Mar 3, 2015 7:30:00 AM / by Sandra M. Smith

Opportunity cost of an unfilled job for your firm is painful and could be costing you more money than you realize. For roles that are billed out or bringing in revenue, the impact is even more direct to the bottom line. Furthermore, just imagine what else managers could be accomplishing if they were not burdened with the increased stress of supervising teams and individuals filling in for the open position?  Are they being forced to ignore top performers or short-change development of average performers? Are they being asked to take on the role of recruiter because the positions are going unfilled? In such cases, your top performers are now vulnerable and are more likely to be lured away by your competition, causing the cycle to exasperate out of control.

Are you confronted with two or more of the following problems within your organization?

  • Are you seeking ways to reduce your variable recruiting expenses?
  • Are you faced with increased time to fill per position?
  • Are you struggling to work through peak requisition loads and hesitating to increase your fixed expenses by hiring additional recruiters?
  • Are you expanding your organization in new regions and seeking to staff strategically?
  • Are you finding that your job postings are not attracting quality talent?
  • Are you losing candidates during the hiring process?
  • Are you confronting the reality that a majority of your workforce will soon be reaching retirement?
  • Is your Preferred College Recruiting program not producing candidates or are you losing the top graduates to other firms?

You are not alone – below are the likely reasons these problems are happening:

In a recent focus group meeting with “in-demand” technical candidates, they stated:

  • They receive upwards to ten emails from recruiters per day.
  • They are so frustrated with ATS systems that require endless efforts and pre-screening questions that they just don’t apply.
  • They are disappointed with long wait times between contacts during a recruiting process with a firm so they remove themselves from the process.
  • They are reading reports about employers and avoiding those with a negative rating.
  • They find job descriptions require too many skill sets that are not realistic to enable anyone to have a level of mastery.
  • They are disappointed that most firms expect them to accept lateral pay/roles.
  • They are seeking interesting work, work/life balance, career progression, mentoring and opportunities to expand skills. If your firm doesn’t promote these things during the interview process, you are likely to experience a shortfall of quality candidates for your firm.


What is the impact of these critical roles going unfilled?

The cost of calculating an unfilled position is fairly simple:

  • Step #1 – Annual Company Revenue/Number of Revenue Generating Employees = Annual Revenue Generated per Employee
  • Step #2 – Annual Revenue Generated by Employee / 365 days = Daily Revenue per Employee
  • Step #3 – Daily Revenue per Employee X  Average Days Positions Unfilled =Revenue Lost per Unfilled Job
  • Step #4 – Revenue Lost per Unfilled Job X Number of Open Jobs = Total Revenue Lost for All Open Jobs

For example, Company X is a financial organization with an annual revenue of $5 Billion. They currently have 34,000 employees and 970 open jobs. Based on industry average, the open jobs have been unfilled for 37 days.

  • Step #1Annual Revenue Generated per Employee = $5 Billion/34,000 employees = $147,059
  • Step #2Daily Revenue per Employee = $147, 059/ 365 days = $403
  • Step #3Revenue Lost per Unfilled Job = $403 x 37 days = $14,911
  • Step #4Total Revenue Lost for All Open Jobs = $14,911 x 970 =$14,463,670

What can you do?

If you are confronting two or more of these recruiting challenges, you may find that working with a trusted recruiting partner can help you reduce variable recruiting costs, drive down your time to fill metrics, and help you reduce the impact of having those jobs go unfilled – all while delivering the caliber of quality candidates that enable your organization to achieve its goals. By calculating the cost of your unfilled positions, you can get a better idea of the true costs which don’t readily show up in the hiring budget. In situations when your time to fill days begin to grow longer, it may be time to bring in additional support for those hard-to-fill positions and stop the bleeding.

Finally, according to Forbes, recruiting top workers should be a priority for every firm, especially in today’s competitive industry where quality candidates are being aggressively sought after. If you’ve decided to stop the pain and use a recruitment firm, be prepared to make the commitment. If you’re willing to pay a fee for a quality hire, try not to get too hung up on additional minor costs. Instead, focus on the quality of employee you are investing in. After all, you do get what you pay for.


About the Author

Sandra Smith is the Founder & President of Insight Talent Solutions. With over 25 years of recruiting experience she is a Practice Leader of Executive & Professional Search in the following areas: Information Technology (IT), eCommerce, Digital Marketing, Marketing & Sales, Supply Chain, Logistics, Strategic Sourcing, ERP, and Human Resources & Recruiting. She is a certified Mcquaig Systems Evaluator and a member of SHRM and NAPS. Her specialties include RPO, Custom Recruiting programs, and Pre-Employement/Talent Development Assessments. Connect with Sandra on LinkedIn!

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