The Hidden Cost of Overstaffing

Last month we talked about what to do when the person we hired isn’t the right fit. What was the feedback from a lot of colleagues? To avoid this scenario, they like to have more than enough team members in case one doesn’t work out. 

So, what is the danger of being overstaffed? It isn’t just payroll alone, although that can be a huge burden on many practices. It’s what happens when roles are blended, people are underutilized and accountability disappears. Underperformers can slip by when there are more people than work to go around, and that can breed resentment.

Why do many of us overstaff? It’s not a lack of planning or poor decision-making. They do it to maintain coverage and flexibility and avoid burnout (for both them and their team). But without structure, that buffer can turn into inefficiencies.

Over time, work will always expand (or shrink) to fit the people present. Tasks get divided up and everyone stays busy, but output doesn’t necessarily increase. What happens as a practice owner? Payroll increases, margins tighten and the practice must stay “busier” to break even or bring in a profit.

How do we combat this inefficiency issue with an overstaffed office? Being more aware and cognizant of what is happening does not mean cutting people. It means making team members more responsible for their roles and ensuring everyone has a clear purpose that keeps the practice running.

SO, HOW DO WE DO THIS?

If you have ever been understaffed, you have unwittingly figured out exactly what needs to be done in your practice and the best ways to do this. My cold start practice went from three team members to one in December of 2024, our first year of being open. Instead of panicking (well, after a slight panic), my office manager and I had to figure out how to stay open, see patients and make money by ourselves. It was a great time to put clear systems in place and figure out exactly who should be doing what as we added new team members.

We did this by separating roles from people. Most large or established practices don’t know who is doing what. A great first step is to write down everything that needs to happen in the practice each day, week and month—clinically, financially, operationally and administratively. Then map those out before assigning people to do them. This list is also great for employee reviews. Ask each person to create a list of their job responsibilities, and then make sure they’re doing it!

Next, look for overlap or redundancy that exists “just in case.” While it is important to have coverage, duplication is typically unnecessary and costly. If two people are doing the same work that could be done by one person who is more efficient, the answer isn’t adding more people, it is becoming more streamlined. 

Make sure each role is clearly defined and fully utilized. The right people for the job will rise to meet or exceed goals, but these roles must be clear. We often estimate what our teams can do. Even the best staff will do only what’s asked—and nothing more—if expectations aren’t clearly defined. Do you have a teammate who is not pulling their weight, even after this support and guidance? Well, last month you learned that not everyone is the right fit for your practice, and this is a great opportunity to reduce your payroll.

A word of caution—current staffing levels are a comfort zone for practices, and teams will always feel they are understaffed versus overstaffed. It can feel impossible to maintain the same workload in a busy practice with fewer people, but with a clear list of expectations and responsibilities, many of us can manage with a leaner team. The morale of a practice will often rise when underperforming teammates leave. Even with a smaller team handling more work, a fully engaged staff can give the practice a big boost. Employees feel most secure when they know they add value to their team.

I don’t expect practices to run lean to the point of fragility or affect their profitability. If your practice margins feel tight and your team feels busy, I encourage you to pause before assuming adding more staff is the right answer. Look to define role and expectations more clearly. When your team is fully optimized, the practice feels lighter and more efficient. A strong business is built by using what’s already there, on purpose.

Read more on staffing here.