Finding out how much cost a open vacancy in your company can be important so that the recruitment process is done more quickly. This is because, despite the chance to reduce costs with the dismissal of a professional being tempting, this vacancy that has just opened can bring a series of impacts due to the drop in productivity of your business. In addition, this cost can quickly exceed the salaries of the former professional.
Although most organizations know that unfilled positions can hurt profit, few are able to quantify exactly how much these vacancies cost. It is essential to observe how the loss of manpower and talent can affect everything from sales, production to management and recruitment efforts.
Among the main impacts caused by an open position, some of them can hinder the evolution of your business. In this scenario, probably some employees will need to be relocated and will start to perform not only their obligations, but also that of another sector, taking the focus away from the professional for their tasks. In addition, when hiring an employee for the specific payment takes a long time, other professionals may feel devalued, since they are performing double functions.
Because of all these problems mentioned earlier, it is super important that the leaders of a startup know how to calculate the COV. Known as “Cost of Vacancy”, the selection and recruitment metric can help you recognize how much it costs to have a open vacancy in your company. Want to know more details? Check it out below.
What are the costs of a open vacancy?
The costs of a vacancy can vary depending on several factors. In addition to financial impacts in relation to the monthly / annual revenue that the lack of an employee generate, there are also some additional problems that can occur in your team and in the company as a whole. This can even be felt by the staff, by each individual professional, by competitors, partners, customers and also in the development of your company.
When there is a open vacancy in your business it means that the work that would have been completed by a person in that role still needs to be done in some way. The solution to this recurring problem may be to hire a temporary employee or pay overtime to other employees. Another concern is the costs of employee turnover in your company. When a selection process is not carried out in an assertive manner, costs related to hiring, integration and training may be demanded by a professional who does not fit correctly for the specific vacancy.
As well, from the moment there is a vacancy open the productivity decreases, affecting its results in several ways. This not only means that you are potentially paying extra overtime, but you are also missing out on business opportunities and product development that you cannot take advantage of or explore. This, in turn, impedes your company’s growth and stifles your ability to scale.
How to calculate the cost of a open vacancy?
As stated earlier, calculating the “Cost of Vacancy” for certain positions in a company is crucial for you to know what the real cost of an open position is. Besides, this calculation is also super important to find out how much is feasible to spend in the process of selecting and hiring new employees.
The importance of performing this calculation goes further. Most companies think that an open position is not something that can cause problems for their business, because it means a temporary reduction in expenses. However, the reality is that hiring an employee should be seen as an investment and not an expense, since all professionals must bring financial returns to the company.
Entering the subject of our subtitle, performing this calculation can vary greatly for different positions in your business. However, there are some formulas that can help you measure this to approximate values.
The first is for hiring in general. This formula is based on the average of how much an employee generates annual revenue for the company, divided by the number of working days in a year. Thus, you get the average daily revenue of an employee in the final result. If you have an open spot, this is the amount you lose each day.
(Annual revenue / No. of employees) / Working days in the year
Another way to perform this calculation is for vacancies in more specific positions and positions. According to studies, a professional is expected to generate a financial return of 1 to 3 times the value of his salary. Therefore, divide the employee’s salary by the number of working days in a year and multiply it by a number from 1 to 3. The final result should represent how much your company loses each day that a particular vacancy is not filled.
(Annual professional salary / Working days in the year) x 3
In addition to making an assertive hiring for your business, it is super important that it be done in a short period of time. Therefore, some practices to optimize the selection process can help you in this regard.
One way out is to try to make the selection as objective as possible for the vacancy in question. With the elimination of bureaucracy, costs are also lower. Also, do a well-planned outreach to attract as many candidates as possible. If it is still difficult to find a professional – mainly for the technology area – some companies are specialized in this type of service and can bring the ideal professional in a short period of time.