In today's competitive business landscape, many organizations adopt lean staffing practices when looking to reduce costs and increase efficiency. While operating with minimal staffing levels might seem economically advantageous, it can have unintended consequences that negatively affect both employees and the company's bottom line. In most 24/7 operations, there are a fixed number of positions to be filled on each shift. Because of this, staffing levels greatly impact overtime rates for employees.

Understaffing requires employees to work additional hours originally allocated for off-duty activities such as rest, recovery, family time, social events, and personal responsibilities. Unlike machines that can operate continuously, people need adequate time off to maintain their emotional and physical well-being. Ignoring this can lead to decreased productivity, increased absenteeism, and higher costs in the long run.

Here are three reasons why lean staffing can be dangerous for your organization:

1 - Lean Staffing Leads to Higher Absenteeism Rates

Staffing Levels are Directly Related to Absenteeism

Based on CIRCADIAN's Shiftwork Practices data, operations with lean staffing reported significantly higher absenteeism rates compared to adequately staffed operations. When employees are overworked due to understaffing, they are more likely to take unscheduled absences to cope with fatigue and stress.

Interestingly, over 50% of all unscheduled absences are due to personal needs, stress, or an entitlement mentality (i.e., "I've earned it") according to the same study. This means that lean staffing not only burdens your current employees but also disrupts workflow due to unexpected staff shortages.

Figure 1. Staffing Levels & Absenteeism Rate

Additional Facts:

• A study by the American Institute of Stress found that job stress costs U.S. businesses over $300 billion annually due to absenteeism, turnover, and decreased productivity.
• The Society for Human Resource Management (SHRM) reports that companies with high employee engagement have 41% lower absenteeism.

2 - Fatigued Workers Increase Workers' Compensation Costs

The Hidden Costs of Lean Staffing on Employee Health

As employees reallocate their off-duty time toward work due to lean staffing, their fatigue levels rise because of additional labor and reduced sleep opportunities. Fatigued workers exhibit up to four times the workers' compensation costs compared to non-fatigued workers. A recent meta-analysis of 27 observational studies found that sleep problems increase the risk of workplace injuries by 62% (Uehli et al., 2014).

This means that any short-term savings from lean staffing can be quickly offset by the long-term costs associated with workplace injuries and higher insurance premiums.

Figure 2. Overtime Levels & Fatigue Problems

Additional Facts:

• The National Safety Council reports that fatigue-related productivity losses cost employers $1,200 to $3,100 per employee annually.
• Fatigue contributes to an estimated 13% of workplace injuries, according to the National Safety Council
  
  Figure 3. Fatigue Levels & Worker’s Compensation
  
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3 - Stress and Fatigue Are Productivity Killers

Lean Staffing Reduces Overall Productivity

Severe stress and fatigue problems have been found to reduce worker productivity by up to 10%. According to CIRCADIAN’s Shiftwork Practices survey operations with lean staffing levels more frequently report severe stress and fatigue among shift workers than adequately staffed operations. 

When employees are overworked and stressed, their ability to perform at optimal levels diminishes, directly impacting the company's efficiency and profitability.

Figure 4. Reduction in Productivity as a Function of Stress & Fatigue*

Additional Facts:

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• The World Health Organization estimates that stress costs American businesses up to $300 billion a year in lost productivity.
• A study published in the Journal of Occupational and Environmental Medicine found that highly stressed employees are 25% less productive than their less-stressed counterparts.

The Conclusion: Balancing Efficiency with Employee Well-Being

While lean staffing may appear to be a cost-saving strategy, it often leads to higher absenteeism, increased workers' compensation costs, and reduced productivity due to stress and fatigue. It's clear through this body of research that workload-staffing imbalances need to be addressed to reduce excess costs, safety incidents, and worker fatigue. Here are some strategies that CIRCADIAN scheduling and shiftwork experts recommend if you are looking to lower operational costs and enhance efficiency:

Implementing Solutions:

• Invest in Adequate Staffing: Ensure that your staffing levels are sufficient to meet operational demands without overburdening employees.
• Promote Work-Life Balance: Encourage employees to take regular breaks and utilize their time off to recover fully.
• Monitor Employee Well-Being: Implement programs to regularly assess employee stress and fatigue levels.
• Provide Support Resources: Offer employee assistance programs, stress management workshops, and other resources to help employees cope with workplace demands.

By prioritizing employee well-being and avoiding the pitfalls of lean staffing, organizations can create a healthier, more productive work environment that benefits both employees and the bottom line.