A missing team member in any department means more work has to be assumed by others. Aside from the true cost of replacing that one position, it’s also important to consider the underlying affects of how the vacancy is affecting your existing staff.
How does an empty seat affect productivity, accuracy, job satisfaction, and morale? All of these issues can ultimately put you at risk for more turnover if not handled in a timely manner.
The cost of calculating an unfilled position is fairly simple:
- Step #1 - Annual company revenue/number of revenue generating employees = annual revenue generated by employee
- Step#2 - Annual revenue generated by employee / 356 days = daily revenue per employee
- Step #3 - Daily revenue per employee X days position unfilled = revenue lost per day unfilled job
- Step #4 - Revenue lost per day X number of open jobs = total revenue lost per day for all open jobs per unfilled job
Opportunity cost is a major factor. Think about what else managers could be accomplishing if they were not burdened with the increased stress of supervising teams and individuals filling in for the open position. Are they being forced to ignore top performers or short-change development of average performers? There are significant morale and revenue side effects tied into this as well.
Another part of opportunity cost is the time managers spend in the search process. Managers in accounting, finance or IT are not paid to be recruiters. The productivity cost can be enormous if the search process is not handled efficiently. How efficient has your hiring process been with regard to time spent by those involved, cost of tools utilized, and the ultimate goal of attracting and hiring the best employee?
These days many positions have performance-based incentives tied into their overall compensation. Missed bonuses due to having to pick up the slack for lost employees can cause resentment and potentially greater loss of employees that will only compound the problem.
When an employee has to fill in for a non-core function, then someone else has to cover for that person or tasks simply don’t get done. Juggling responsibilities, while sometimes necessary, usually means that your employees may be spending time outside of their area of expertise. This can be costly to the organization, as ultimately the employee’s frustration with the additional work grows and their productivity drops.
Ideally, you need a plan in place to effectively manage vacancies when they happen. Partnering with a specialized recruiter who understands your department’s technical needs, as well as your company’s culture, can save you time as well as money.
Be proactive with your hiring strategy so you can consider making room for top talent to stay competitive, even before you have an open position. This will allow you to maintain morale at all levels while continuing to grow revenue!