Simplifying Cost Effective Staffing

A properly staffed process is efficient and cost effective. Developing an efficient staffing strategy is a major responsibility of an operations manager.

Staffing strategies do not have to be overcomplicated or complex. In fact, it is a much simpler process when each step is taken and analyzed individually.

The first challenge is to evaluate your current staffing demand against staffing supply. If the staffing demand exceeds staffing supply, you will have overtime or holdover.

Both have an associated cost. The overtime cost is usually the easier of the two to calculate.

Holdover might be a soft cost, a hard expense or combination of the two. Holdover can impact the financial position of the organization as well as delivering a negative customer service message.

If the staffing supply exceeds the demand, then you will have excess idle time. Idle time is often a hidden operational expense in both hard and soft dollars.

Unallocated idle time is a hard dollar expense to the business. You are paying for staff that is non-productive.

Regular occurrences or an excess of idle time are known to impact morale, absenteeism and attrition rates.  Idle time has been documented to account for up to 20% and more of a department’s labor expenses.

To remedy a staffing gap, choose a demand-focused strategy.  Match the availability of staff to meet the processing demand.  To start, you need to be able to forecast demand on a monthly, weekly and daily basis.

In some instances when the forecast needs to be more granular, an hourly or shorter time frame is required.

Some factors can impact and create variances in processing demand. New business, customer attrition, seasonal cycles, weather, and numerous other factors can account for variations in demand volumes.

A review and analysis of historical volumes and their fluctuations is often the most common starting point. The appropriate historical time frame for analysis varies based on the type of business, processing operation and work processed. Ideally, one year of historical information meets most analytical requirements.

However in a highly dynamic environment, three months may prove to be more appropriate. Historical data that is too old for individual analysis has the potential to skew your forecast.

Forecasting Demand

In simpler terms, how much and what type of staff do you need?

Consider the variability in demand.

  • Do you need the same staffing level throughout the day?
  • The same staffing level each day of the week?
  • Each week of the month?
  • And each month of the year?

If you don’t, then you need to have a variable staffing plan to meet processing, quality and expense commitments.

If you are using a fixed number of full-time staff each month, you are costing the business money. A business that experiences daily fluctuations in processing demand and is staffed at affixed level for the month can be wasting 30% or more of its staffing dollars.

To reach processing, quality and expense goals, do you have the proper mix of human capital? Consider the following questions:

  • How many people do I need and when?
  • What is the average of the minimum daily processing demand?
  • Does the number of full-time staff fall short or exceed this minimum level?
  • How does attrition and absenteeism impact your ability to meet processing demands?
  • What is the learning curve timeframe for the tasks at hand and how does that impact your staffing model?
  • How effectively is variable staffing being utilized?
  • What is the level of cross-training in your department?

How do these factors influence your forecasted staffing requirements?

Analyze Supply

  • What is your source for meeting variable staffing demand levels?
  • Does an opportunity exist to borrow from other departments or lines of business whose processing demands complement yours? Your processing peak is their lull time.
  • Do you use a third party staffing service?
  • Do you source and manage your variable staff?
  • Can you use college student?
  • Does overtime, flex time and other scheduling options offer variable staffing alternatives?  Or is it a combination of all of the above?

Learning how to define and analyze your staffing requirements is an important step in being able to accurately match staff to processing demand.

You can learn more about how to effectively meet your staffing challenges at FTPConsulting.com.

What have you found to be the biggest staffing challenges?”   What solutions have you enlisted to meet the staffing challenges of your operation?  Let us know in the comments below!

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Simplifying Cost Effective Staffing
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A properly staffed process is efficient and cost effective. Developing an efficient staffing strategy is a major responsibility of an operations manager.
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