Insights into the forces shaping our industry.

What is the cost of not filling a position?

Hiring Advice

I’m surprised that when I ask a client (or prospective client) what their cost is to not fill a position, they don’t have a quantifiable response.

Each day that a position goes unfilled, it costs your organization lost revenue and productivity as well as the additional strain on your current employees.

There are ways to calculate the cost per day:

Take the position’s annual salary, divide by 260 working days and multiply by the average days it takes to hire.  So for example, if the base pay is $100,000 and it takes 30 days to fill the role; using this calculation, it will cost your organization $384.61 per day to leave this position vacant which is $11,538.46 in 30 days.  If the position remains open for four months (which we often see by the time we are contracted to start a search), it’s already cost your organization $46,153.20.

You can also calculate your average employee revenue.  Divide your company’s annual revenue by the total number of employees in the organization.  Then multiply by 260 (the average number of working days per year).

You also must consider the other non-monetary costs to an unfilled position:

  • Managing a team with lower numbers (productivity dips).  Both sales numbers and not having enough employees to cover daily tasks
  • Additional workload to remaining team members (lowering productivity and morale)
  • Customer satisfaction diminishes as the service level goes down
  • Lower customer confidence – Loss of skills and expertise on your team
  • Loss of leadership, idea generation, skill development
  • Perception to the industry – why are these roles open?  What is not working well in your organization

The cost of leaving a role unfilled in your organization is tremendous.  And candidly far greater than the investment in partnering with a professional recruiter.  Yes, the cost of using a recruiter is high but Egret Consulting finds industry specific talent (result – less internal training).  The process is much faster than posting on job boards…Egret Consulting’s average is 23 days to fill a position.  This is far less than the cost of having your position sit vacant.