employees so overtime is not excessive, but quality doesn't suffer," says Sanders.

What sorts of factors influence employee numbers? Here are a few ideas.

A business model change.

Sometimes, companies start out doing one thing and end up specializing in another.

I know of a grocery store that began to add to its deli. Pretty soon it had a salad bar, a brick pizza oven, a grill for sandwiches and a full kitchen. Soon after that, it added seats so customers could sit down. Next came servers. The company's business model changed. As a result, it needed more servers and fewer people to stock shelves. Its hiring had to change accordingly.

Changes in demand for your product or service.

Take a small business that, after years of selling locally, finally gets a Web site. Suddenly, orders start pouring in from all across the globe. Companies that have the potential to be impacted by technology either positively or negatively need to stay ahead of that curve and adjust their numbers of employees accordingly.

Changes in technology.

Bank tellers replaced by ATMs. Gas-station attendants replaced by pay-at-the-pump machines. Cashiers replaced by scan-it-yourself aisles. Many of these types of companies are slowly finding less need for full staffs.

So what you can do to ensure you have the right number and right type of employees to keep your company functioning efficiently?

Survey your employees. Take the pulse of your staff, with a specific focus on workload issues.

Watch your rate of turnover. Are people leaving more often than before? Staff problems might be the cause.

Keep an eye on employee stress. Take a walk through your company. How do people look? Are they stressed? Burning out? Or are they energized and enthused?

Staffing is a tricky business. Those doing the hiring need to keep an eye on trends, technology and employee workload before they hire—or fire.

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