Your vacant roles might be costing your company more than you realize.
It’s not just about empty desks, but lost opportunities, overloaded teams, and unhappy customers. By the end of this article, you’ll have a clear picture of:
- How to quickly calculate the cost of a vacancy
- The hidden expenses you might be overlooking
- Proven strategies to reduce these costs
- Our recommend analytics tools to help you stay on track
What Is the Cost of a Vacancy, and Why Does It Matter?
When a role stays empty, it’s not just the workload piling up. It’s also profits slipping away.
Cost of vacancy (COV) measures what each unfilled position truly costs your business. Understanding this can help prioritize and justify recruitment investments to leadership.
How to Calculate the Cost of Vacancy for a Position
Here’s a practical, effective formula to calculate the cost of vacancy, based on annual revenue per employee:
- Calculate daily revenue per employee
(Company Annual Revenue ÷ Total Number of Employees) ÷ Working Days per Year (~260) - Adjust by a job level multiplier (Low = 1, Mid = 2, Senior = 3)
Daily Revenue per Employee x Job Level Multiplier - Multiple by the number of vacancy days
Adjusted Daily Revenue per Employee x Vacancy Days
For example, if your company generates $5 million annually with 50 employees, and a mid-level role (multiplier = 2) remains vacant for 60 days:
- Daily revenue per employee: ($5,000,000 ÷ 50) ÷ 260 = $384
- Mid-level job multiplier: $384 x 2 = $768
- Vacancy cost: $768 x 60 = $46,080
What Are the Hidden Costs of Leaving a Role Unfilled?
Beyond immediate revenue impacts, vacancies bring significant hidden expenses like:
- Money spent on job boards and other recruitment marketing platforms
- Team burnout and possible employee retention issues
- Lower productivity and/or missed deadlines
- Decreased customer satisfaction
These hidden costs compound quickly, often exceeding direct vacancy costs.
Hidden Vacancy Cost Variables by Industry/Role
Hidden vacancy costs vary depending on what industry and role you’re recruiting for. For example, many of our clients at DISHER Talent Solutions ask us for help filling technical roles in industries like engineering and manufacturing. The longer those roles stay open, the more hidden costs like stalled product launches and disrupted production timelines add up.
Other examples could be construction delays or missed revenue targets for sales roles.
Cost of Vacancy vs. Cost of Hiring: Which is Greater?
Hiring expenses like job ads, recruiting fees, and onboarding can seem daunting in the short term, especially for companies with tight budgets. But in the long term, it’s typically the most cost-effective option.
If a role is left unfilled for long enough, vacancy costs can exceed all of these expenses. This makes proactive hiring financially smarter in the long run.
How to Hire Faster and Reduce Vacancy Costs
Some roles, especially technical ones, take longer to fill than others. But there are ways you can reduce time-to-fill and cut some of the associated costs.
Here are a couple of strategies to consider:
- Write enticing, yet clear job descriptions
- Ensure the hiring manager and HR/recruiting team are aligned on non-negotiables
- Train team members on proper interview etiquette
- Go beyond job boards and look into referrals, LinkedIn outreach, or alumni groups
- Provide competitive offers and be ready to negotiate for top talent
- Use automation or AI to streamline simple or monotonous recruiting tasks
- Outsource hard-to-fill roles to an experienced recruiting firm
Vacancy Metrics Analytics Tools
There are a number of tools that enable you to get clear hiring data quickly. Some that we recommend are:
- Vacancy cost calculators, like this one from Upwork
- HR analytics software from companies like Lever, Workday, or BambooHR
- Even basic Excel templates can do the trick!
Take Back Control of Your Hiring Costs
Every day you wait to fill critical roles, money slips away. If you need help reducing the cost of vacancies or other recruiting expenses, schedule a quick call with us. We’re happy to review your process and provide suggestions on how you can hire better people, faster—even if it doesn’t mean using our services.
