Cost of Vacancy or Time is Money

What do Cost of Vacancy and my grandma have in common? Time is money, that's what my grandma told me when I was young. Of course, I didn't really understand it back then and I would also assume that she said it in a completely ignorant way. But there is a lot of truth in it.

Time is money when you sit in a cab and watch the fare rise.
Time is money when you have ordered tradesmen and they present proof of the hours worked for you to sign after completing the work.
Time is money when a machine is unable to produce due to a technical defect.
And time is money if the right talent is simply not found for an open position. There is even a technical term for this: vacancy costs or cost of vacancy. But what exactly is behind it?

The cost of vacancy - or vacancy costs - is an extremely complex topic for which there are various calculation formulas. But one thing is certain: vacancy costs quickly become very expensive.

Let's assume a team member leaves the company and a new one has not yet been found. However, the area of responsibility must still be reliably processed and therefore inevitably ends up on the desks of the remaining team. This quickly results in overtime, which ultimately has to be compensated for, either in monetary terms or through additional paid time off.

A reduction in productivity is also a frequent consequence of unfilled positions. This can even go so far that turnover cannot be generated or declines because the necessary manpower is lacking.

Would you like to know how much an unfilled position costs you? The details are of course individual and depend on various factors, but there is a rule of thumb that you can use as a guide: As a rule, a vacancy costs around €500 per day. Extrapolated to an average staffing period of around 90 to 120 days, this quickly adds up to tens of thousands of euros.

But there is also good news: There are some ways in which you can shorten staffing times and thus reduce vacancy costs. Here are a few examples:

• Use the team's networks. Satisfied employees are the best ambassadors and, if the recruitment is successful, the referrer will also be happy to receive a reward.
• Put the watering can aside and carry out your recruitment measures in a target group-oriented manner.
• Let us support you! There are clever technologies and tools that can take some of the work off your hands and create automated and targeted contact points with relevant talent.

Is this an exciting topic for you and would you like to find out more? My name is Friederike Kracht, I am a project manager at JobCloud HR Tech. Feel free to contact me and we can talk about your cost of vacancy.