The Real Cost of a Vacancy

The Real Cost of a Vacancy

Jeff Gipson 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.

About the Author

Jeff Gipson
Jeff Gipson
Jeff Gipson Sr. is a veteran of the staffing industry, with more than 30 years of experience. He got his start working for an international staffing organization where he focused on information technology placements across the country. In July 1992, Jeff continued his staffing career with a St. Louis based information technology staffing company. There, he was strategically involved in launching the organization’s first branch office — and subsequently three additional branch offices over the next several years. In July 2000 Jeff made another move — this time to launch his own staffing company, continuing his IT focus. In 2003 the organization was reinvented. Relying on his earlier sales career in the insurance industry, the company changed course and began building the firm around the insurance industry. The company continues to put all their energy in the insurance sector filling positions of all titles across the country. Jeff and his wife Carolyn have been married since 1980. They have three children and seven grandchildren.
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