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Unfilled positions translate to higher costs for your organization.
Nationwide studies show companies spend an average of 51 to 72-days to fill open positions. This is simply too long. Here's why. In today's business environment, organizations need to maintain and grow their competitive advantage. Without the right talent (or too many vacancies) – this is impossible to accomplish in business today.
There isn't a magic formula, or even a standard formula, for calculating the cost of vacancy. There are, however, several formulas that are adaptable for every organization. We recommend the early involvement of your finance department. This approach adds credibility to your calculations and eliminates internal doubt and resistance that may interfere with your efforts.
We've put together a brief explanation of basic cost of vacancy formulas and provided access to calculators for your convenience. This helps determine the best method for your company.
Click a link below to Calculate.
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Average Revenue Lost Per Employee If you don't have position specific data available, this simple formula allows you to determine the revenue your company is failing to generate due to a vacant position. -
Simple Salary Multiplier This calculation doesn't require your company's specific information. Instead, it estimates each employee's value as a multiplier of their salary. You can rely on a study conducted by Harvard University that indicates an individual's value is between one and three times their salary.
Some experts have found three times the salary to be most accurate. However, you can utilize one or two times a salary without any argument. If you go above the 2x figure, CERS suggests feedback from your finance department to gain creditability.
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Direct-Revenue Lost For revenue generating positions, such as Sales or Business Development with specific quotas – this formula helps estimate how the vacancy affects your bottom line.
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Budget Expenditure per Employee This formula is ideal for support positions, such as clerical or administrative…as their productivity contributions are difficult to directly measure.
For assistance or further explanation about cost of vacancy or to help with your calculations, simply call 561-910-8000 to speak with a Talent Delivery Expert today!
