What does overhiring mean?

What does it mean to overhire? Overhiring is when you bring on more staff than necessary. For hourly workers, this might mean not having enough shifts to fill your staff’s schedules. For salaried workers, overhiring can look like not having enough meaningful tasks for each employee.

Overhiring can be tricky to spot because employees often look for ways to keep themselves busy. Sometimes, even managers may assign work that’s unnecessary or is not benefitting the business. Overhiring can even come from the very top when executives and senior management create roles that don’t impact business operations enough to justify the cost of the employee’s wages.

Ultimately, when a company overhires, it means they’ve overinvested in a single resource. There’s a delicate balance every organization should meet by having enough people to do important jobs that help the business reach its goals.

Why overhiring can be a problem

Several problems can arise with overhiring:

1. Increased costs

Overhiring can increase business costs, which can cause profits to drop. This could leave the company financially vulnerable if sales decrease.

2. Layoffs

Overhiring could potentially lead to layoffs. After the company comes out of its rapid hiring craze, it may realize that it can’t afford to keep paying such a large workforce, or they may find that they don’t have enough work for such a large staff.

3. Poor morale

Overhiring can significantly impact morale. If you tend to hire externally, internal candidates may feel that they’ve been overlooked for a promotion.

If layoffs do happen, it usually leaves employee morale very low. The people who are left will feel uneasy about their job security, may feel they’re being asked to do the work of multiple people and may start looking for a new job.

4. Internal strain

Lastly, if you start hiring rapidly, it often puts a substantial internal strain on your recruiting and onboarding teams. Staff may feel pressure to fill all the open roles and onboard new employees quickly. This can result in a few things:

• You hire above your initial salary ranges for positions that need to be filled quickly.
• The quality of your onboarding process may suffer as you have to train many new hires all at once. This means that new employees aren’t onboarded to your usual standard, and their ability to perform well in their new role is potentially impacted.
• Your recruiting and onboarding staff may feel overworked this could lead to burnout.
• Sometimes, when companies rush to overhire, they prioritize external candidates. This could result in your company overlooking internal moves and promotions, leading to poor employee morale.

3 tips to help avoid overhiring

Overhiring doesn’t have to happen. Here are some tips you can follow to reduce your chances of overhiring:

1. Keep track of hiring averages

Consider tracking the average hiring numbers for the past few years. Now that you have an average number of monthly hires, ask them to keep that number in mind. If they notice that they’re starting to hire at a rate that’s significantly higher than average, it might be an early sign of overhiring.

2. Create detailed business cases for each hire

Create an internal process to ensure that there’s a detailed business case for each new hire. The document should outline current challenges as well as how additional staff can solve these problems. This ensures that your organization is never trying to hire for roles that are unnecessary or where there isn’t enough work.

3. Consider internal mobility

If you need new to fill a position but would rather not hire externally, consider looking within your company’s ranks. Internal mobility can be an excellent opportunity to allow current employees to learn new skills and pivot to a new role. When done correctly, internal mobility is a mutually beneficial opportunity that saves you from adding to your employee base and gives someone internal a chance to learn new skills and develop professionally.

Don’t underhire either

By now, you understand the pitfalls of overhiring. However, it’s important to note that you don’t want to underhire either. If you’re too slow to recognize the need for a new position, it can put pressure on existing staff and slow down your business operations.

Ultimately, hiring is all about balance. You want to continuously evaluate what your workforce needs are and create a plan to meet those needs as soon as possible. Often, the key is simply checking in with your employees to see their perspectives. They do the work daily and can tell you if they need additional support or feel adequately staffed.

Keep hiring at a slow and steady pace as much as possible. Hiring should naturally grow as your business grows, but each new hire should be a careful decision.