Most small and medium-sized business owners say that out of all the problems they encounter when running the business, staffing issues are the biggest headaches. Hiring and retaining the right employees is an ever-present concern. Just when you think you have a good mix of capable and productive people on staff, business slows down unexpectedly, and suddenly you're overstaffed. Of course, you could lay off some staff, but there are other options to consider before taking that step.

Reassign Workers to Other Areas

Usually, only some areas of a business are overstaffed. For example, it's tough to have too many people in sales because the more sales reps you have, the more new business can be brought in which would mean more work for everyone — from production to customer service — and would relieve the overstaffing problem. Similarly, if you have research and development employees, you want to keep them working even when times are slow. If they can invent new products or tweak current ones that become hot, your sales could skyrocket to the point that you become understaffed.

There are departments, however, whose workload is directly proportional to sales so, when sales are down, they have less work to do. Customer service is a good example; fewer customers means fewer people needing help from customer service reps. Take a look at your employees in each department from two angles:

  1. What skills do they have that could be useful in another department?
  2. Look for tasks they performed for previous employers or as hobbies and consider where else within the company these could be useful.

Example of Worker Reassignment

If you conduct interviews with employees and their managers to get ideas, you may learn that Tamara has bookkeeping experience that could be useful in a financial area or that Brandon used to do event planning. When work is slow and salary increases are on hold, morale can often need a boost. Brandon could use his planning skills to hold impromptu parties in the lunchroom, celebrations for birthdays or an afternoon break for games with inexpensive prizes like candy or a $10 gift card.

A Jeopardy match based on company product knowledge isn't all fun and games – it's good training, too. Reassigned workers could perform their new roles part-time while still contributing to their previous departments.

Reduce Hours but Keep Benefits

As long as you continue to provide full benefits, many employees would welcome some time off now and then. You might reduce hours companywide by cutting Friday to a half-day or even institute three-day weekends. Salaries would be cut back accordingly, with the assurance that the hours and pay will come back when the slump is over. Or, try asking for volunteers who'd like to work part-time for a while. You may not know who's taking care of a sick family member or is just burned out and could use some extra time away from work.

Reducing hours for two people is nearly always better than laying one person off. Both are already trained and up-to-speed on company knowledge, culture and methods. If you let people go, you'll need to hire new employees when work picks up again, and new people come with a learning curve before they become productive. The individuals you keep on staff can simply be moved back to full-time in their previous departments or reassigned as needed.

Prepare to Be Understaffed

The economy is a series of continuous ups and downs, so it won't be long before business is booming again and you're understaffed. This is the time to bring the part-timers back to full-time without delay. Although you save money by keeping them part-time, you risk overworking your current staff. Too many hours or extra tasks lead to exhaustion and burnout, and that's when costly mistakes may be made on the job that negate any money you saved in salaries. You also risk losing clients and staff resigning in frustration, leading to more understaffing.

If you need to bring on more people, consider looking for part-time help first so your budget won't be stretched too far when the economy is down again. When unemployment is low and you're competing for good employees, offer additional perks like great benefits, flextime or remote working, gym memberships, online medical counseling and other time-saving, stress-busting ideas.

Money isn't everything to today's workers who are looking for work/life balance and don't hesitate to change jobs to get it. If they find that balance with your business, though, they're more likely to stay and grow with you.