The cost of vacancy: What are unfilled positions costing your business?
Everyone working in a company has their own share of work to do which they usually struggle to finish. To top that, if there is added work from an unfilled position that is being passed to the other employees, things can get really ugly.
These unfilled positions might not seem like a big deal, but it becomes one when you compare if with the final outcome. In many countries, it is proven that such unfilled positions will end up costing a lot for the company.
Why you should calculate costs
The problem with recruitment is that, if it does not happen immediately and at one go, it costs the company a lot of money. Most of the time when a position needs to be filled, by the time the recruitment personnel or manager finishes their work and starts to search for the new position, there would be enough damage done.
When there is an open slot, a couple days into work, you will barely notice any problems caused by that vacancy. Someone else will be taking care of that part of the job for the time being and everything would seem like it runs smoothly. This will lead to the thought that that vacancy can be kept intact for a longer period. However, what this does is that the person who is juggling both their work and the work of the vacant spot gets a massive amount of work and ends up not finishing their own work.
The recruitment personnel should establish the urgency for the need to fill that position. Each day that chair goes unfilled, whatever work that hypothetical person is supposed to do, remains unfinished and unfinished work has never made a successful company.
Quantifying lost revenue
Although a person’s job cannot quite be quantified or made tangible, there are ways to understand what that position is worth. One way doing this is dividing the total revenue by the total number of employees. This will show how much each person is responsible in creating in the work place. This is of course assuming that everybody’s work is equally important. When you find out a day’s revenue and divide it with the number of employees, you will now know how much that one vacant post you thought was irrelevant can actually cost you.
Of course, high paying jobs in high positions create more revenue and hence a chair vacant in a higher position is much more a loss than any other position.
The reason why this is an issue that needs to be addressed is because the value of these vacant chairs are intangible. Unlike quantifying normal outcomes in a business, these are aspects that go unnoticed because people tend to assume it won’t harm the company’s revenue.
Set a limit on acceptable revenue loss
Once you realize the importance of filling that vacancy, you need to set a limit on how much revenue you can afford to lose from that position. The ideal would evidently be zero but a since filling a position is a time-consuming hard task, there would inevitably be some revenue lost. Once you have calculated how much that vacancy was worth, you can also determine how much of it you can afford to miss. This will provide you with a clear-cut idea of the urgency with which that position should be filled.
You need to also know the average time your own hiring team would require finding you that perfect fit. If they usually take up more time that you can afford to miss, then it is worth considering handing over that job to a RPO agency or RPO company.
Recruiting spend vs Cost of open position
As soon as a position is open, you need to figure out how to proceed with it. Once you find what the loss would be from that one open position, you will know how long you can leave it that way. If the position does bring in a lot of revenue which you are letting go, and if your recruitment team will take up longer time to find the apt staff, then it is better to get outside help.
When reaching out to staffing agencies, the one thing you need to figure out is if the amount of money that position is making you lose is more than that of the recruitment agency’s cost. If it is, then it is best to get outside help to reduce that loss as soon as possible.
Time is money becomes quite literal in this case and hence it is one of the best times to consider investing in RPOs or staffing agencies. Finding a good RPO for your company will not just find you the perfect person for that unfilled position; it will also be of massive help in any kind of recruitment-based needs in the company’s future.