The Real Cost of a Vacancy
By Jeff Gipson | October 7, 2019
At The James Allen Companies, every day, we see the real cost of a vacancy on your team. Money isn’t everything. I’m talking about longer completion times on projects and lowered productivity. Those lead to an inevitable drop in morale. When you have lost a member of your team, taking stock of the situation is the first step in the solution.
Calculate the dollars lost
There’s a formula you can use that will put a dollar figure to the open job position. Figure your former employee’s annual salary, divide by the number of productive days per year, and you’ll have your daily cost:
Annual Contribution / Productive Days per year = Daily Cost of Vacancy
That daily cost multiplied by the number of days that position is vacant will give you a good idea of the real cost, in dollars, of each open position. But that’s not the entire story.
Beyond the monetary cost
Your employees work hard to hit the goals you set for them. Their institutional knowledge and team mentality are big factors in your company’s success, and you want to do as much as you can to keep them motivated and happy. But if a vacancy goes unfilled for very long, kicking it into a higher gear starts to wear thin. People taking on additional duties start to get tired. The more tired the worker, the longer the road they’re walking looks, and that can lead to longer project completion times, missed deadlines, or additional unexpected openings. That means productivity is lower, and that feeds into a vicious cycle where employees are falling behind in their work and could despair that they won’t catch up. Not ideal.
How to head it off
Recently, we talked about how to address your turnover rate, and it is important to keep your retention rate as high as possible. Keep your top performers, and your overall picture improves. That’s a no-brainer. But when a vacancy does occur, it’s important to act quickly to minimize the overall impact on your organization.
At The James Allen Companies, we understand how much the real cost of a vacancy is to your organization—more than just monetarily, your entire team shares the cost of fewer hands at the same amount of work. Let us help you find the right person with the right skills and experience to join your team. Contact us today to get a conversation started.