written by: N Nayab•edited by: Jean Scheid•updated: 7/15/2011
Excess staff and staff shortages cause drags and related ill-effects. Calculating staffing requirements depends on accurate forecasts, or anticipating both future demand and workforce levels. This is a challenging task and requires much insight and experience. Scientific methods ease the process.
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Optimal workforce levels are indispensable for the good functioning of an organization. Staff shortages increase the workload of existing employees and forces them into overtime, and this leads to ill-effects such as low morale, loss of productivity, absenteeism, and higher overtime wages. Hiring excess staff leads to unnecessary wage payouts and creates inefficiencies It also denies all employees enough opportunities, and is the root cause for interpersonal conflicts and disputes.
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One simple way to estimate staffing levels is to quantify labor demand and supply.
Possible factors that shape demand for employees are existing business volumes, possible expansion related growth, a favorable business climate or marketing campaign, or a reduction in sales volume owing to the impact of competition or a poor economic outlook. Possible factors that influence availability of workforce are present staffing levels less possible attrition owing to resignations, terminations, and retirements, and losses owing to transfers and promotions. One good way to prepare a staffing plan is by quantifying such factors to make an assessment.
Assume the case of a fleet operation company. The company operates 24 trucks around the clock. The total weekly man-hours required are 24 hours 24 trucks x 7 days = 4,032 hours. A normal truck driver works 40 hours. Dividing the total requirement of 4,032 by 40 hours per driver generates a requirement of 100.8, rounded off to 101 drivers.
The distortions, however, come when some drivers call in sick, or take vacation time off, or some drivers quit and finding a replacement takes time. Again, not all trucks would be running 100 times and some fleet would be idle at some point of time for maintenance or lack of business, wherein some drivers would remain idle and could proceed on vacations.
Assume the company policy may allow workers six weeks of sick leave and another two weeks of vacation time, totaling a possible eight weeks off. The total hours off per employee would be 8 x 40 = 320. For 101 employees this translate to 101 x 320 = 32,320 hours a year or (32,320 / 52) 621 hours a week. The total number of additional drivers required to cover this additional 621 hours is (621 / 40) 15.5. However, not all employees would avail or be provided with the maximum number of leaves, and the full complement of 15.5 additional employees would be unnecessary. The actual number of extra staff required depends on managerial judgment such as anticipated leave requests, the extent to which existing drivers can work overtime to cover for employees on leave, anticipated attrition, and other factors.
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Applying the same principle to work that involves varying levels of output and multiple activities makes quantification more complex. Traditional methods such as time and motion for an assembly line operations study involves observing people at work to record time taken for specific tasks, and other specific work related actions to identify time required to complete tasks and productivity levels. The total work is then divided by time taken, to calculate the staffing requirements.
Other industries have since then developed their own methods of estimating time and productivity. The Erlang C formula, for instance is a good choice for calculating staffing requirements by interval, useful for customer support and call centers. This method calculates the optimal staffing levels after calculating metrics such as call volumes, average handling times, and service level goals. Shrinkage or unproductive time may distort such calculations.
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Informal Managerial Judgments
Very often, determining staffing needs depends on the subjective and rule of thumb judgment of an experienced manager. The popular joke “a project manager is the one who thinks that if a mother can deliver a baby in nine months, nine mothers can deliver a baby in one month" illustrates the limitations of relying solely on a statistical analysis over floor level practical knowledge.
A seasoned manager, foreman, or business owner, over time would have a correct understanding of the extent of work involved in the firm or department, seasonal spikes and lows, nature of skills and competencies required and more. A variation of this approach is to employ a few personnel first, and then add to the head count as the managers or business owners find existing personnel overwhelmed with work and having to engage in overtime on a regular basis. Most small organizations adopt this method by default.
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Benchmarking is a way for calculating staffing requirements, especially when the company lacks competent managerial staff to make informed judgments.
A new retail shop may look at the staffing levels of its competitor who sells the same product, has the shop of a similar size, and spends the same amount in advertisements. There is no reason to believe why the business would not require any less or more staff than the competitor. Such benchmarking, however, needs to factor in distortions caused by the competitors’ better learning curve and experience that may make their workers more productive and thereby, require lesser hands, or more people frequenting an already established shop, requiring more hands.
Optimal staffing levels allow the organization to work at its efficient best, and allows employees an enriching work experience that translates to better productivity. Things change over time, and good organizations should conduct such an exercise periodically.
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"Forecasting Staff Requirements." http://www.icmi.com/Resources/QueueTips/2005/March/Forecasting-Staff-Requirements.aspx. Retrieved July 13, 2011.
Retail Online Integration. “Contact Centers: How to Calculate Staff Levels and Scheduling Requirements." http://www.retailonlineintegration.com/article/contact-centers-how-calculate-staff-levels-scheduling-requirements-27109/1. Retrieved July 13, 2011.