You know that an empty spot will cost you — the trick is understanding just how much.
Businesses feel vacancies in many ways with some of the obvious pains including lower productivity, lost profit opportunity, and increased margin for error.
Calculating the cost around these pain points may fluctuate based on industry. In manufacturing, for example, an Accenture study of 300 executives found that unfilled roles led to significant financial impact around increased overtime with 32% of respondents seeing a 10% rise or greater in overtime expenses. More so, 28% of respondents experienced a similar leap in downtime cost, and 26% felt a tenth or worse deficit in their cycle time as a consequence of talent shortages.
Source: Accenture Manufacturing Skills and Training Study
Conversely, the average U.S. company spends more than $3,500 per new hire in job-advertising costs alone, which culminates to about $124 billion annually. Not only is the vacancy costing you revenue, but the resources you’re investing to find a hire are adding up.
These quantifiable losses, however, are just the tip of the iceberg. The expense around vacancy doesn’t end with money; in fact, the impact on your team morale may be more taxing to your bottom line in the long run.
Why? When jobs go unmanned, your employees must find a way to fill the void on top of their existing responsibilities. If the position remains vacant, your team may become frustrated with stepping up only to be rewarded with more work. As time marches on, they might lose motivation to keep tackling the extra load without a light at the end of the tunnel, and resent you for not getting a handle on the situation. Worst case scenario, they begin to question your leadership and doubt the company’s ability to fill the role, which may lead to a problematic rumor mill.
Ultimately, a vacancy increases your risk of turnover — the longer the void, the higher your risk. In my experience, the saved salary from an open position will never be worth the cost on your business.
What can you do? Work smarter, not harder when it comes to your hiring. Dig into your current process and question what could be done more efficiently, or where does the momentum stall. If you haven't implemented a passive candidate recruiting process and campaigns, it maybe time to consider "outbound recruiting" as an additional source of quality candidates.