Cost of Vacancy
National studies show companies spend an average of 51 to 72-days to fill open positions. The business impact of a talent shortage that results from a gap between the time the talent is needed and the time the talent is acquired is calculated as the Cost of Vacancy.
There isn’t a magic formula, or even a standard formula, for calculating the cost of vacancy. There are, however, several formulas that are adaptable for every organization. Knowing the cost of the vacancy illustrates the urgency to widen the scope of viable recruitment solutions.
Average Revenue Lost Per Employee
If you do not have position specific data available, this simple formula allows you to determine the revenue your company is failing to generate due to a vacant position.
Internal hiring processes can be a lengthy and costly experience when searching for the right candidate. Contact Us for a quote and to learn more about how Executrade’s recruitment specialists can help!
(For example, with annual company revenue of $10,000,000 and 40 employees and 230 working days, 73 days to fill a position, the total cost of vacancy is $79,350)
Simple Salary Multiplier
This calculates each employee's value as a multiplier of their salary. You can rely on a study conducted by Harvard University that indicates an individual's value is between one and three times their salary. Some experts have found three times the salary to be most accurate. However, you can utilize two times a salary safely.
(For example, with a $80,000 annual salary, a productivity multiplier of 2 and 230 working days, 73 days to fill a position, the total cost of vacancy is $50,782)