When a position becomes vacant, and before you decide to fill it by adding to the workloads of current employees, it is worthwhile to consider the literal and figurative costs of leaving the position open. The results may surprise you…and hopefully arm you with awareness to avoid paying the price in the future.
The basic math. Companies today spend an average of 25 days to complete the hiring process, potentially leaving that position vacant for all of that time. This number could be 58 days for larger organizations with 5,000 or more employees. And while there’s no concrete measure, here’s one formula you can use:
Daily Cost of Vacancy = Annual Revenue ÷ 220 Annual Working Days
Number of Employees
Let’s say your company has annual revenue of $20 million and 100 employees. Do the math and you’ll see that a vacancy can cost you $909 a day. Scout around for other formulas that might work for you. No matter which approach you use, you’ll see that keeping a spot vacant will have a significant cost attached.
- The cost to staff. Consider that with an open position, management now has to work with one less team member. There’s the real possibly of upsetting the well-established balance of working with a certain number of people. With nobody to fill the gap, productivity may decline as the team scrambles to fill the hole. Reassigning work to other team members means adding more to their plate, possibly forcing them to frantically acquire new skills and/or contacts. This also may cost you in overtime if employees were required to work longer hours to make up for the unfilled post.
- The cost to customers. You probably began thinking of the ripple effect this cost will have on your customers. Less productivity can slow everything down, which means less attention to those for whom you’re doing the work. It can also lead to pushing back deadlines and potentially resulting in lower-quality work, all leaving the customer less satisfied.
- Future costs. Don’t forget about how all of this will look to competitors who will take advantage of the fact that you’ve lost some of your edge, much less prospective employees who will avoid your company if they think either they won’t get hired due to downsizing or don’t want to work for a place that forces its employees to do the work of more than one person. You never want to send the message to anyone that the company isn’t performing well.
To avoid having a vacant position, work with a staffing agency to fill in the gap as you search to replace the employee, and have a plan ready for such contingencies. Do what you can to minimize the overall cost to your company and all involved. For more information or to partner with an experienced recruiter, reach out to our expert team at Medical Professionals today!