In some businesses and geographical areas, staffing shortages can be a serious problem. For instance, a survey by the Manpower Group discovered that 40% of American employers had trouble filling available positions, with skilled crafts, sales reps, and drivers being the hardest occupations to fill. Another survey from the US Chamber of Commerce on the nation's workforce crisis, 94% of state and local chambers reported that businesses in their area were finding it “difficult” or “very difficult” to hire workers.
This challenge is not isolated to the United States. With the rise of remote work options and changing workforce demands across industries, the number of unfilled positions continue to increase and the hiring market becomes more and more competitive.
Businesses may suffer from a lack of qualified personnel due to some common reasons: it could be due to the high demand for talent in the industry or overall lack of employee retention strategies that could push away current employees due to burnout. That’s why it’s critical for businesses to take a proactive approach to staffing shortages.
In this blog article, we explain what a staffing shortage is, why it happens, and how your organization can handle it before it affects your company’s bottom line.
What is a staffing shortage and how does it impact businesses?
A staffing shortage is a situation in which there are not enough people available to do the work that needs to be done within a company or organization. This can happen for a variety of reasons that will be explained later on. A staffing shortage can negatively impact a company or organization by decreasing productivity and efficiency, increasing workload for existing employees, and potentially leading to financial losses.
Let’s give this financial loss a clearer context:
The Society for Human Resource Management (SHRM) estimates that the average cost to replace an employee can equal six to nine months of that employee’s salary. The Work Institute, on the other hand, estimates that the total cost of turnover is between 33% to 200% of the employee’s annual salary. For a company losing just a handful of employees annually, these hidden costs can easily become one of the largest unplanned expenses that could have a long term impact on the business as a whole.
In reality, staff shortage is more than just an empty desk. It is a profound weakness in operations that increases employee stress, spikes replacement costs, alienates customers, and ultimately holds the entire organization back from its potential.
What causes a staffing shortage?
Potential reasons why a staffing shortage might occur vary across industries and organizations. However, here are some common causes:
Increased demand
If a company or organization experiences an increase in demand for its products or services, it may need to hire more employees to meet this demand. However, if there are not enough qualified candidates available, a staffing shortage could result.
This is particularly true in industries that are seasonal, experiencing a sudden growth spurt, or dealing with unexpected large projects or contracts. If the hiring process is slow or there are simply not enough qualified candidates available locally or nationally to staff the new roles quickly, a staffing shortage could result. This often puts immense strain on the existing staff, potentially leading to burnout and further turnover.
Lack of qualified candidates
Even if there are open positions available, a company or organization may struggle to fill them if there is a shortage of qualified candidates in the job market. This can be due to a lack of skilled workers in a particular industry or geographic region, or a mismatch between the skills and qualifications required for a job and the skills and qualifications of available candidates.
One way to address this is to expand the search by utilizing offshore outsourcing solutions. This way, a company is not only limited to hiring available local talent — maximizing the chances of finding the right people for different roles and minimizing the time spent looking for qualified talent.
High employee turnover
A high rate of employee turnover, or the rate at which employees leave an organization and are replaced, can also contribute to a staffing shortage. If a company or organization is losing employees faster than it can replace them, it may struggle to maintain an adequate workforce.
In this scenario, the challenge lies not with hiring, but in retaining existing staff. High turnover is often a symptom of underlying organizational problems, such as:
- poor company culture or toxic work environments,
- uncompetitive compensation and benefits,
- lack of growth opportunities or professional development,
- ineffective or inefficient management, and
- burnout due to excessive workload caused by an existing staffing shortage.
Other factors
Other factors that can contribute to a staffing shortage include changes in economic conditions, competition for skilled workers, and changes in government policies or regulations.
How to effectively address the staffing shortage of your organization
When your company has a staffing shortage, it can be difficult to meet customer demand and maintain high levels of quality. Here are some of the best industry secrets to effectively address a staffing shortage:
1. Review your hiring process
Consider if your hiring process is efficient and if there are any bottlenecks that are causing delays. You may want to streamline the process or consider alternative hiring methods, such as partnering with an outsourcing company or hiring temporary or contract workers. Utilizing specialized recruitment agencies for hard-to-fill roles can also provide immediate access to pre-vetted candidates who are not actively applying through traditional channels.
2. Offer incentives
Consider offering incentives to attract and retain employees. This could include things like bonuses, flexible schedules, or additional training opportunities. To effectively compete, your company must ensure that its overall compensation package, including salary and benefits, is at or above the market average for your industry and region. Beyond money, offering enhanced incentives like comprehensive health insurance, as well as clearly defined hybrid or fully remote work options can be powerful differentiators.
3. Promote from within
Encourage your current employees to take on additional responsibilities or offer them the opportunity to advance within the company. This can help you fill positions without having to go through the hiring process. This requires a dedicated focus on succession planning, where high-potential employees are identified early and given targeted mentorship and training to prepare them for leadership or specialized roles before the position becomes vacant.
4. Utilize outsourced staff
If you have a short-term staffing need, consider outsourcing some of your job roles to an offshore staffing solutions company. This can be a good option if you don't want to commit to a long-term hire. Outsourcing is most effective for non-core business functions such as IT help desk support, payroll processing, data entry, and customer service. By leveraging the large, specialized talent pools available through Business Process Outsourcing (BPO) firms, your internal team is freed up to focus exclusively on strategic, high-value tasks that require specialized knowledge.
5. Consider remote work
If you have the option, consider allowing your employees to work remotely. This can help you access a larger pool of candidates and may make it easier to find the right fit for your team. Alternatively, you can explore remote staffing solutions as well. EEmbracing a remote working policy or flexible work hours that eliminates geographical constraints, allowing you to recruit top talent from across the country or globally, effectively mitigating local labor shortages. For jobs that require some physical presence, a hybrid model — where employees split time between home and the office — is a major retention tool that signals flexibility and trust, making your company more attractive to highly skilled candidates seeking better work life balance.
6. Train and develop your current staff
Investing in the training and development of your current staff can help you retain employees and increase their skills and productivity. This can also help fill gaps in your staffing needs. Beyond basic training, offering employees personalized upskilling programs in high-demand areas (like new software or data analytics) is a powerful, proactive strategy to future-proof your workforce.
7. Collaborate with other organizations
Consider partnering with other organizations or businesses in your area to share resources and personnel. This can help alleviate staffing shortages and reduce costs. Formalizing partnerships with local universities, community colleges, and trade schools is essential for establishing a reliable talent pipeline through internships, apprenticeships, and other similar programs.
Having explored all the options organizations can explore — from optimizing internal hiring and incentivizing staff to strategic cross-training and building academic partnerships — what remains true is that time is often the most critical factor when addressing staff shortage.
Unfortunately, many internal fixes, while necessary for long-term health, take months to yield results. So, when faced with an immediate and urgent talent gap, the fastest and most scalable solution is to look outside your walls. This is where outsourcing shifts from being a mere option to the most effective solution for handling critical staffing shortages right now.
Outsourcing: The Best Solution to Handling Staffing Shortages
Companies might use outsourcing to get access to specialized talents or expertise that might not be present within their own organization. It enables them to hire outside expertise on a temporary or permanent basis, which can be a perfect solution to deal with staffing shortages. Even in the face of staffing issues, this can help the organization achieve its goals and keep running efficiently.
Consider KDCI, an offshore staffing solutions provider with a long-decade of leadership and experience in Ecommerce outsourcing. We offer outsourced and offshore staffing services at an affordable rate in customer support, product information management, web development, digital marketing, and accounting.
Let us help you improve your staffing levels and improve your overall work environment. Click the button below to get your FREE consultation with one of our outsourcing experts today!
