HR Mavericks

Eddy’s HR Mavericks Encyclopedia


Overhiring may seem like a quick fix, but it can lead to devastating consequences. Read on to discover the four key ways to prevent overhiring in periods of hyper-growth and ensure the success of your company by building a lean, motivated team.

What Is Overhiring?

Overhiring is a term used to define instances where a company has strategically or mistakenly hired more employees than what is actually needed. This can be done intentionally as a tactic to lower the impact of employee reneging and turnover, similar to airlines and hotels purposefully overbooking seats and rooms. This is a short-term solution that can cause more harm than good in some situations. When done unintentionally, it is usually due to a misidentification of the right number of new hires to take on.

Why Is Overhiring Harmful?

The unfortunate results of overhiring can be felt throughout the company. Some of the most obvious are:
  • Increased expenses. Hiring too many employees can result in increased expenses, such as salaries and benefits, which may not be sustainable for the company's growth.
  • Decreased productivity. Hiring too many employees can lead to a shortage of responsibilities and tasks, which can result in decreased productivity and motivation throughout the workplace. Additionally, employees may feel unimportant in their role, which is a major contributor to turnover.
  • Limited resources. Overhiring can also lead to limited resources, such as office space and equipment, which may be necessary for the success of the business.
  • Poor company culture. Hiring too many employees can result in a decline in company culture, as it can be difficult to maintain a cohesive team when there are too many members or members are constantly changing.
  • Mis-hires. Rushing to hire employees without careful consideration can result in mis-hires, which can be costly and time-consuming for the company to rectify.

Common Causes of Overhiring

By being aware of these common causes of overhiring, companies can take steps to avoid it and ensure they are hiring the right number of people to meet their needs.

Lack of Clear Job Roles and Responsibilities

When job roles and responsibilities are not clearly defined, it can be tempting to hire more people to cover potential gaps. This can lead to redundancies, confusion and inefficiencies.

Pressure to Meet Growth Targets

Companies that are experiencing rapid growth may feel pressured to hire more people to keep up with demand. However, if this growth is not sustainable or if the company has not adequately planned for it, it can lead to overhiring.

Fear of Being Understaffed

Managers may worry that they don't have enough staff to handle current or future workloads. This fear can lead to unnecessary hiring, as managers try to preemptively address potential issues.

Lack of Understanding of the Talent Market

When companies don't fully understand the talent market, they may assume that there is a shortage of skilled workers and overcompensate by hiring more people than they actually need.

Inefficient Hiring Processes

When companies have inefficient hiring processes, they may end up hiring more people than they actually need simply because they don't have a good way to identify the right candidates for the job.

Strategies to Avoid Overhiring

The best steps to take to avoid this pitfall are preventative. By following these strategies, you can avoid overhiring and make sure you have the right number of employees to meet your business needs.

Consider Contractors

When facing new goals or challenges, a company may consider whether a new role needs to be created and a new worker hired. An alternative to the costly hiring and onboarding process would be to hire contractors or freelance workers. Contractors can be brought on for specific projects and only paid for the work they do, rather than taking on a salaried, full-time employee. Outsourcing to a freelancer or agency also ensures that the work is done by an expert in the field. This option can make a big difference in productivity quickly without the risk of overhiring. Additionally, by putting a gig-worker on the job, you’ll be able to deduce whether or not creating a full-time role makes more sense moving forward.

Offer Remote Options

This is effective if limited space is an issue. Consider offering remote work to your employees. Remote workers can help fill temporary gaps and ease the burden on current employees. Additionally, offering remote work can be a way to build trust and create more space in your office.

Communicate Transparently With Your Team

Before making any hiring decisions, talk to your team to get a sense of how the business is performing on the ground level. Ask team members about their current workload to get a gauge on if they feel overwhelmed and if they feel they could use more help. This can help you assess if you actually need to hire more employees.

Hire Intentionally and Carefully

If you do decide to hire new employees, be sure to do so carefully. Review candidate credentials and experience before making a decision. You want to make sure your new hires are prepared to do the work well and will add value to your company culture. A mis-hire can cost both time and money, so it's important to take the time to find the right fit.

How to Address Overhiring When It Happens

Finding yourself in an overhiring situation can be overwhelming and stressful. But there is hope. The situation can be redeemed by following these eight steps.

Step 1: Acknowledge and Assess the Situation

Recognize that overhiring has occurred and the impact it is having on the company. Evaluate the current workload and assess the actual need for additional staff.

Step 2: Determine the Cause

Review the hiring processes, evaluate job descriptions and assess the current recruitment and hiring strategies. Identify the root cause(s) of overhiring to avoid repeating the same mistakes in the future.

Step 3: Communicate With Current Employees

Talk to current staff members to determine if they have capacity to take on additional responsibilities. Communicate what steps the company is taking to address the situation and get their input on potential solutions.

Step 4: Explore Alternative Options

Consider hiring contractors or freelancers to handle temporary projects or fill specific skills gaps. This can be a more cost-effective option than hiring full-time employees.

Step 5: Reevaluate Job Descriptions

Revisit the job descriptions and ensure they accurately reflect the responsibilities and requirements of the position. This will help attract qualified candidates and ensure that new hires are a good fit for the role and company.

Step 6: Reevaluate Recruitment and Hiring Strategies

Review the recruitment and hiring process to identify areas for improvement. Ensure that all job postings are accurate and clear, and that candidates are properly vetted to ensure they meet the requirements of the role.

Step 7: Monitor the Situation

Keep track of the progress and monitor the effectiveness of the new strategies implemented to avoid overhiring. Be flexible and adaptable to make changes as needed.

Step 8: Take Additional Action When Layoffs are Needed

If after implementing the above strategies, an HR professional finds that the company is still overstaffed, layoffs may become necessary. Prior to beginning this process, make sure alternative options have been considered. This could be reducing work hours, pay cuts, or offering voluntary severance packages. If layoffs are necessary, it's important to handle them with sensitivity and care. Here are some steps to follow:
  • Identify the positions that need to be eliminated. This should be done based on a careful analysis of the company's needs and resources. Determine which positions are no longer necessary and can be eliminated.
  • Communicate with employees. Be open and transparent with employees about the situation and the need for layoffs. Provide as much information as possible and be available to answer any questions or concerns they may have.
  • Follow legal requirements. Ensure that the layoff process complies with all legal requirements and that employees receive any required notice or severance pay.
  • Provide support. Offer support to employees who are laid off, such as career counseling, job search assistance or outplacement services.
It's understandable for HR professionals to feel stressed and overwhelmed in this situation. However, by following these steps and approaching the situation with sensitivity and care, they can help minimize the negative impact on employees and the company as a whole.
Kayla Farber

Kayla Farber

Kayla is the Chief Innovation Officer at Hero Culture, where the passion is to create company cultures of retention using the power of personality.
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