It takes a lot of time to find and hire great candidates for your team.
Those who are responsible for talent acquisition understand the leg work that is required to hire and on average spend ⅓ of their week on sourcing and finding candidates to consider for a single role (sometimes 13 or more hours per week.) If someone is working to fill multiple openings, it’s easy to see how time spent on recruiting and hiring can balloon quickly. If someone on your staff is tasked to do the hiring, chances are that is not their only set of tasks. Often they are juggling their own job and responsibilities and have had to add hiring to their to-do list. In order to expedite the process, a business owner or other executives may step in and try to help recruit and hire to fill the open position quickly.
A business owner can sometimes spend upwards of 40% of their time on tasks that don’t necessarily generate income. Imagine offloading that work on to someone else! It’s great to get help from the outside so you can minimize the time spent on hiring and focus on more income-driving actions. This can also help you minimize any loss to your business – the quicker the position is filled, the less loss you’ll incur. Getting your time back, incurring a smaller loss, and keeping your current staff happy by leaving their work-load as is seems like a win to us!
In order to truly minimize your losses you need to work quickly and hire someone to fill the role as soon as you can. A lot of times moving quick just isn’t possible. The resources needed to quickly hire someone aren’t available (time, money, tools) so hiring takes longer than it needs to. The cost of vacancy can also balloon quickly if a job is left open too long.
There are so many factors associated with true cost of vacancy calculation, it is impossible to assign an exact cost of the vacancy. Unless you have someone on your staff who is experienced and 100% dedicated to all tasks related to hiring and nothing else, you may not be putting your business in the best position in both the short and long term.
It would be easy to see the money lost on visible things like a hotel with unrented rooms, an airplane with unfilled airline seats or a grocery store with unsold product. Although harder to see every day, open vacancies represent a similar lost revenue opportunity and often times business owners feel the squeeze before they see it on any financial reporting.
Consider partnering with a reputable staffing agency to get the job done, and get it done efficiently while saving you time, hassle, and money.
Staffing agencies are in the business to hire, so they make it their mission to source and interview great talent to fit a variety of job roles. They also understand time is of the essence since the job market is so hot.
Effective recruiting is (and should be) a full time job. Time needs to be dedicated to market the open position on all available mediums, source candidates, review resumes, engage and connect with candidates, interview, follow up and then hire. That time can either be spent internally – with a high possibility of overextending your current staff and workload – or externally by partnering with a great staffing agency.
Working with a staffing agency is a smart move because great staffing agencies do the leg work of hiring for you and let you get to your business.
How do you measure the true cost of a job vacancy?
While some costs of leaving a job vacant can be measured, a lot of costs are intangible and are hard to define exactly. When thinking about the true cost of a job vacancy, a business needs to factor in actual monetary cost and those intangible costs.
What are some monetary costs that need to be considered when thinking of the true cost of leaving a job vacant?
- The money it takes to hire a new employee.
- The cost of the loss of production of the vacant job role.
- The cost of overtime to cover for the vacant job role.
- The cost of offloading work to cover for the vacant job role.
- The cost of loss of production of the team members that owned the job role.
- The loss of revenue stemming from inability to take on new jobs due to staff restrictions.
- The cost of underutilized company equipment and assets.
- The loss of sales volume due to inability to satisfy orders.
However, there are other costs to a job vacancy that may not be able to be measured by money lost. Things like this include:
- Stress on the existing staff after the vacant job responsibilities are moved around.
- Unhappiness with frequent turnover if the job is filled and then vacant again.
- Lost productivity from the current staff as they now have to do more work in the same amount of time.
- Customer service could see a decline causing unhappy customers and returned orders.
- Lower customer confidence due to lack of skills and expertise.
- A dip in morale from the staff as the job remains vacant and stress continues to mount.
What is the true monetary cost of a job vacancy for your business?
This primarily depends on what job is left vacant. While some jobs have a higher salary and more expectations, an average employed person outputs 1 times their current salary. Revenue losses are likely to be greater for employees in high-impact positions such as product managers, customer support analysts and product engineers but the impact of any vacant position can be seen when it comes down to dollars and cents.
If trying to determine the monetary cost of leaving a position vacant in a simple equation, try the below:
(Annual revenue / number of employees) / 220 working days X 1,2, or 3 multiplier
If your business has an average annual revenue of $500,000 and employs 50 people with a current job vacancy of an entry-level job that currently produces 1 times their current salary that’s $90 a day lost if the job stays vacant. $454 dollars a week or $1800 a month is lost when a job remains vacant.
According to the Society for Human Resource Management (SHRM), the average position takes 42 days to fill at a cost of $4,129. If you add that to the possible one month salary cost of vacancy you can have a cost of over $5,000. And a lot of that can be avoided by partnering with an effective and reputable staffing agency.
Minimizing any cost, both measurable and not, helps businesses and business owners focus on the more important things that will help their business grow and thrive.
Don’t underestimate the impact of a vacant position to your existing staff.
The real loss of many job vacancies is the loss of employee morale. When a job remains vacant for days and weeks at a time, the current staff at a company can take a big blow in morale. The workload of the vacant job now needs to get moved to other people – other people who are already busy. Those people now feel extra stress to do their job and the workload of someone else and that can take a serious toll on morale. On average, employees are working over 40 hours a week – sometimes working closer 50 hours a week. Adding more work to people already giving more than 40 hours is bad for business. Studies show that productivity drastically decreases at 50 hours of work a week.
When asking existing staff to take on current job roles of a vacant position, overworking and burning them out becomes a reality. Many businesses are staffed at the right capacity, so one small shift or change of moving more work to others already doing a lot of work is a surefire way to overwork current staff. Overwork often leads to burnout and burnout can lead to resentment and general unhappiness.
The existing staff may also start to ask “why” the person left and is not being replaced. Is the business losing money? What does that mean for their job? What does the future hold? Uncertainty breeds distrust and stress – and having a position unnecessarily vacant for too long can do that. You may even find slip-ups in customer service, errors in work, and lost productivity when employees spend time gossiping about the vacant position.
When 85% of business is referred via word of mouth, you want to make sure your business is fully staffed and providing excellent service to your customers. Partnering with a staffing agency that knows your industry and can help you hire smart will allow your business to continue to make customers happy and keep them coming back to purchase. Having a recruiting agency help fill open jobs quicker can also help you to keep your position in the market.
Build A Workforce That Works – With Our Help
Partnering with a staffing agency makes sense if you are looking to fill a job or you are the one looking for an open job. Staffing agencies, like ours, want to lend a hand to the busy hiring department or person.
And if you need help with hiring or identifying ways to show your culture off in the hiring and recruiting process, we’re here to help you. Get in touch with GTR today, and begin working with a staffing partner that will help you Build a Workforce That Works.