Top 7 risks for understaffed small businesses

Here are some of the key negative effects of having an understaffed work environment:

Injuries and illnesses

Understaffed workplaces typically cause elevated stress among staff members who are expected to do more with less, work longer hours, and struggle with a work-life balance. Tired and overworked employees can also lead to safety issues and workplace injuries, which could lead to a workers' compensation claim.

Medical research shows that increased stress can make the body more susceptible to illnesses, which can hurt productivity. Physical stress can also lead to muscle and nerve problems that could disable members of your team and affect their well-being.

Missed deadlines

Staffing shortfalls can result in your existing employees putting in extra hours, delaying some projects, and increasing the chance of a missed deadline. This can hurt your business’s credibility and its ability to retain customers.

Higher costs from delayed tasks

When you're struggling to complete your day-to-day work, chances are you aren't thinking about updating your anti-virus software, your business insurance policy, or your printer. If any one of those conks out in the middle of a big project, it’s going to affect your bottom line.

Cyber and information crimes

While direct client interactions may seem more important to your revenue than behind-the-scenes measures, such as updating passwords and ensuring that your data is properly encrypted, failing to keep up with technological updates can lead to a data breach that could seriously tarnish your reputation. A cyber hacking could also disrupt your work environment for a while.

Decreased customer satisfaction

Whenever your performance suffers as a result of understaffing, your clients will feel it. Over time, decreased performance could translate into less-satisfied customers, fewer referrals, less repeat business, and lower revenue.

Employee turnover

Understaffing might add up to more than just a loss of customers and revenue, it can also cause employee burnout. If this happens, your employees will be less motivated to produce and more likely to take their careers elsewhere, causing too much work and more stress for your understaffed team.

Compliance issues

If your employees are overworked and stressed out, they’re less likely to follow legal or safety regulations relating to your work environment. This is especially risky if you work in a regulated field, or if you and your team members have professional licenses.

You wouldn’t want to risk any fines or legal judgments by state or federal regulators. These situations could lead to an expensive claim of professional negligence and a lawsuit.

The TALiNT International survey revealed that 51% of respondents said they would solve their retention and hiring issues by offering better employee perks and benefits. An additional 30% said they were investing in better human resources and 27% said they were investing in learning and development.

A Washington Post-Ipsos poll last year found that salary, having a good boss, plus good health insurance, retirement, and vacation benefits were top priorities for American workers. Roughly 4 in 10 workers said their jobs can be done from home.

The biggest reasons that people changed jobs were:

• Higher salary: 44%
• Disliked previous job: 30%
• New job was more interesting: 24%
• Better health care and retirement benefits at new job: 21%

While raising salaries and benefits might not be possible for every small business owner, there are steps you can take to retain employees and mitigate the impact that understaffing has on your business. Your risk management plan should include:

Stress-management strategies

Encourage your team to eat well, rest, take breaks, exercise, and engage in leisure activities to manage their stress loads. This focus on wellness can help keep everyone refreshed and calm enough to maintain their productivity.

Insurance policy reviews and updates as needed

Ensuring that your cyber insurance and workers' compensation insurance policies are up to handling your current risk level will give you peace of mind and help minimize any understaffing-related losses or liabilities.

Consistent communication with your team and clients

If you don’t have enough people at your business, let your team know what the situation is, when you plan to hire someone new, and what you need from them in the meantime. Similarly, talk to clients early and often if you know you won't be able to meet an agreed-upon deadline.

Phone calls with customers might be preferable to emails or texts because you can hear their concerns and address them. This will empower everyone involved and help reduce stress levels.

Stay as flexible as possible

There are, of course, many jobs where people have to be on-site or online during business hours. However, offering whatever flexibility you can to your remaining employees can reduce stress and increase satisfaction.

Letting an employee leave work a bit early, or arrive late now and then, can help them relieve stress and increase job satisfaction. Allowing remote work, if possible, could also be an incentive for many workers.

Reward your employees

Bosses who complain but never compliment their staff are likely to face high turnover. Acknowledging and celebrating your team’s accomplishments can boost employee morale and motivate people. It also gives them a sense of pride, if they feel their work is appreciated.

Whatever rewards you offer should build a sense of unity among the team and must be something they would all enjoy. It doesn’t have to be extravagant. Something as simple as giving people some extra time off or closing early on a Friday can let them know that you recognize their efforts.