3 Ways Staffing Shortages Cost You Money

accountingOne of the potential challenges that companies have to face is a labour shortage. Being understaffed can be extremely costly to a business.

We will consider three ways that staffing shortages can cost you money:

  1. Missed deadlines
  2. Lowered worker morale & reduced productivity
  3. Unnecessary overtime

By considering these three issues it will help stress the importance of developing an employee retention strategy. It will also provide you with reasons to consider using a recruiting firm to cut down on the adverse economic impact of a labour shortage.

Missed Deadlines

When your company is understaffed you take the risk that your employees are not going to be able to complete necessary tasks within the allotted time. Missed deadlines can definitely have a negative effect on your bottom line.

When you miss a deadline due to a labour shortage it can lead to losing clients which will inevitably lead to loss of revenue. This is one reason why it’s a necessary mandate to retain your permanent staff. This will reduce the impact of a high turnover rate and being understaffed.

Lowered Employee Morale/Reduced Productivity

One of the costly by-products of a labour shortage is that your current employees have to take on an increased workload. When your workers are overworked it can lead to the following negative consequences:


  • They can become overtired
  • They can become irritable
  • They will be more inclined to make mistakes


Each of these consequences will lower worker morale and reduce your productivity. This reduced productivity can also lead to loss of clients and revenues.  Low employee morale can prolong the cycle of high employee turnover which can contribute to extended periods of labour shortages.

Unnecessary Overtime

Another way that a labour shortage can cost you money is the costs associated with having to pay unnecessary overtime. Not only is there the obvious monetary cost associated with overtime, but unnecessary overtime can cost you money in less direct ways.

We can link these costs back to what we discussed previously. When your employees work excessive overtime there is a good chance they are going to become overtired and irritable. They will also be more inclined to make costly mistakes. This will definitely contribute to lower worker morale and decreased productivity.

We see from the three ways that a staffing shortage can cost your business a lot of money. By reflecting on these three ways you can develop a retention strategy for your company. You can take positive steps to minimize the negative impacts of a labour shortage.

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